Local Government’s Devil’s Choice

A major problem for local government in New Zealand is that the paradigm they are working in cannot solve the problems that city dwellers care about.

Their main piece of legislation -The Resource Management Act is a negative planning tool that can only relax or tighten restrictions on land use -mostly private property land use -local and central government lacks the institutional framework to build the urban environment itself.

This gives local government a devil’s choice.

If land use restrictions are relaxed then environment harms are exacerbated, like increased CO2 emissions from excessive commutes, chronic traffic congestion and farmland lost to urbanisation -leading to a popular backlash.

If land use restrictions are tightened then economic harms like the housing crisis worsen -leading to a different kind of popular backlash.

The solution is to change the paradigm and only central government can do that.

Bernard Hickey the managing editor of Newsroom, believes central government only has two choices due to the high cost infrastructure -either the central government pays or central government shares its taxation revenue sources with local government.

The only sustainable solution is for either the central Government to stump up for the infrastructure using its own balance sheet, or for the central Government to share some of the centralised revenue such as GST and income tax so Auckland could borrow more and not breach the 270 percent of revenue limit.

All the rest of the debate is just noise.

I have a lot of sympathy for Bernard Hickey’s position because for a long time I believed in it.

But I am less certain that infrastructure funding is the chief constraint restricting the building of new housing.

I believe there is a third paradigm choice.

What if New Zealand applied the principle that housing growth paid for its own infrastructure provision, using tools like targeted rates to pay for infrastructure and voluntary land acquisition techniques to affordably assemble land for housing?

And what if central government created a new entity that had no anxiety about using these tools? An entity that isn’t constrained by a ‘negative planning’ paradigm. An entity that can embark on ‘positive planning’ to master plan and build the urban environment.

I believe that Phil Twyford’s policy work with his new Ministry of Housing and Urban Development and its Urban Development Authority is headed in that direction.

It will be interesting to see how much progress Phil Twyford makes and if he has to resort to one of Bernard Hickey’s choices.

Overseas in Japan for instance, they have learnt how to build housing and city infrastructures like commuter rail without subsidy.

From my ‘building walkable communities around rapid transit’ perspective an unshackled Urban Development Authority could be a successful route out of the devil’s choice trap.

Trying to optimise amenity and affordability values for urban areas

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