If, as I do, you’ve lived for almost 25 years 100 yards or so from the old Erskine College you have a fairly good sense of what National was on about in this snippet from their new “Building NZ, RMA Reform and Housing” policy discussion document released yesterday.
Objections to proposals for residential reuse of the old Erskine School site in Wellington held it up for more than 20 years. It involved claims that the decaying buildings had heritage value, as well as the routine RMA neighbour objections. Long after the school closed the buildings were red-stickered by Wellington City Council as being unsafe for occupancy. After two decades of costly objections and delays, development eventually started on the site providing 94 dwellings for families.
The school closed in 1985. Some of the land was developed decades ago, but the main site is only now getting the first few occupants in the new (eye-wateringly expensive, at least on the advert I followed up) townhouses.
But if there seem to be some hints of some modest good things in the document, it is hard to be that positive Every so often Opposition parties talk a good game about fixing (or rather, freeing) the housing market – the one that results in such appallingly high price-to-income ratios, systematically skewing opportunity away from the young. And then nothing very much that matters happens. It has been that way for 30 years now, even as the problem has got worse and the imbalances more entrenched.
National talked a good game leading up to 2008. And then accomplished almost nothing – people from David Seymour to David Parker argue they made things worse – including when they had a clear absolute majority with ACT. Some elements of Labour – well, mostly just Phil Twyford – talked a good game prior to 2017. Twyford can still give a pretty good speech on the subject, but are real house/land prices higher or lower than they were when Labour took office two years ago? Higher of course. And these are asset markets, that trade not just on how things are right now – policymaking and legislating takes time – but on best credible expectations about the future.
And now we have National in Opposition again, trying to shape the best policies for New Zealand – oops, the best policies they think they might win on – heading towards next year’s election. They seem to have given up already.
Oh, I know the headlines don’t say that. They’ll report National talking of splitting the Resource Management Act in two, to have separate regimes for urban development and for wider environmental resource utilisation issues. But then the current government is already looking at that option in one of their numerous working groups and consultative processes. Have land prices on the edges of our cities been falling towards the value in the best alternative (agricultural?) use? Not that I’ve noticed. In principle, the idea of splitting the Act sounds appealing, although with the caution that various experts have posed that there is a risk of creating huge uncertainty for a decade or two as courts define the implications and limits of a whole new regime.
But what is striking is how little specific there is about how differently things might actually operate under new National legislation. National grappled with these issues in government for nine years, with ready access to experts inside and outside government. They’ve now had two years in Opposition, with key former ministers (eg Amy Adams and Nick Smith) still on board, and yet nine months out from an election we have page after page of ideas from other people (notably the Environmental Defence Society) and discussions of how things are done in Scotland, South Australia, and Queensland, but little or nothing specific, and nothing that articulates any sort of National vision of a radically more functional future system. And nothing that, for example, notes that Scotland has little population growth and the big cities in Queensland and South Australia have house price to income ratios well in excess of six – classified in the annual Demographia rankings as “severely unaffordable” – when both Brisbane and Adelaide not that many decades ago had price to income ratios of three.
And, sadly here I add an “of course”, there is not a single reference anywhere in the document to that myriad of thriving growing US cities where house price to income ratios today – 10 years into an economic growth phase, with interest rates almost as low as those here now – are anywhere from 2.5 to 4. Or how we might be able to deliver those sorts of outcomes for New Zealanders.
I got to the end of the document last night and was rather struck by the lack of apparent ambition and by what appeared to be an avoidance of directly addressing the main issues. So I checked the entire document and neither ‘land prices’ nor ‘house prices’ appear at all. And yet every serious analyst knows that one of the key presenting issues is how large a share of the cost of an urban house+land is the price of the land under the house. We aren’t short of land in New Zealand – far from it. Fly in and out of even Wellington or Auckland – let alone most provincial cities – and it is striking just how much land is close by the existing urban areas. And yet our governments – central and local – have managed to create an artificial scarcity that often means that well over half the cost of a house+land in our cities is the price of the land. It is crazy – and we aren’t just talking close-in places like Mount Victoria or Parnell, with distinct locational advantages. But it is worse than crazy, it is a chosen evil that governments do to our younger generations. National can do all it likes – and there looks to be good stuff that could and should be done – but unless they end the artificial (government created and maintained) scarcity of (potentially) urban land, they will never make any serious inroads in fixing housing affordability. There wasn’t even any sign in the document of National pushing back against the current proposal to worsen the situation around so-called “highly productive land”. No hint of, for example, a flagship stake in the ground, promising (say) to enact a presumptive right to build two-storey housing on (almost) any land.
And so one comes away from the document with a sense that National really doesn’t care that much about severely unaffordable housing and rigged land markets, or they are scared and don’t trust themselves to actually be able to sell the case for change and what it might take to bring that change about. Probably only they know the answer to which influence is more important, and perhaps not even they do (since the human capacity for barely conscious self-deception is pretty well-developed). And so the government-created disaster, and all the attendant injustices, will go on. It doesn’t make National any worse than the Labour-New Zealand First-Greens government, but what consolation is that to anyone (other than those sitting on existing artificially high-priced assets)? On these issues – as on so many – they are really two sides of the same coin, largely protecting the status quo and wasting the offices of government which could be occupied by an – as yet non-existent party – that might be really willing to address the core issues to promise to get house and land prices a long way down, and perhaps even offer some sort of limited compensation scheme for those who – largely through no fault of their own – have taken on very large debts in recent years to get into any sort of home of their own.
Instead, all we get is small-target stuff, with nothing to scare the horses, no bold messages to sell, and little or no prospect of overdue real change and improvement. Much like – again from both parties – the failure to even begin to get to grips with the decades-long productivity failure. I’m guessing National – like Labour – would be quite happy if several decades hence houses were once again affordable (perhaps three times income) more or less by accident. But they won’t promise to get house and land prices down, they won’t do what it would take to fix this massive failure of our government. And, so it seems, they’d mostly also be happy with just a bit of marginal product differentiation and just little enough action to keep the public angst (my children should be in the house market 10 years from now) more or less in check.