Putting enough land in New Zealand for future housing needs

NewsroomPlus.com Contributed by Stephen Olsen – part 1 of a series Productivity Commission chair Murray Sherwin is a past taskmaster of presenting reports, and followed a reasonably tight set of talking points at a media briefing earlier today just ahead of the release of the Commission’s latest two-step production – a draft report simply titled Using land for housing. With housing issues almost continually in the headlines since last year’s Election campaigning, and court action looming over the legality of the rights that can be exercised over public land in Auckland, the timing couldn’t have been more apt.

An economist who came to the New Zealand Productivity Commission after roles as Chief Executive and Director General of the Ministry of Agriculture and Forestry (now MPI) and Deputy Governor of the Reserve Bank of New Zealand among others, Mr Sherwin couched the evident “stresses and strains” around land and housing with a comment that in his judgement the issues are “not intractable”. Having said that, and even though he termed current shortfalls as “not invevitable or insoluble”, a readymade soundbite from today’s briefing was that Auckland requires the equivalent of 10 Hobsonvilles (at 3,000 houses apiece) to level out supply and demand, with 3 or 4 more equivalents every year to keep pace with demand. “Business as usual is unlikely to be enough,” said Mr Sherwin, adding that, for want of a better word, a more “aggressive” approach is needed, with, he implied, fewer disconnects between national interest and local interest. He then moved straight to making mention of the potential for urban development agencies – a UDA or Urban Development Authority – to take a leadership and coordination role to achieve residential development at scale in both greenfield and brownfield settings, working in partnership with private sector developers. Questions that followed from Bernard Hickey (Hive News, Interest.co.nz), Brian Fallow of the Herald, Nick Butcher of RNZ, Catherine Harris of the Sunday Star-Times and NewstalkZB pursued angles such as the recommendation that removal of the rating exemption on land owned by the core Crown, including land used for health and education purposes, be investigated. As noted on page 269 of the draft report the rates revenue forgone by councils from all non-rateable land is not insignificant – totting up to about $180 million a year. The report states that “at the margin, this would make agencies think harder about whether maintaining their holdings is in the public interest”. On a question from NewsRoom it was confirmed that such land holdings in the United Kingdom are subject to rates, and in Australia and Canada they are able to be transparently ‘tagged’ (more on that on page 267). How much headroom councils have in terms of the debt they carry in undertaking an increase in supply of land for housing developments, and the standards set for that by the Auditor-General and others, was another question, along with a question about charging for infrastructure growth. The answer from Commission officials present at the media briefing on the latter, was a view that infrastructure charges should more closely reflect the underlying costs, and that flat charges don’t send signals about where development is most efficient. For more on this, see page 221-222. An old chestnut of a question that will no doubt continue to reappear, arose from a recommendation that local authorities should review minimum apartment size rules in their District Plans, with a view to removing them. Aversion or otherwise to the construction of liveable ‘shoebox’ apartments is a problem for markets to solve said Mr Sherwin, with another official adding that the Building Act is the appropriate place to address issues like ventilation and light in apartments. For more on this, see page 120-122. For a process that had as its terms of reference a request to undertake “an inquiry to assess and identify improvements in local and regional authorities’ land use regulation, planning and development systems” there is no getting around that this will be perceived as a report about and for the Auckland ‘crisis’. By dint of a quick, unscientific but indicative keyword search, our dominant urban growth centre of the Auckland isthmus and surrounds features on more than half of the report’s 358 pages, Wellington a quarter of the pages, and Christchurch – surprisingly in many ways – less than 20%, followed by other ‘growth cities’ of Tauranga, Hamilton and Queenstown – in that order. Murray Sherwin is right to say this is a process – following on in an almost linear sequence from the Commissions’ earlier 2012 report on Housing affordability and its 2013 Local government regulation report – that has “plenty of meat”. With all manner of housing issues riding high in the headlines it is also some cause for comfort, as he pointed out, that the level of engagement in the process is high. Getting to the draft report stage alone has attracted more than 70 public consultation submissions – with a wraparound of 94 engagement meetings in New Zealand, 15 in Australia and a UK study tour to boot. The challenge for the next round of submitters is no small one to mount – there’s the density of the report itself, and then 36 questions that beg allied pondering and responses. In terms of timing the countdown for making a submission starts today, and is open till Tuesday 4 August. R8.1 Auckland Transport and Watercare should amend their SOIs [Statements of Intent] so that they are aligned with the Auckland Plan and its target for new dwellings. The SOIs should include performance measures relating to the efficient rollout of new infrastructure to support an increased supply of new dwellings. R8.2 Auckland Transport and Watercare should include performance measures in their SOIs that encourage greater coordination between CCOs [Council Controlled Organisations] and with Auckland Council, building on Auckland Council’s current review of CCOs. R8.3 Watercare should change their approach to calculating infrastructure growth charges to better reflect the underlying economic costs of supply in different locations and for different types of dwelling. R8.4 The requirement to consider development agreements that applies to councils should also apply to CCOs. Chapter 9: Shaping local behaviour R9.1 The Treasury, in consultation with the Department of Internal Affairs, should investigate removing the rating exemption on land owned by the core Crown, including on land used for health and education purposes. Chapter 10: Planning and funding our future R10.1 The Treasury should investigate the possibility of providing an exemption from the foreign investment screening regime for developers purchasing land, providing the land is developed into housing and resold within an acceptable timeframe. –]]>