Not happening (at least under this government)

I’ve had a couple of posts (here and here) this week prompted by Phil Twyford’s generally encouraging recent speech about fixing the market in urban land, in ways that might –  in his own words –  flood the market with development opportunities, and thus materially lower land prices in and around our cities.

My bottom line: I see no reason to believe that far-reaching reform –  in ways that might make a real difference, as distinct perhaps from just some rewritten laws – is actually likely to be implemented under this government.   We have a weak government, united on relatively little, and there is no sign that serious reform in this area is a prime ministerial priority.  A mere fifteeen months from now the election campaign will be in full swing.

More importantly, market prices suggest that people transacting in the urban land market don’t believe it either.

There was another excellent illustration in this morning Dominion-Post as to why one would be foolish to put a high probability on such reform happening.   It appeared in the form of two articles, one with the (hard copy) headline of “Where will Wellington grow?”  and the other with the hard copy headline “Tough Choices”.  I’ll set to on side for now the point that with a sensible immigration policy, the abolition of corporate welfare and longstanding New Zealand birth rates the city probably wouldn’t be growing at all –  as I pointed out recently, it is not as if stellar productivity growth is some irresistible lure.     Wellington City Council can’t be held responsible for New Zealand population growth, so lets grant for the sake of argument that the population probably will keep on rising.

There are Labour mayors in all three of our largest cities. But it is worth recalling that the Wellington City Council is one the most woke-lefty outfits in the country –  if any council is well-aligned with the government it must be them.  It has a Labour mayor who surely has national political ambitions, several Green councillors, and deputy mayor who if she had her way would strip out all reminders of the Anglo heritage and culture of the bulk of the population, and even the councillors who are not from Labour or the Greens are mostly only a softer shade of pinky-green.  The same issue of the newspaper reports council officers questioning the “appropriateness and relevance” of street names in my own suburb, mostly named for various British and European rivers.  As I’ve noted previously, it must stick in the craw of councillors and their staff to have their offices on (Edward Gibbon) Wakefield St and (Queen) Victoria St and their (well, our) city named for the Duke of Wellington.

This is the opening of the article

City councillors are bracing themselves for a “nimby” backlash as a major plan to find space for 80,000 more Wellingtonians to live goes out for public consultation.

Councillors voted unanimously this week for their spatial plan to go out for feedback.

and goes on to note

The council’s spatial plan posits four scenarios that people will be able to provide feedback on: one centred on high-rises in the CBD, another focused on building upward in suburban townships, a third creating a new suburb in Ohariu Valley and a fourth scenario extending developments at some existing greenfield sites.

No sense anywhere of letting the market work, in response to the revealed preferences of prospective purchasers. No sense of getting the pricing right (for infrastructure connections etc) and then letting things develop in an evolutionary way. No, it is all a matter for councillors to choose, for councillors to “make space”.   And, of course, all led by the Council’s (Australian) Chief Planner.

One councillor notes that

councils were required by law to have a plan for expected growth and Wellington had “no choice” but to come up with a plan to accommodate the extra 80,000 people expected in the city over the next 30 years.

Perhaps, but why couldn’t that plan be, we will get the pricing right, we will allow for appropriate differential rating, we will build (or allow to be built) connections pretty much as required, we will facilitate intensification where local property owners are agreeable, and then let people and the market take it from there?  An abundance of competitive development opportunities – a superfluity –  is what keeps prices down.

That sort of approach might look something like the fine words from Phil Twyford. But not a single comment, from councillors or council staff, in the article suggests anything like that sort of mindset.

If the government were really serious about thoroughgoing reform, wouldn’t it have been an ideal opportunity to have sought to work with their ideological allies on the Wellington City Council to make it happen here – to actually lead the way and bring land prices back to something more like the value in the best alternative use?

Instead, we have the right-on Labour mayor, emphasising not choice, not facilitation, but his own ideological preferences, all supported by the bizarre rhetoric of having to “squeeze people in”, when Wellington City (let alone the greater Wellington region has abundant land).

When mayor Justin Lester is asked for the scenario he wants he just points up

As I understand it, he himself lives in a low-rise family home in a quiet suburb.  But apparently he thinks it is up to him to determine that many fewer of the next generation would have that opportunity.  His Chief Planner is clearly right behind him –  his distaste for a physical expansion of the city seeps through in almost every comment in the article.

It is a democracy, and too much power in such matters rests with councillors and their staff.  My point here isn’t so much to champion an alternative model –  much as I would support one –  as to make the point that anyone who doubts the government is serious about thoroughgoing reforms and significantly reducing land prices in and around our cities, need only look to the lead being provided by the government’s close ideological allies at the Wellington City Council.

As the Dominion-Post articles suggest, there is likely to be lots of blowback against the options preferred by the council (intensification and more intensification) and so in the end whatever gets approved will be some sort of lowest common denominator.  There will be more houses built over time –  as there have been in fast-growing cities around the country in the last 30 years –  but never enough land-liberalisation to ever create a sustainable rational expectation that future land prices in and around our cities will be materially lower than they are today.

Perhaps one day reform will really happen, and prices really will sustainably adjust.  But, as yet, there is nothing in the wind –  whether from the Prime Minister, or Labour mayors or Labour/Greens councils – to suggest it will occur on this government’s watch.  And the young and the poor  (especially the young poor) will be the ones who pay the price, in lost opportunities.

12 thoughts on “Not happening (at least under this government)

  1. The good news is that a great deal of work is being done by the NGO sector on wide sweeping resource management reform (i.e., repeal and replacement of the RMA amongst other things). And as the below article in LG Magazine points out;

    “This [review project] will complement a number of other relevant reforms being progressed, including short-term Resource Management Act (RMA) changes, the three waters review, and the roll-out of the Housing and Urban Development Authority.”

    Things are being done on a wider perspective.

    Where WCC’s consultation is concerned, what is critical is that people come out in great numbers with submissions to the council. Someone interested in major land management reform/market choice as you have proposed (perhaps the NZ Initiative?) should set up a submission form, that makes it easy for people of like mind to submit really easily.

    You would be surprised at how effective these form-type submissions were with respect to the MFE’s consultation on the Zero Carbon Bill. In summarising the submissions, the headline number of 91% of submitters wanting an all gases approach left an impression on politicians – even when one divided out the forms from the unique submissions;

    In looking at the list of options you report that they have presented – I would think the point is they should facilitate all !!!!

    Liked by 1 person

    • Long term changes to the RMA or is successor wont help those currently living in garages. Personally I dont mind the RMA, I mind the way its been implemented.

      Under any short term RMA changes:

      1) The government needs to force itself by the RMA amendments to issue national standards on urban development & for district and regional plans to be amended immediately to reflect them. This would allow a national approach to removing/reducing zoning and density limitations.

      It could also force the government and successive governments to issue national standards on issues which should have national standards. The original RMA effectively left this action as voluntary.

      2) Central government should subject itself to part 2 of the act, which in itself could even be constitutional with some tweaks to the wording. There is no way the government could have run its high immigration policy subjecting itself to part 2, if one takes a wide interpretation or reinterpretation of physical resources.

      The purpose of this Act is to promote the sustainable management of natural and physical resources.
      In this Act, sustainable management means managing the use, development, and protection of natural and physical resources in a way, or at a rate, which enables people and communities to provide for their social, economic, and cultural well-being and for their health and safety while—
      sustaining the potential of natural and physical resources (excluding minerals) to meet the reasonably foreseeable needs of future generations; and
      safeguarding the life-supporting capacity of air, water, soil, and ecosystems; and
      avoiding, remedying, or mitigating any adverse effects of activities on the environment.

      Liked by 1 person

      • Can’t disagree with any of that. Yes, I think the RMA in 1991 was an elegant and forward-thinking piece of legislation, but implementation (from the word go) was in the image of its predecessor, the TCPA. Point being, no one (in the world) knew how to implement ‘effects-based’ planning law and the government of the day didn’t provide any support (i.e., money for re-training) nor any guidance. Then came the ‘overall broad judgment’ and, it seems to me with that, the Courts (and the mountainous) case law was to make all the decisions of any import. Planners responded by over- and overlay- planning in order to cover every imaginable development possibility, and to try and stay out of court.

        Then you get amendments fixing earlier amendments – the tree protection rules being an hilarious case in point;

        I heard that one person was employed by a council for two years exclusively to categorize/map trees and groups of trees throughout the district in preparation for the plan change covering just that 2013 amendment, which clarified the 2012 amendment.

        Like your ideas about short-term change.

        Liked by 1 person

  2. The intensification option will only work if homeowners have an automatic right to build up 4 to 6 stories across the entire frontage of their section like you can in Tokyo. And neighbours not having the right to forbid 4 to 6 stories being built right up to their boundary.

    When justin Lester points ‘up’ is that what he means? If he doesn’t mean that, then he really means the status quo i.e. no right to build, so not much is built, instead house prices and rents inflate.

    And to be honest Justin Lester and the chief planner although they clearly want ‘up’ are too cowardly to spell out what that means. So Wellington is unlikely to get enough ‘up’ to correct the housing crisis.


  3. What Wellington needs is a new option. I think this should be transit oriented development on green field sites.

    Congestion road pricing the motorways is the necessary first step because it will incentivize Wellington home buyers to buy homes where good quality public transport is available. And even better it turns the motorway network into a BRT network so it supplies that option.

    Thus transit developments can be built be in Horokiwi, Takapou Valley and elsewhere. Horokiwi has the added advantage of providing a short cut between Porirua and Lower Hutt.

    Congestion road pricing will not be politically popular but not as unpopular as 4 to 6 story buildings looming over neighbours. Overseas experience in Stockholm found that road pricing became quite popular over time.

    If Jacinda wants to use her political capital for a worthwhile project that has a short term cost but long term gain then congestion road pricing to unlock new housing areas would be my suggestion.

    Talk Wellington have republished my Eco City proposal with more specific details on how this can be achieved. I have previously shared that link.


  4. Michael I find it curious that you continue to believe that resolving the housing crisis would not improve productivity despite all the evidence I have provided. I always thought of you as a libertarian and a strong supporter of free trade because of the economic gains it delivers. Yet somehow you think that argument doesn’t extend to freeing up restrictions on building houses?


  5. Overnight reflection has made me even more horrified. Having read through the proposed urban plans and following a meeting yesterday with two young Wellingtonians I believe we are witnessing the collective failure of Wellington’s governing elite.

    Wellington’s governing elite have no idea how big the housing crisis is or the pace and scale of the required reforms.

    The young Wellingtonians I met were not that young -early thirties. They work as civil servants in policy development which sometimes leads to contact with Ministers -so they are educated, good income earners, with a moderate degree of status and some influence (they are not low income and politically disconnected). Yet they are still renting and they describe a market where rents have inflated massively since they first arrived in Wellington -this forces them into shared rentals, often in cold and mouldy accommodation that worsens their health -one of them suffers from asthma.Their solution is to buy a Tiny Home i.e an improved caravan designed for long term living. They are happy with this because it is cheap, well built (insulated and double glazed) and well located -they pay minimal rent to a friend to occupy some space in an inner city suburb.

    This is the qualitative experience that goes with quantitative data that shows Wellington’s population is increasing faster than house building, rents are rising faster than incomes -$5000 increase in yearly housing costs for 2 bedroom rentals since 2014/15. And rents in Wellington being higher than Tokyo -the biggest city in the world.

    It is good that my Tiny Home friends have found a solution that works for them, others would have left Wellington (I know experienced nurses who have) and NZ would have lost expert and experienced policy advice (there’s your productivity effect Michael). But Tiny Homes is not a scalable solution. There will be people that do not have friends with spare space for a Tiny Home. And a Tiny Home probably will not fit most people’s personal circumstances. What is happening to these people? Especially those people with lower incomes and fewer resources?

    Wellington needs to build houses in the tens of thousands in the coming decades and they need to be affordable.

    The urban development options being discussed in Wellington are underwhelming on the housing front and way too ambitious on the transport side. My Wellington friends were very disappointed when I told them them that Wellington City Council does not have the funding to build the grand transport schemes. -they cannot afford to build light rail to the airport. That their entire strategy is to create so much publicity and public expectation that central government and the long suffering taxpayer is forced into subsidising the scheme to the tune of $billions. Even worse light rail to the airport is not the infrastructure needed to solve the housing crisis.

    Morally this is despicable. Real people -families and children are suffering from Wellington’s housing crisis yet Wellington’s governing elite is irresponsibly playing ‘chicken’ with itself.

    Liked by 1 person

    • Well put Brendon. Thanks

      It’s actually worse than you think as the dense development the WCC mandate is almost uninsurable now. It’s hard enough to get insurance on a house but apartments are near impossible and if you can the premiums are crazy. $300 a week for a one bedroom was one example!

      I have heard that over zealous body corps who rode the insurance companies after the Kaikoura quake damage are some of the cause. It’s the reinsurance companies that have pulled the plug – they don’t have to be in a high risk city with over-demanding claimants – so they have just walked.

      Liked by 3 people

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