From Kiwibuild to Kiwis Building

Dr Eric Crampton
Insights Newsletter
14 June, 2019

At its heart, Kiwibuild was a promise to end the housing crisis. The set of reforms Minister Twyford is overseeing can fulfil that promise, if he has the chance to see them through.

The housing crisis has nothing to do with government failing to build enough homes. It stems instead from a nasty mess of perverse incentives facing growing councils, debt limits, infrastructure financing problems, and difficulty in revising district plans under RMA processes – as a starting point.

If the prior National government understood any of it, there was scant evidence of that understanding in policy. While Kiwibuild also missed the point, the policy is only a minor part of the government’s housing supply agenda – despite the disproportionate attention it draws. Focusing on the notable failure of one part of the package makes for great political sport but does nothing to advance housing reform more generally.

Last February, I warned in this newsletter that Kiwibuild could never solve the housing crisis. The targets set were utterly unrealistic and the fundamental blockages lay elsewhere. In response, the Initiative produced a report sharply critical of the programme.

But my Insights column also said that the government should be given a pass on its likely-to-be inevitable failure to hit its building targets, but only if it made sufficient progress on the rest of the supply agenda.

That more fundamental reform is coming. It has been slower coming than we would like, in part because Kiwibuild has proved to be a distracting millstone. But, done properly, the coming changes to infrastructure finance will be transformational.

Infrastructure supporting new development will be financed by bonds backed by levies on the properties benefitting from the infrastructure rather than depending on overstretched Council balance sheets. It will enable leapfrogging of existing landbanks and help unlock housing affordability.

No Member of Parliament understands New Zealand’s housing policy problems as well as Minister Twyford. Shuffling him from the Housing portfolio might bestow a political win on National, but it will come at substantial cost to everyone harmed by broken housing policies.

New Zealand has to build its way out of the housing crisis. Enabling that building is the most important task. And Minister Twyford’s broader agenda is our best hope of getting there. Focus less on how many houses the government builds, and more on the development enabled by the coming reforms.

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