NZ POLITICS DAILY: Blue-Green battle over housing crisis and RMA

A blue-green battle is looming over housing affordability and the reform of the Resource Management Act. This might well be one of the biggest political battles of 2015. After all, the issue of housing affordability is of significant concern to the general public, while the reform of the RMA is of particular concern to political parties, with the ideologies of National/Act and the Green Party looking to clash the strongest. 

A Blue versus Green debate
True blue Nats have never been comfortable with the RMA (despite it actually being passed by a National government). It has been seen as being too green (environmentally weighted) and not blue enough (economically weighted). For two decades, therefore, National’s traditional constituency of farmers and business have wanted to see the legislation turned into more of an Economic Development Act. 

That’s precisely what’s going to happen according to Chris Trotter, who says today that New Zealand Doesn't Need A "Developers' Charter". He argues that the new reforms signalled this week by Nick Smith ‘would be about using the legislative process to advance the interests of a section of New Zealand society which has, for more than sixty years, grown extremely wealthy (and dangerously influential) by convincing the National Party to continue following a model of sprawling urban development, based on the single-story detached dwelling and the private automobile’. 

Today’s Dominion Post editorial also expresses concern about the reforms being too business-friendly: ‘But when the politician says he wants more rights for property owners, and says his Government is "blue as well as green" and wants development along with conservation, many will feel queasy. These sound like National Party code for: we are here to help the developers’ – see: Scant detail on Nick Smith's proposed RMA overhaul. 

This rather scathing editorial raises the question of whether the planning laws can really be ‘streamlined without turning the law into a developer's charter, a green light for unfettered development and eco-destruction’. Overall, the Dominion Post argues for scepticism towards the Government’s reform agenda.

According to an ODT editorial, Heeding housing advice, there is an trade-off between economic and environmental values: ‘It seems inevitable there will be some trade-offs, but there is little doubt the major housing crises in our two biggest cities will dictate some big policy changes in order to restore our supposedly egalitarian society to one in which the average family can afford to buy a home - and then to live a reasonably comfortable existence when they have done so’.

There is no doubt, according to the NBR’s Rob Hosking, that in understanding National’s need to reform the laws, ‘the wider economic issue is more significant. The RMA has long been a bugbear of business’; ‘the burden on firms and farms has been high’ – see: Nick Smith declares full speed ahead on RMA reform (paywalled).

A column by Hosking last year, Why the PM 'parked' RMA reform (paywalled), also explained the importance of the reforms for National: ‘The RMA changes are in fact crucial to National's overall economic programme. Announced by Environment Minister Amy Adams at the party conference last year, the nub of the changes involves putting economic development considerations on an equal footing with environmental considerations when considering use of resources. At present, environment considerations over-ride economic ones’.

How radical will RMA reform be?
How contentious will the RMA reform battle be? That depends how radical the Government’s reforms will be, and so far Nick Smith has been entirely vague on the details. 

There is some reason to believe that the Government will be toning down the reforms it had wanted to introduce in its last term, with John Key promising late last year that the reforms would be ‘moderate and pragmatic’.

For a very good backgrounder on RMA reform agenda, see Pattrick Smellie’s post-election article, What will be done with the RMA?

In his announcement of the reforms, Nick Smith said that ‘tinkering with the RMA won't do’ and that ‘He expected "intense discussion" over some of the "hundreds" of amendments to the existing legislation’. According to Hamish Rutherford and Kelly Dennett, ‘Smith signalled that National was reviewing the most contentious of its proposed reforms of the RMA, covering changes to the act's principles – a move critics have argued would aid development - but otherwise the tone of today's speech was consistent with the last term’ – see: National pushes on with Resource Management Act reform. 

According to Brent Edwards there are expectations of more major reforms, and ‘It is likely that National has been emboldened by last year's election result’ – see: Powerplay.  

Edwards also reports Peter Dunne’s disquiet: ‘National's blunderbuss attempts to obliterate the RMA, egged on by ACT which fears National is not going far enough, are obscuring the vast areas of agreement for change across the political spectrum, upon which a responsible package of change could be developed’. It’s likely that National’s support partners – apart from Act – are seriously unhappy about the way in which they are being sidelined in this week’s manouveres by National.

Could it be that the Government’s proposed reforms will actually be far too mild? That’s certainly the view on the radical right, with bloggers expressing some support for the shift, but bemoaning, to various degrees, that it won’t go nearly far enough – see Peter Cresswell’s RMA reform? Mush, without any details to give it form, Eric Crampton’s Auckland SimCity, and David Farrar’s RMA reform. 

What will the other parties do?
The sidelining of National’s support partners, the United Future and Maori parties, bodes ill for the coming reform, according to today’s Herald editorial, RMA move too important for bare majority: ‘This suggests National and Act are pressing ahead with the most contentious element of its proposals - the insertion of economic considerations into the act's stated purposes - which the Maori Party and Mr Dunne would not support in the previous term’.

Vernon Small also writes about National building support for their changes in his column, Smith lays some bait lines on RMA remodeling. He suggests that National are outmaneuvering some of the parties, and will seek to snooker Labour: ‘Smith and Prime Minister John Key are trying to sucker Labour, in particular, into overdoing their opposition. To make it as tricky as possible they are setting the reforms within the wider context of affordable housing’.

At the moment the Greens are making the biggest opposition to the reforms, and this is likely to continue to be the case due to the strong blue-green ideological dynamic at play. Labour are being cautious in their response but they will need to take make a more decisive response at some stage. There will be some pressure to fall behind National – see, for example Nevil Gibson’s Why Labour must support RMA reforms (paywalled). He says, ‘The key will be the attitude of Labour leader Andrew Little and his intention to restore a pro-growth and pro-development agenda to a party that has a reputation for being more green than red’.

Is RMA reform really the solution to expensive housing?
‘The Government is doing something about unaffordable housing’ - that’s the public response National is hoping to gain from this reform exercise. But there are many expressing strong scepticism about how much difference these reforms could really make.

Perhaps the most sceptical is John Armstrong who has argued this week that the RMA has become an easy scapegoat: ‘Got a problem? Then blame it on the Resource Management Act. When it comes to political whipping boys (or girls), few pieces of legislation get whacked with such alacrity and regularity as the RMA’ – see: We all know the act is not the problem. 

Armstrong says that that ‘Smith is using the RMA as a smokescreen’, and suggests that the reform debate needs rather more complexity than we are being offered.

So, should regulation be seen as a bad word? Writing in praise of regulation, Greg Presland gives an exaggerated idea of what it might mean if we jettisoned such constraints entirely: ‘Obviously if we had buildings with lower ceilings and apartments without balconies prices could reduce.  And smaller lot sizes will reduce cost.  We could even go as far as removing windows in apartment buildings and insist on footpaths and road berms being removed.  But would you want to live there?  Or would you want to live down the road from such buildings?’ – see: Nick Smith’s RMA reforms – low cost housing in Epsom?

And of course, it has to be asked whether the RMA really is making housing more expensive. The Treasury-commission research publicised this week certainly had some shortcomings, and the Eye of the fish blogsite looked at how much councils charge for Resource Consent – see: RMA vs Affordable housing. It asked, ‘Have you ever been charged $30,000 for a Resource Consent application? Has anyone? Is that not, like, an exaggeration? Or just a lie?’

Labour blogger Rob Salmond has also made a strong case that the proposed RMA reforms will hardly make a difference to the rising costs of housing, calculating that ‘Even if those three heroic assumptions [of the Government] come to pass, Auckland house prices would drop (once you average out houses and apartments) by about $10,000, one off. Which would make Auckland's "severely unaffordable" score of 8.2 in the Demographia survey drop amazingly to a "severely affordable" 8.06’ – see: Nick Smith's gambit. 

The RMA reforms and their ability to produce cheaper housing are therefore easily mocked, and Scott Yorke is doing just this in his blog post, On the RMA changes. 

The forgotten renters
The housing debate focuses almost exclusively on the plight of homeowners and those entering the market. But the situation of renters is normally ignored. 

Yet it’s the rental market that might benefit the most from reform. According to NZIER economist Shamubeel Eaqub, such reform could be a partial solution to the current housing crisis. In Anne Gibson’s article, Property: Mad truths on home prices in Auckland, Eaquab’s views are reported: ‘We must make renting more attractive. Tenancy policy and agreements provide flexibility but this is a barrier to regarding renting as a substitute for owning. More balanced tenure and tenants' rights in Britain and Germany support renting as a normal alternative’.

In fact, according to Pattrick Smellie, the Government needs desperately to focus on reforms to improve rental housing quality – see: A reform that would give healthy gains. Smellie’s must-read article bolsters calls for a mandatory warrant of fitness for private rentals, and he explains why the quality of housing is so important. 

Smellie also attempts to explain why such initiatives are unlikely: ‘Calls for a mandatory warrant of fitness for private rentals seem to stall at every turn. The tempting conclusion is that small-time real estate investors and landlords are part of the core National Party vote, making the imposition of new regulations on this sector politically unpalatable.  It might also look contradictory to impose new regulation in one area of housing when the aim elsewhere is to reduce, or at least streamline, the red tape mountain’.

See also, Asher Goldman’s blogpost, Instability, home ownership and kids, in which he argues that ‘Pro-renter policies – those that improve the quality of rentals, the affordability of renting and the stability of renting – are a must for any future Government’.

Big solutions required
The extent of the housing crisis appears to mean that big solutions are required. No doubt there will be more calls for larger state housing provision and building. Already, the Dominion Post is showing some support for this. In its editorial, Many facets to housing solution, the newspaper says, ‘It seems clear that something more is required, and that probably means a decision by the Government to spend money on increasing the housing stock. The Government has ideological objections to this. But reality might force it to reconsider’.

The Greens are also pushing this, with Julie Anne Genter saying, ‘The Government has the ability to build affordable homes and address the housing crisis now but it is simply not doing it. New Zealand needs a major state home building programme, to meet the need for new homes and drive down high prices’ – see TVNZ’s 'There is no silver bullet to housing' - Housing Minister.

Of course, this is an age-old concern: the market isn’t delivering for the poor. This is well pointed out by social housing researcher, Elinor Chisholm – see her blog post, Building houses for poor people in 1912 and 2013. 

Finally, is it worth reevaluating the problem? According to scholarly blogger, Andrew Chen, the housing crisis might not be quite how it is portrayed. He applies some alternative calculations and comparisons and shows, for example, that ‘while house prices may not be affordable for many, the general trend is that they are becoming more affordable over the last four or five years’ – see: Property Price to Income Ratios. 

Furthermore, might we soon see the ‘housing bubble’ burst, effectively solving the problem? According to investor Brian Gaynor, the ‘massive momentum to the property market’ won’t last too much longer, and ‘it will come back 10, 15, 20 or even 25% and that will have a really devastating impact upon the New Zealand economy because of the high level of debt – see TVNZ’s NZ house prices could fall by up to 25% - Brian Gaynor.