Housing despair

Dr Eric Crampton
Insights Newsletter
23 August, 2019

The New Zealand Initiative has been a staunch supporter of the coalition government’s housing agenda. While we warned that Kiwibuild would not fix the housing crisis but rather risked diverting the government’s attention from more important reforms, we have had every confidence in Minister Twyford’s wider vision.

Unfortunately, the past week has brought worrying National Policy Statements on sensitive agricultural land and urban development.

Where to begin.

Fundamentally, New Zealand’s housing affordability crisis stems from not building enough houses because restrictive zoning rules and other regulatory constraints prevent cities from either building up or out. These constraints flow from incentives facing councils: growth can be costly for councils.

Twyford’s vision promised radical change. Better infrastructure financing mechanisms to make growth less of a burden for councils. Ending urban boundaries that constrain cities against growing out, encouraging density within cities to allow growing up, and introducing congestion charges to ensure not only that traffic can flow but also that choices of where to live reflect costs. And work on infrastructure financing is underway.

Last week’s National Policy Statement on sensitive soils began from a reasonable premise: It is better to rule out development in a small number of places, and to allow it everywhere else, than to require litigation of every proposed development. But the potential scope of the soils NPS is vast: Category 1, 2 and 3 land covers about 15% of New Zealand. By comparison, our major urban areas take up less than 1%. A city near agricultural land wanting to constrain outward growth would need only designate the surrounding area as sensitive.

The National Policy Statement on urban development talks a good game about the need for more housing but does not change the incentives facing councils. The shift in the early 1990s from the Town and Country Planning Act to the Resource Management Act encouraged councils to pour the old planning wine into new bottles. It is now not hard to imagine councils defining “quality urban environment” or “appropriate, safe, and resilient” development in ways that rebuild many of the old constraints. Without a change in council incentives, we need rely on the Environment Court to prevent councils from undermining the intent of the National Policy Statement.

The Initiative will examine the two National Policy Statements in more depth in building our submission, but the preliminary outlook is worrying. Together, they risk scuppering the chances of restoring housing affordability.

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