There is another blow for Nick Smith’s attempts to untangle the Resource Management Act and get more houses built,  particularly in Auckland.

It is just the latest in a list of events that suggest Smith’s promises of vastly increased new housing in Auckland is beginning to unravel and with it, quite possibly, his political career.

In a hard-hitting submission to the Ministry for the Environment Business New Zealand says Smith’s proposal to draft a National Urban Development standard will not work.

The standard would trump the RMA and in effect become the planning template for urban housing.

Clearly, the Government saw it as a way around the RMA.

But Business New Zealand’s submissions says it is likely to create even greater planning confusion “while failing to meet the objective of delivering land as and when the market demands it.”

Instead, the lobby group argues that existing urban limits should simply be removed.

That is also supported by both the Labour Party and ACT.

But BusinessNZ says it has concerns that a National Policy Statement (NPS) will not adequately achieve the objective of ensuring that land supply for housing and business development reflects changing market demands over time.

“ A gradual approach to dismantling metropolitan urban limits is insufficiently decisive to stem dramatic imbalances in land and house prices,” it says.


“Problems with undersupply of housing in some areas, notably Auckland, stem from overly restrictive planning.

“Land value should be set by its highest value use and markets should be allowed to find that value.”

The submission advocates a more market-based approach to housing provision,” as this is more responsive and flexible than a planning approach.”

“ The NPS focuses too much on planning and not enough on allowing markets to work.”

And the lobby group has repeated this approach in its submission to the Productivity Commission’s draft report on Better Urban Planning.

Its CEO,  Kirk Hope says individuals and companies should have more leeway to build and develop where they wish, as long as they bear any associated environmental and economic costs.

“Regulating should be used more as a last resort, where there is a clear public interest in doing so, and more consideration should be given to compensation for loss of property rights caused by regulation,” Mr Hope said.

He said funding of infrastructure needed a fresh look.

“Councils should receive better guidance on available funding tools to achieve better infrastructure.

“Rather than imposing new taxes it would be preferable for local government to explore working with the private sector in various ways to jointly build and manage affordable infrastructure.”

Areas, where BusinessNZ had concerns in the draft report, included the suggestion of reducing appeal rights, and also the suggestion of a Government Policy Statement on environmental sustainability, given the difficulty of accurately defining what this was and the reduction in certainty this could pose for business and household investment decisions.

The submissions are yet more questioning of the very fundamentals of New Zealand’s planning legislation.

When Smith launched the National Policy Standard in June, he said it would begin the process of dismantling the urban limits that Business New Zealand is complaining about.

But it does so slowly.

Over the long term Councils are required to provide 15% more land for housing  than population growth would require

 “This new urban development policy is part of the Government’s systematic dismantling of Auckland’s Metropolitan Urban Limit,” he said.

“The first step was providing for Special Housing Areas that enable developments to be approved in the interim contrary to Auckland’s old plans and rules.

However a month ago developers began to pull out of the Special Housing Area developments because they were required to ensure 10% of the houses they built were “affordable”.

Smith then said the SHA’s were only a temporary solution.

The second step was the fast-track process for a new Unitary Plan, to be completed in September.

That is currently held up again by the prospect of appeals.

“The third step is the Resource Management Amendment (RMA) Bill that adds new specific functions for councils to provide development capacity, and this proposed policy provides detail on how this is to be done. “

This Act is currently stalled in the Select Committee while everyone waits for the Cabinet to sign it off.

If centre right candidates do not win a majority on the Auckland Council this weekend, then the political pressure on the Government over Auckland housing is sure to intensify.

Whether the Prime Minister decides to keep Smith in the Housing portfolio when the expected Cabinet reshuffle happens early next year may well depend on both those elections and whether he can get some movement across his policies.