NIMBYism highlighted as major problem

Jason Krupp of The New Zealand Initiative highlights NIMBYism as a major problem, within an opinion for the New Zealand National Business Review

The housing problem is institutional failure at the local level, where the local authority loses control of its costs.

This in turn leads to strangling land supply and the imposition of spurious Development Levies, as part of the mix gathering additional revenues.

The Christchurch earthquakes and the performances of the larger Christchurch City Council … and the smaller adjoining units of Local Government, being Waimakariri and Selwyn illustrate this … refer STATISTICS NEW ZEALAND BUILDING CONSENTS …

http://www.stats.govt..nz/browse_for_stats/industry_sectors/Construction/building-consents-issued-info-releases.aspx

There are likely many more Nimbys and Greenies out in Waimakariri and Selwyn (particularly with lifestyle blocks), than Christchurch … yet the former two smaller units of local government proved responsive to development needs following the initial  earthquake events.

It is simply a matter of “following the numbers” to ascertain the problems and solutions.

The two major problems are artificial zonal scarcity values and the inappropriate financing of infrastructure.

Mr Krupp makes no mention of the artificial scarcity values above true rural values on the fringes of our metros … being for example …  roughly $500,000 a hectare on the fringes of tiny Rolleston, about a million bucks on the fringes of Christchurch and $2 million on the fringes of Auckland.

There is no mention within Mr Krupp’s opinion that the current Development Levies are inappropriate … for what should be blindingly obvious reasons of economic efficiency and intergenerational equity.

And further to this, that the Texas Municipal Utility District bond financing model is clearly the way to go.

Those who own the infrastructure should be responsible for its equity and debt financing and charge users levies / rates for its use.

The current system of  (the politically convenient and  deliberately mis-named … the developer is simply the intermediary) Development Levies with subdivider and builder margins thrown on top for bad measure … then “gifted” by new home buyers to large utility operators, is clearly a most inefficient way of financing infrastructure.

And unjust too.

Public services such as hotels and taxi services do not “break out” capital and operating costs when charging customers. We are not required to make capital gifts for these services.

No wonder Local Authorities and other monopoly utility providers commercial disciplines are weak, when their initial assets are gifted to them !

We should not be surprised that when it comes time to upgrade and replace infrastructure, these local authorities and other monopoly utility providers do not have the capacity to do so.

To illustrate, Christchurch citizens following the earthquake events are learning to their cost, about poor quality infrastructure that had not been maintained and upgraded.

The focus clearly needs to be instilling some structural, systemic and cultural disciplines in to the regulatory and infrastructure divisions of the local government sector.

Again somewhat surprisingly, Mr Krupp’s opinion makes no mention of the major Government announcement late October 2012, where the focus is on …

       Land supply

       Infrastructure financing

       Process … and …

       Construction costs

Why this omission ?

This major Government announcement late October 2012,  followed years of exhaustive public discussion from the time of the release of the first Annual Demographia International Housing Affordability Survey early 2005 … and the release of the Productivity Commissions Housing Affordability Report April 2012.

As Deputy Prime Minister Bill English made clear at the time of the October 2012 announcement, the Productivity Commission did not provide solutions. The Government engaged in extensive and meaningful  consultation within that intervening period.

This had been a 6 1/2 year process … up to the time of the major Government announcement October 2012.

Early 2013, Dr Nick Smith was appointed Housing & Building Minister, managing the Housing Accords and Special Housing legislation through the Parliament.

Following the late 2014 General Election, Dr Smith was given the additional responsibility (again) of the Environment portfolio, to manage the essential changes to New Zealand’s land use legislation, the Resource Management Act.

Soon after the release of this year’s 11th Annual Demographia International Housing Affordability Survey, Dr Smith and this writer discussed these issues on Television Ones Breakfast programme …

http://tvnz.co.nz/national-news/no-silver-bullet-housing-minister-video-6222167

http://tvnz.co.nz/breakfast-news/rma-reforms-not-enough-fix-housing-affordability-video-6222176

Polling by TV One Colmar Brunton late 2012 found that 75% of young and 63% of all New Zealanders were concerned about the excessive costs of housing.

The new Labour Leader Andrew Little on the day of his appointment 18 November 2014,  informed Party members recent polling illustrated an astonishing  97% of New Zealanders were concerned about excessive housing costs.

The public has made it clear …  politicians across the political spectrum must  work together in dealing effectively with excessive housing costs.

There are serious political consequences, if the housing issue degenerates in to stigmatizing Nimbys, Greenies and other protectionists on the Left.

It should not be a surprise that many communities within an urban environment are not supportive of high-rise and / or intensive development near them.

Even in “no zoning” urban environments such as Houston, Deed Restrictions will block them. And if these are not in place, howls of protest from a local community will make it clear to developers attempting to try it on.

No mention is made within Mr Krupp’s opinion of the protectionists on the Right … politically well-connected land-bankers and the like. They are a much greater problem than those on the Left, because of the financial incentives to the former, in misusing the political and planning processes to shut out the competition.

It is essential to keep the focus on the “nuts ‘n bolts” structural approach, from the foundation of the major Government announcement October 2012 … to ensure widespread public and political support.

As the fringes are freed up and artificial land price scarcities “evaporate”, there will be more than enough space within the appropriate areas of an urban environment for intensive and / or high-rise development to occur.

This is happening in Houston, with minimal community conflict and tension. Greater intensification means higher prices for land. That is incentive enough to allow more intensive and high rise development to occur … in the appropriate places with the consent of local communities.

ENDS

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