Last Tuesday and Wednesday, Housing Minister Hon Chris Bishop and former Housing Minister Hon Phil Twyford tried to work out how to make one of the planning system’s most important housing reforms survive long after either of them has left Parliament.
They were not arguing about whether planning rules should stop creating artificial scarcity of urban land. They broadly agreed on that. Instead, they argued over how independent the planning system’s new land-market umpire should be, and what should happen when it finds a problem.
Two weeks ago, Bishop announced that the new planning system would include an independent economic umpire. The new Urban Land Market Officer would monitor how urban land markets are working, would provide determinations on whether those markets are competitive, and would advise government and councils on improvements.
‘Competitive urban land markets’ just means that planning rules should provide plenty of alternative places for doing things, rather than inflate prices through artificial scarcity of land zoned for particular activities.
That artificial scarcity can be directly responsible for high rents, and high land prices that follow.
When demand for apartments goes up, rents for existing apartments initially rise. When urban land markets are competitive and zoning is flexible, developers can build new apartments to meet that demand – checking that increase in rents. But when suitably zoned land is scarce, as it too often has been, rents keep rising along with the value of land with that scarce zoning.
Competitive urban land markets were a focus of Hon Twyford when he was Minister for Housing. And it is a goal of Hon Bishop’s new Planning Bill, which went through its committee stage in Parliament last week.
As Bishop’s press release had put it, the new Planning Bill would create a statutory obligation on councils to ensure that planning rules do not create an artificial scarcity of developable land. The Officer would determine whether councils were meeting that obligation. And an adverse determination would require the local authority to take action to address it.
But building a truly independent office is tricky. The new planning system places substantial control in the hands of the Minister. Every plan in that system must be consistent with the direction the Minister might set in national policy direction and national standards. If a future Minister wants to restrict housing, the Officer still needs to be able to do their job.
There has been a fair bit of reporting on differences between National and Labour on parts of the new planning framework. Compared to what National has proposed, Labour would like stronger environmental protection, fewer provisions compensating landowners when councils restrict land use, and less ministerial control.
But early in last week’s session at Parliament, Twyford noted Labour’s support for the parts of the Planning Bill bringing competitive urban land markets. He described cross-party consensus on those provisions as a “bright spot” in the country’s overall housing policies.
Twyford presented a series of late amendment papers aimed at strengthening both the independence of the Urban Land Market Officer and the consequences of that Officer’s determinations.
Discussions between Bishop, in the hot seat defending the bill and his own set of amendment papers, and Twyford suggesting alternative ways of approaching the problem, represented Parliament at its best.
Parliament’s urban nerds were trying to figure out how to build the best and most durable approach to housing affordability for a planning system that may stand for decades.
There was merit to many of Labour’s proposed amendments strengthening the system. But many of them seemed like matters requiring caucus or cabinet deliberation, rather being able to be settled in the room.
Useful amendments failed. But those amendments failing on the night matters less than what the debate established.
The debate strengthens the credibility of an important part of the new planning system. Whatever other changes a future Labour-led government might want in the new planning system, it will be less likely to retreat from the central principle of competitive urban land markets and housing affordability.
Bishop’s foundations should stand and can be built on over time. If that happens, the planning system will no longer tolerate city plans that inflate costs by unduly restricting where housing can be built. And other markets, like retail grocery, will also see fewer zoning-based impediments to competition.
Whoever holds the portfolio after the election will have responsibility for the national instruments that will guide the system. The election will decide who holds that role, and there is plenty of reporting on everyone’s guesses about who might win that broader race.
But for voters whose highest priority is housing affordability, the biggest victory came in an otherwise unreported session of Parliament last week, affirming cross-party support for competitive urban land markets.
Dr Eric Crampton is Chief Economist at the New Zealand Initiative. This article was first published HERE
Two weeks ago, Bishop announced that the new planning system would include an independent economic umpire. The new Urban Land Market Officer would monitor how urban land markets are working, would provide determinations on whether those markets are competitive, and would advise government and councils on improvements.
‘Competitive urban land markets’ just means that planning rules should provide plenty of alternative places for doing things, rather than inflate prices through artificial scarcity of land zoned for particular activities.
That artificial scarcity can be directly responsible for high rents, and high land prices that follow.
When demand for apartments goes up, rents for existing apartments initially rise. When urban land markets are competitive and zoning is flexible, developers can build new apartments to meet that demand – checking that increase in rents. But when suitably zoned land is scarce, as it too often has been, rents keep rising along with the value of land with that scarce zoning.
Competitive urban land markets were a focus of Hon Twyford when he was Minister for Housing. And it is a goal of Hon Bishop’s new Planning Bill, which went through its committee stage in Parliament last week.
As Bishop’s press release had put it, the new Planning Bill would create a statutory obligation on councils to ensure that planning rules do not create an artificial scarcity of developable land. The Officer would determine whether councils were meeting that obligation. And an adverse determination would require the local authority to take action to address it.
But building a truly independent office is tricky. The new planning system places substantial control in the hands of the Minister. Every plan in that system must be consistent with the direction the Minister might set in national policy direction and national standards. If a future Minister wants to restrict housing, the Officer still needs to be able to do their job.
There has been a fair bit of reporting on differences between National and Labour on parts of the new planning framework. Compared to what National has proposed, Labour would like stronger environmental protection, fewer provisions compensating landowners when councils restrict land use, and less ministerial control.
But early in last week’s session at Parliament, Twyford noted Labour’s support for the parts of the Planning Bill bringing competitive urban land markets. He described cross-party consensus on those provisions as a “bright spot” in the country’s overall housing policies.
Twyford presented a series of late amendment papers aimed at strengthening both the independence of the Urban Land Market Officer and the consequences of that Officer’s determinations.
Discussions between Bishop, in the hot seat defending the bill and his own set of amendment papers, and Twyford suggesting alternative ways of approaching the problem, represented Parliament at its best.
Parliament’s urban nerds were trying to figure out how to build the best and most durable approach to housing affordability for a planning system that may stand for decades.
There was merit to many of Labour’s proposed amendments strengthening the system. But many of them seemed like matters requiring caucus or cabinet deliberation, rather being able to be settled in the room.
Useful amendments failed. But those amendments failing on the night matters less than what the debate established.
The debate strengthens the credibility of an important part of the new planning system. Whatever other changes a future Labour-led government might want in the new planning system, it will be less likely to retreat from the central principle of competitive urban land markets and housing affordability.
Bishop’s foundations should stand and can be built on over time. If that happens, the planning system will no longer tolerate city plans that inflate costs by unduly restricting where housing can be built. And other markets, like retail grocery, will also see fewer zoning-based impediments to competition.
Whoever holds the portfolio after the election will have responsibility for the national instruments that will guide the system. The election will decide who holds that role, and there is plenty of reporting on everyone’s guesses about who might win that broader race.
But for voters whose highest priority is housing affordability, the biggest victory came in an otherwise unreported session of Parliament last week, affirming cross-party support for competitive urban land markets.
Dr Eric Crampton is Chief Economist at the New Zealand Initiative. This article was first published HERE
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