New Zealand Labour Party

Speech to NZ Planning Institute conference

Thank you for the invitation to speak today. Ever since Bill English said he wasn’t going to allow 20 planners to hold the economy to ransom I’ve been intrigued by your profession’s power and influence.

Who would have believed urban form would become one of the country’s hottest political issues?

Fuelled by concern about unaffordable housing and falling home ownership, we’ve seen a vigorous public debate that has drawn in all the political parties, and a myriad of other voices from the property industry to ratepayers to Generation Zero, and planners of course are smack bang in the middle of this debate.

Two things are increasingly clear. First, pretending Auckland’s woes are inevitable or that the city is a victim of its own success, won’t wash. When our housing is less affordable than Tokyo, New York and London, and it takes 50 years to pay off the average home, something is seriously wrong.

There is no silver bullet. The mess housing is in is a result of multi-layered policy failure.

Fixing the crisis is going to take bold and sustained reform on several fronts.

We need to crack down on speculators, starting off by banning non-resident foreigners from buying existing homes.

Government needs to be willing to intervene in the market on an ongoing basis to deliver the volume and quality of affordable housing needed. Currently an accumulated shortfall of 30-40,000 in Auckland.  Labour believes a big bold policy like Kiwibuild is needed to flood the market with high quality affordable homes.

We also think that particularly in Auckland we need to scale up our ability to deliver master planned mixed-income, mixed-tenure and mixed-use urban renewal projects.

An urban development authority that manages the Government’s urban land portfolio, and has the powers and tools to establish project specific master planning agencies could be the way to do this.

But it is not just Auckland that would benefit from this approach. It could be the way forward in regional centres with aging population and out of date housing stock.

Already in parts of south Dunedin, drainlayers can only fix drains at low tide. A master planned approach to urban renewal could being central and local government together to find solutions.

We have to make renting better.  We need minimum standards to make all rentals warm and dry, and encourage more security of tenure.

And we need to get serious about ending homelessness.

But this morning I want to share with you Labour’s ideas on reforming the planning rules, and the way infrastructure is financed, to add to our comprehensive set of policies designed to fix the housing crisis.

Our commitment is to free up the restrictions on density, reform the use of urban growth boundaries to stop them driving up section costs, and modernise the way infrastructure for development is financed.

We believe these three changes will allow the property industry to build more and build better.

It will allow the market to be more responsive to demand.

Crucially it will allow more affordable housing to be built in places where people want to live.

First, we will publish a National Policy Statement under the Resource Management Act that will for example, direct Auckland Council to free up the rules on intensification in its Unitary Plan, because it is a matter of national importance.

The detail of land use rules is rightly a matter for local communities and their elected representatives in local government, but overly restrictive rules on height and density shut down housing affordability and choke off supply.

That has damaging effects for future generations locked out of affordable home ownership, and fuels a housing bubble that is harmful to the nation’s economy.

Hopefully in Auckland the Council and the Independent Hearings Panel will sort this out, but we believe it is right for central government to have a say on these issues and a National Policy Statement is the best way to do that.

Being smart about urban growth boundaries is the next big challenge. Over the last 25 years the urban boundary, along with the density restrictions, have stopped Auckland building up and out during a time of rapid population increase.

It created a pressure cooker which found its only release in skyrocketing section prices.

The big problem with the urban growth boundary is that it creates an artificial scarcity of land that drives up section prices, creating wonderful business opportunities for land bankers.

We believe there are better ways to manage growth on the city fringes, particularly more intensive use of spatial planning in growth corridors.

The key to making both these measures work is reforming the inefficient and expensive way infrastructure is financed.

Currently all of the infrastructure costs within a new development, and a share of the connecting infrastructure through development contributions, are financed by the developer and directly passed on to the home buyer, and paid off through their mortgage.

This adds tens of thousands to the price tag of the new home, making it even more unaffordable. Worse, the higher price of land is substantially capitalised into the value of all homes in the market.

Our policy is to finance infrastructure using local government bonds paid off through a targeted rate on the properties in the new development.

Bonds are a much cheaper option than funding it through your mortgage.

They allow you to spread the cost over the lifetime of the asset. It is fairer and more efficient.

Importantly the targeted rate ensures the infrastructure costs of a new development land with the new property owners, so the ratepayer at large is not subsidising developments in places where it might be more expensive to service.

And by relieving developers of the job of financing infrastructure it removes some of the risk and cost that can slow or jeopardise developments.

Interestingly the Productivity Commission looked at infrastructure financing and settled on a very similar position to ours. Sadly, Building and Housing Minister Nick Smith dismissed the idea out of hand.

Bill English and Nick Smith have been blaming the RMA for expensive housing for ten years now.

After seven years in government they have not yet done anything to tackle the substantive ways that Council planning rules block development: density restrictions, urban growth boundaries and infrastructure financing.

In fact for the last several years the National Government has been on a fruitless quest to weaken the core environmental principles of the RMA. They have not yet been able to get support from the country or the Parliament for these changes, and have wasted years in the process.

Labour’s policy of a National Policy Statement could have addressed the critical issues years ago.

So, there are three practical proposals that under an Andrew Little-led government will clear away the road blocks to building more and building better.

They sit alongside a suite of other measures: cracking down on speculators, large-scale master planned urban renewal projects, a massive government-backed building programme to deliver 100,000 affordable homes for first home buyers, making all rental properties warm and dry, building more state housing, and the provision of emergency housing to end homelessness.

There is nothing inevitable about the housing crisis. The solutions are all there. We just need a Government with the political will to embrace reform.