Government holds land development gun to Auckland's head: firing blanks says Twyford

Housing Minister Nick Smith has unveiled the government's biggest weapon yet in its attempts to solve Auckland housing unaffordability, with a National Policy Statement that lets it force local councils into making enough affordable land available for housing and business development.

The NPS, first promised in National's 2008 election manifesto, "is about a culture change to support development that connects planning decisions to economics," said Smith in a statement accompanying the draft NPS, which is now open for public submissions until July 15 and is intended to be in place by October, in time for newly elected local governments to implement it from later this year.

Although it seeks to recognise the public interest in housing being affordable over neighbourhood lobbying that often prevents it, the NPS contains no specific guidance on what ratios of affordability should be applied and leaves open the question of how infrastructure for new development should best be funded, leading Labour Party housing spokesman Phil Twyford to accuse Smith of "firing blanks".

"The land-bankers and speculators will read the NPS and rub their hands with glee," said Twyford. "It fails the two crucial tests. It has nothing to say about how infrastructure will be financed, leaving Auckland ratepayers to wonder whether they will be left to pay the $17 billion cost of new infrastructure needed to support Auckland's growth.

"And for all National's huffing and puffing about getting rid of the urban growth boundary, it says nothing about abolishing the boundary and replacing it with a smarter way of managing urban growth."

The NPS will require councils to over-provide by between 15 and 20 percent the amount of land it estimates is needed for new housing and business growth, based on quarterly statistics that they will have to start collecting, including "housing affordability indicators, resource and building consents, price signals and business land vacancy rates."

"We will be particularly focused on section prices," said Smith, who pointed to a 350 percent rise in the average price of an Auckland section over a period when building costs rose 78 percent.

Councils governing fast-growing urban areas such as Auckland are targeted with extra responsibilities. They will have to provide 20 percent more land than estimates suggest is needed. This is to encourage competition for new development land and "set minimums for sufficient residential development capacity in accordance with their housing assessment, and incorporate them into regional policy statements".

High-growth areas must also have "a future land release and intensification strategy" - the document's closest reference to the underlying desire for cities such as Auckland to grow both "up" and "out" - to ensure the minimum targets are met. By mandating a land release strategy, the NPS falls short of completely abolishing the Auckland Maximum Urban Limit, as Twyford and some economists have advocated as a way to end the radical difference in land values inside and outside the limit.

At a press conference announcing the changes, Smith dodged questions on whether failure to meet the requirements of an NPS could lead to the appointment of government-picked commissioners to replace the Auckland Council, whose decisions on the final version of the city's Unitary Plan are due mid-August. The NPS's timing is intended to demonstrate the government's determination that the Unitary Plan live up to requirements to speed up and lower the cost of residential construction in the country's largest city, which is straining at the seams at the height of an inward migration boom.

"We will cross that bridge when we come to it," he said of the commissioners question, saying he was confident "the powers of both the Resource Management Act and the Local Government Act will see issues of development capacity addressed." Smith's ministerial powers under the RMA also allow him to override decisions of local governments, on top of using NPSs to direct outcomes.

"The only long-term answer is more houses and this policy is about ensuring the ability to deliver enough homes," he said.

On infrastructure funding, Smith said reforms to local government legislation in 2013 opened up a range of funding options, including local councils issuing long-term bonds of the sort proposed by Twyford, who argues bonds and a targeted repayment by occupants of a new development would remove one source of land price inflation: when developers include the cost of infrastructure provision in the up-front section price.

The NPS also seeks to limit overly prescriptive council planning bylaws and regulation, saying all councils must assess "the cumulative impact of zoning, objectives, policies and rules and overlays in plans" and introducing a new "commercial feasibility" assessment.

(BusinessDesk)