N Z RMA Reform: Nick Smith’s Confusion
N Z RMA Reform: Nick Smith’s Confusion
Co author - Demographia International Housing Affordability Survey
Performance Urban Planning
14 September 2010
On Tuesday 12 September 2010, New Zealand’s Environment Minister Hon Dr Nick Smith released the keenly awaited Resource Management Act (New Zealand’s land use law) Phase 2 Reforms, under the rather grand title “Planning reform needed for NZ cities to be competitive” stating –
“We are not getting the right infrastructure in place at the right time” Dr Smith said “Poor quality decisions on land planning are making homes too expensive.”
He got that much right, but then got confused from there.
Readers were led in to a 95 page meandering Discussion Paper, underpinned by a misnamed 70 page Technical Report. For those capable of withstanding “bureaucratic mush” as its worst, they could inflict even more suffering on themselves, by reading further forgettable homegrown background material.
Poor Dr Smith. No one was kind enough to remind the Minister to define clearly what an affordable and competitive city is. So here goes –
“For metropolitan areas to rate as ‘affordable’ and ensure that housing bubbles are not triggered, housing prices should not exceed three times gross annual household incomes. To allow this to occur, new starter housing of an acceptable quality to the purchasers, with associated commercial and industrial development, must be allowed to be provided on the urban fringes at 2.5 times the gross annual median household income of that urban market. The fringe is the only supply and inflation vent for an urban market. The critically important Development Ratios for this new fringe starter housing should be 17 – 23% serviced lot / section cost – the balance, the actual housing construction. Ideally through a normal building cycle, the Median Multiple should move from a Floor Multiple of 2.3 through a Swing Multiple of 2.5 to a Ceiling Multiple of 2.7 – to ensure maximum stability and optimal medium and long term performance of the residential construction sector.”
The writer has often repeated this definition within numerous articles, such as Houston, we have a (housing affordability) problem and many others at his website Performance Urban Planning and the research resource on urban issues, the Demographia website.
There is no “mystery’ at all about how to supply affordable housing, as the great construction industry entrepreneur Bill Levitt had it all figured out over sixty years ago. He dragged the residential construction sector from the “horse and buggy” era to the modern disciplined production one we know today. Bill Levitt figured out how to supply $US7,000 - $US8,000 new suburban houses to SINGLE EARNER young families, earning $US3,500 a year. The wives / partners were not forced to be “mortgage slaves” through that era either.
Enduring listening to politicians “agonizing” over housing is embarrassing.
It seems too, Dr Smith is unaware of the six Annual Demographia International Housing Affordability Surveys. This year’s Survey (data September quarter 2009) illustrates clearly that the eight major metros of New Zealand have bubbled out to a Median Multiple (median house price divided by gross annual median household income) of 5.7 – with Tauranga at 6.8; Auckland 6.7; Christchurch 6.1; Wellington 5.8; Dunedin 5.6 with Hamilton and Napier 5.0 and Palmerston North 4.6.
To “add insult to injury”, poor quality governance created an $NZ11 - $NZ20 billion leaky home problem, involving up to 90,000 residential units. A seriously degraded development / construction culture created by the politically induced housing bubbles, put 61 Finance Companies to the wall , impairing $8.5 billion and 239,000 deposits. The recent Christchurch earthquake illustrated clearly the massive systemic failures of local government, The writer explained just some of these failures within a recent article Christchurch: A Bureaucratically Buggered City.
So the obvious question is – how come New Zealand’s Environment Minister Dr Nick Smith got it all so wrong?
First – the National Party is historically not the natural party of reform in New Zealand. The Labour Party is. Indeed Dr Smiths RMA reform proposals are of such a poor quality, they would be more suited to an earlier National Government led by Sir Robert Muldoon, that put New Zealand to the wall in 1984. Dr Smith is clearly intent in taking this country back to the failed British style Town & Country Planning (dressed up as “spacial planning”) and central government direction and control.
Second – the current National led Coalition Government did not win the 2008 general election – the tired Labour led Government lost it after nine wasted years. The current National led Coalition Government leader John Key great political attribute is that he is “likeable” and unlike his predecessor Dr Don Brash, lacks policy development and management skills. If one was to ask what this current Government stood for, the only answer on its policy development performance to date would be - “itself”.
Third – for anyone knowledgeable of these local government structural and systemic issues, it was crystal clear that they had to be tackled in a comprehensive way, as the writer outlined within an early 2008 paper “Getting performance urban planning in place”. Early this year, soon after Dr Smith announced this work, it was indicated to the writer this would happen – but it didn’t.
Forth – although the National Party (Conservatives / Republicans) purport to have some affinity with free enterprise and entrepreneurs, in reality it prefers to work closely with business interests seeking protection. It was no accident that Connal Townsend of the Property Council was appointed to the Urban Technical Advisory Group and too, professionals with no actual industry experience as developers / wealth creators. Mr Townsends members would be delighted with the “bureaucratic mush” generated, as they will know Dr Smiths proposals will go nowhere. This group with other business interests, led the flawed local government amalgamation of Auckland – repeating the amalgamation mistakes of Christchurch of 20 years ago. Little wonder Christchurch’s gross annual median household income is $NZ52,000 while Auckland’s is $NZ68,000.
It is the oldest political trick in the book, in that if politicians aim to do nothing with an issue, they take the “confuse them and lose them” approach. The able Governor of New Jersey Chris Christie explained this old trick to journalists recently (refer YouTube - Governor Christie explaining political clarity to journalists for a little light relief).
Clearly – Chris Christie is in politics to do a job – Nick Smith is in politics for a job.
Finally – the question needs to be asked – can anything be salvaged out of the “bureaucratic mush” the New Zealand Environment Minister Dr Nick Smith has generated?
The answer to that depends on whether New Zealanders demand performance from their politicians. Politicians are a reflection of us.