National sabotages housing bipartisanship move by saying 112 minutes later it would repeal Three Waters and hand assets (and debt) back to councils, slashing borrowing capacity for infrastructure
Absolutely not responding to any of the substance, but man I dislike the concept of 'bipartisanship' (and same for 'the opposition'), it just seems contrary to the concept of MMP.
Hoo boy. We are very badly governed and debt is the crippler. There is no reason for funding to be tied to borrowing and debt. New Zealand has a Treasury. The treasure is the NZ$, which only exists because the government says it does by the power invested in it by the people of New Zealand. The NZ$ is produced by tapping a computer keyboard and making an entry into a database, mostly by the private banking debtmongers. But the government must stay away from the privates. There need not be any shortage of money to fund whatever is socially desirable. The money can and should be issued directly from the Treasury, bypassing all debt and borrowing considerations. Or if anyone insists on borrowing, then borrow only from our own RBNZ and therefore the debt is a wash. We need to realise that the government is the only entity capable of solving the housing crisis and that it is using debt as an excuse not to. Will we ever overcome this debt tyranny?
Hm. I dunno, I still see it as a pretty positive move. Obviously it doesn't solve the problem, but if a pipe is clogged at three points and you remove the clog at one of them it's still progress even if the water doesn't flow yet. Let's call it a win and keep the pressure up?
The Akl Unitary Plan didn't solve infra funding. It didn't fix the RMA. It didn't conjure up more construction workers. It didn't solve monopolistic building materials supply.
But it did upzone larger parts of Auckland. The result? House prices flatlined between 2016 and 2020 (See REINZ index). Even despite continued immigration-fueled population growth in that time.
Price increases during the pandemic were caused by monetary stimulus. Interest rates fell 30% (from 5% to 3% according to RBNZ), prices rose 32%. Go figure.
Upzoning does lead to an increase in supply. Your argument that because a few other barriers remain nothing will happen fails to account for the impact of the AUP.
Nice Comment Andrew. Agree from what I can see is the Auckland Housing shortage is being resolved by the AUP, it may take several years though. Auckland prices are high for developable site as small developers fall over each other to reap development profits on any site that comes up. Although this still feels very ad hoc.
We need planning that is joined up from a council and government level. Funding for infrastructure is a problem as the council funding model can't keep up with infrastructure required. Government very rarely chip in funds for council projects except large projects such as Auckland Rail Tunnel.
Thinking is not joined up. For example Avondale and Mt Albert have high intensity housing zones, this makes absolute sense as they are relatively close to the city and have good Rail Access. However they also have two of the largest schools in NZ being Avondale College (2800 Students) and MAG's (3100 Students) and the rolls are set to grow considerably with intensification. Yet the Education owned land at Unitec is going to high density housing rather than planning for a new school.
Hospitals, Transport options, the list goes on. We still keep trying to solve yesterdays problems with todays solutions, rather than having vision to shape what we need for tomorrow.
The MDRS will open up way more opportunities for small developers.
Market based approaches always appear ad hoc. The desire to avoid the ad hoc, and to have our cities grow in a nice, planned, orderly fashion is exactly the thinking that got us into this mess.
Big failure to plan on education, transport, health, etc. But the response to our inability to build schools/hospitals is not to limit houses. Again, that thinking got us into this mess. Just leaves us with the same problems plus a housing crisis.
Excellent points Arthur. And every one of those big investments from Govt is like pulling teeth. I watched Auckland beg/grovel/demand the CRL for a decade. Gerry Brownlee and Steven Joyce, backed by Bill English, said no repeatedly. It was only after a group of big listed property companies begged Key to squeeze the money out did it actually happen. It should not have taken that long. Cheers
Thanks Andrew. I agree the AUP helped reduce inflation in that 2016-2020 period, but what was needed was a much bigger supply shock to actually reduce prices. An even bigger one is needed now after the 30% rise in the last 18 months. The reflexive action of both central and local govt is to cut spending on infrastructure when the Budget pressure goes on. The debt-averse and investment-averse culture inside councils and Treasury is so ingrained it really needs to be called out and challenged at every turn. In my view. Cheers
It is a matter of where and when these new dwellings will appear. Walk down the street and look at each existing house and ask if these new rules could be used. An eighty year old weatherboard house on a quarter acre pavlova paradise section will be the prime target for redevelopment. But a twenty year old house that could only be replaced by two of the newbies? I doubt it.
I live in an inner city suburb in Christchurch that has seen some intensification from earthquake destroyed houses being replaced by two or three new townhouses. The street I live in is having it's sewerage pipes replaced because of earthquake damage. The old pipes were laid in the 1870s (yes, 18) and are being replaced with pipes the same size (well 12 inch becoming 30 cm). The densification over the past 150 years hasn't been enough to require larger pipes.
So in existing suburbs I see a gradual move to greater density with the occasional cumulative pressure on three waters and electrical reticulation for them to need upgrading.
Ironically it will be the new three waters bodies that will be lumbered with this cost, not the councils.
A final thought: - those fancy outer suburbs where there are covenants governing what you can and can't do. Will those covenants be dead in the water?
Apart from the nonsense of it all because we have a fiat currency and can issue our own money, isn’t this debt thing just a matter of accounting? I think a look at how it was done in the 1930s when there really were restrictions on debt, might solve the problem of the 1989 Public Finance Act. Just think of what was done in those days. Railways through out the Country, hydro works, housing, an Insurance company, a shipping line etc etc all done by the govt which built things by spending money which then became assets on that accounting ledger…….
Right. It's all just a bit of bookkeeping, and how easy is that with computers? It's astounding that numbers on a computer screen are more important than people's lives. Why? Who says?
By making these housing typologies along with the types enabled by NPS-UD permitted activities isn't it the case that these houses *will* be built and a future government will have their hand forced and have to fund the infrastructure?
Thanks RJ. Would be great to build the infrastructure first. Very keen to avoid another ‘build it after they come’ moment. We still haven’t caught up with the underbuild of the last 30 years.
1. California passed similar legislation last month, more wide ranging in that it applied to the entire state, every city, town county in all of California.
2. Dilution is the solution. From a few thousand available building sites each year heavily concentrated ion the fringe of Auckland requiring brand new infrastructure. This change would mean 400,000 plus development options, only a very few will actually happen in any year and they could happen anywhere in the city so the change will be very gradual and very spread out, hence diluted throughout the whole city. It is nothing like the horror stories some media are suggesting.
Hi Bernard I like your comment that ACT is in a mess. Seymour might find himself between a rock and a hard place by putting his electorate voters offside with the holding of hands between Labour and National as the Resource Management Act won’t apply to the bi partisan housing deal. I wonder if Seymour is visiting his electorate voters who have the kiwi quarter acre section to persuade them that it’s a great idea to let developers in to build a few town houses and to grant easements over their properties to allow for the necessary infrastructure. Yeah right.
Absolutely not responding to any of the substance, but man I dislike the concept of 'bipartisanship' (and same for 'the opposition'), it just seems contrary to the concept of MMP.
So .. how do you propose governance should work?
Hoo boy. We are very badly governed and debt is the crippler. There is no reason for funding to be tied to borrowing and debt. New Zealand has a Treasury. The treasure is the NZ$, which only exists because the government says it does by the power invested in it by the people of New Zealand. The NZ$ is produced by tapping a computer keyboard and making an entry into a database, mostly by the private banking debtmongers. But the government must stay away from the privates. There need not be any shortage of money to fund whatever is socially desirable. The money can and should be issued directly from the Treasury, bypassing all debt and borrowing considerations. Or if anyone insists on borrowing, then borrow only from our own RBNZ and therefore the debt is a wash. We need to realise that the government is the only entity capable of solving the housing crisis and that it is using debt as an excuse not to. Will we ever overcome this debt tyranny?
So does inflation.
Hm. I dunno, I still see it as a pretty positive move. Obviously it doesn't solve the problem, but if a pipe is clogged at three points and you remove the clog at one of them it's still progress even if the water doesn't flow yet. Let's call it a win and keep the pressure up?
That’s fair Benwave. You’re right. I just wanted to provide the context on how hard and bipartisan the clogs are at the other two points.
Another quality podcast Bernard....
The Akl Unitary Plan didn't solve infra funding. It didn't fix the RMA. It didn't conjure up more construction workers. It didn't solve monopolistic building materials supply.
But it did upzone larger parts of Auckland. The result? House prices flatlined between 2016 and 2020 (See REINZ index). Even despite continued immigration-fueled population growth in that time.
Price increases during the pandemic were caused by monetary stimulus. Interest rates fell 30% (from 5% to 3% according to RBNZ), prices rose 32%. Go figure.
Upzoning does lead to an increase in supply. Your argument that because a few other barriers remain nothing will happen fails to account for the impact of the AUP.
Nice Comment Andrew. Agree from what I can see is the Auckland Housing shortage is being resolved by the AUP, it may take several years though. Auckland prices are high for developable site as small developers fall over each other to reap development profits on any site that comes up. Although this still feels very ad hoc.
We need planning that is joined up from a council and government level. Funding for infrastructure is a problem as the council funding model can't keep up with infrastructure required. Government very rarely chip in funds for council projects except large projects such as Auckland Rail Tunnel.
Thinking is not joined up. For example Avondale and Mt Albert have high intensity housing zones, this makes absolute sense as they are relatively close to the city and have good Rail Access. However they also have two of the largest schools in NZ being Avondale College (2800 Students) and MAG's (3100 Students) and the rolls are set to grow considerably with intensification. Yet the Education owned land at Unitec is going to high density housing rather than planning for a new school.
Hospitals, Transport options, the list goes on. We still keep trying to solve yesterdays problems with todays solutions, rather than having vision to shape what we need for tomorrow.
The MDRS will open up way more opportunities for small developers.
Market based approaches always appear ad hoc. The desire to avoid the ad hoc, and to have our cities grow in a nice, planned, orderly fashion is exactly the thinking that got us into this mess.
Big failure to plan on education, transport, health, etc. But the response to our inability to build schools/hospitals is not to limit houses. Again, that thinking got us into this mess. Just leaves us with the same problems plus a housing crisis.
Excellent points Arthur. And every one of those big investments from Govt is like pulling teeth. I watched Auckland beg/grovel/demand the CRL for a decade. Gerry Brownlee and Steven Joyce, backed by Bill English, said no repeatedly. It was only after a group of big listed property companies begged Key to squeeze the money out did it actually happen. It should not have taken that long. Cheers
Thanks Andrew. I agree the AUP helped reduce inflation in that 2016-2020 period, but what was needed was a much bigger supply shock to actually reduce prices. An even bigger one is needed now after the 30% rise in the last 18 months. The reflexive action of both central and local govt is to cut spending on infrastructure when the Budget pressure goes on. The debt-averse and investment-averse culture inside councils and Treasury is so ingrained it really needs to be called out and challenged at every turn. In my view. Cheers
It is a matter of where and when these new dwellings will appear. Walk down the street and look at each existing house and ask if these new rules could be used. An eighty year old weatherboard house on a quarter acre pavlova paradise section will be the prime target for redevelopment. But a twenty year old house that could only be replaced by two of the newbies? I doubt it.
I live in an inner city suburb in Christchurch that has seen some intensification from earthquake destroyed houses being replaced by two or three new townhouses. The street I live in is having it's sewerage pipes replaced because of earthquake damage. The old pipes were laid in the 1870s (yes, 18) and are being replaced with pipes the same size (well 12 inch becoming 30 cm). The densification over the past 150 years hasn't been enough to require larger pipes.
So in existing suburbs I see a gradual move to greater density with the occasional cumulative pressure on three waters and electrical reticulation for them to need upgrading.
Ironically it will be the new three waters bodies that will be lumbered with this cost, not the councils.
A final thought: - those fancy outer suburbs where there are covenants governing what you can and can't do. Will those covenants be dead in the water?
Great insight on the covenants Steve. I’ll dig around.
Apart from the nonsense of it all because we have a fiat currency and can issue our own money, isn’t this debt thing just a matter of accounting? I think a look at how it was done in the 1930s when there really were restrictions on debt, might solve the problem of the 1989 Public Finance Act. Just think of what was done in those days. Railways through out the Country, hydro works, housing, an Insurance company, a shipping line etc etc all done by the govt which built things by spending money which then became assets on that accounting ledger…….
Right. It's all just a bit of bookkeeping, and how easy is that with computers? It's astounding that numbers on a computer screen are more important than people's lives. Why? Who says?
By making these housing typologies along with the types enabled by NPS-UD permitted activities isn't it the case that these houses *will* be built and a future government will have their hand forced and have to fund the infrastructure?
Thanks RJ. Would be great to build the infrastructure first. Very keen to avoid another ‘build it after they come’ moment. We still haven’t caught up with the underbuild of the last 30 years.
1. California passed similar legislation last month, more wide ranging in that it applied to the entire state, every city, town county in all of California.
2. Dilution is the solution. From a few thousand available building sites each year heavily concentrated ion the fringe of Auckland requiring brand new infrastructure. This change would mean 400,000 plus development options, only a very few will actually happen in any year and they could happen anywhere in the city so the change will be very gradual and very spread out, hence diluted throughout the whole city. It is nothing like the horror stories some media are suggesting.
Great line Giles. Dilution is the solution! I will use that at a later date, if you don’t mine.
Gary
Hi Bernard I like your comment that ACT is in a mess. Seymour might find himself between a rock and a hard place by putting his electorate voters offside with the holding of hands between Labour and National as the Resource Management Act won’t apply to the bi partisan housing deal. I wonder if Seymour is visiting his electorate voters who have the kiwi quarter acre section to persuade them that it’s a great idea to let developers in to build a few town houses and to grant easements over their properties to allow for the necessary infrastructure. Yeah right.
Hi Gary
But Seymour may decide that his party's vote is over the 5% threshold so being beholden to Epsom's voters isn't such a biggie.
Gotcha
Excellent podcast as usual 👏🏽