Once were Rogernomes; how 1980s thinking has changed at the Productivity Commission

If you drill into the Productivity Commission’s report on urban planning, there are two unexpected sections.

That is, sections that would be unexpected by those who know who makes up the Commission.

Both its chair, Murray Sherwin and a member, Graham Scott, are veterans of the Reserve Bank and Treasury during the Rogernomics’ years and are regarded by many on the left as high priests of neo-liberalism.

So it would surprise many of those critics to find that the report deals at some length with what it argues are the social inequities brought about by planning.

“Residents who earn more and are more educated tend to cluster in the inner suburbs and in the suburbs with desirable natural attributes, particularly in Auckland and Christchurch,” it says.

“In contrast, a large proportion of residents who earn less and are less educated tend to cluster in the outer suburbs.

“These spatial inequalities can contribute to social exclusion, where residents in poorer or less-educated neighbourhoods face socio-economic barriers.”

At first sight, those consequences would seem an acceptable outcome to a Productivity Commission whose over -arching goal is the same as that of the Rogernomes back in the 80s; economic efficiency.

But that’s not the way Sherwin sees it.

He points to the Act which governs the Commission and requires that it carries out inquiries into productivity as it affects the wellbeing of all New Zealanders recognising the diverse nature of the New Zealand population.

“That’s it; it’s about lifting living standards, lifting well-being.”

He concedes that the Commission is made up of economists.

“You expect a Productivity Commission to see economics as its key discipline, which we do, but we deliberately go after some other key disciplines as well.

“You would expect us to have a strong focus on markets matter, and how to be careful about how state interventions are made and to be sure that you drive the benefits that you think you are going to drive.

“And you’d expect us to be very open on trade and competition because competition is the big driver of productivity.”

He can see how those bits might cause people to suggest that the Commission is simply trying to continue the debates of the 80s.

“But we are pretty careful when we think about our mandate being about the well-being of the wider and diverse New Zealand population.

“In all of these inquiries that we have delved into you keep finding really perverse outcomes from Government and regulatory interventions.

“In housing and urban planning, it’s the poor who get really screwed.

“It’s the rich who will take care of themselves and probably profit from the system.”

He has found the same thing in education where the middle class have captured most of the state assistance and in social services, despite huge sums being spent, the “really needy” were not getting the assistance they needed.

“It’s really about trying to identify those things and finding out why it is coming about from well-meaning and well-intentioned interventions and what you have to do differently.”

The report contains a graphic example of how the middle class can capture a social process.

Submitters to Auckland’s Long Term Plan were 62% male, 28% were over 65 and 80% were European (compared with only 3.7% Maori).

“When you look at who submits and who engages in the process, it is overwhelmingly male, pale, stale and wealthy.”

There is an entire chapter in the report that deals with Maori issues.

“Our view was that if there was ever an area where Maori and Treaty obligations had to have a place it was around land use planning.

“It’s hard to avoid that thought, and you look around, and you see some really quite constructive engagement developing in some Councils and others that just haven’t got there.

“We’re a bit softly softly on this, let the good examples shine through and grow and highlight the deficiencies on the ones that aren’t working.

“But we do think there is a place for Maori to be right there engaged in this.”

There are areas that the Commission clearly did not have time to investigate in the kind of depth it might have liked — particularly around the Local Government Act and the Land Transport Act — but even so, 516 pages is a pretty daunting report by anybody’s standards.

The challenge now is for it avoid the fate of the Richardson Report on Social Policy commissioned by the 1987 – 90 Labour Government which David Lange suggested might make a good door stop.

Sherwin says that when now Prime Minister Bill English established the Productivity Commission

“Bill English said to us he had book shelves full of huge tomes about productivity, but he couldn’t act on any of them.

“What he wanted was for these deep dives that we do to come out with actionable stuff that the Government could do to make a difference.

“We’re not going to solve it all at once, but we’re going to step our way through it, nibble away at all these bits and pieces as we go.”

So the report on planning has some big proposals — spatial planning, linking greenfield land release to land prices, targeting rates to infrastructure costs and possibly even value increases, various new ways of having infrastructure paid for by those who use it, changes in the role of the Environment Court and perhaps most importantly a call for a swing away from an overly prescriptive planning process.

In a way, not all of this is rocket science, as Labour has pointed out.

Many of these ideas are already conventional wisdom among those who are frustrated with current urban planning procedures.

But so far the Government has moved slowly to implement change in the Resource Management area.

It took till the King Salmon case decision in 2014 for the Government to embrace the idea of using National Policy Standards to over-ride restrictive local plans even though planners and academics had been calling for this to happen for some time.

The Resource Legislation Amendment Bill which is expected back in the House next week has been tied up in its Select Committee for almost a year as the Government tried to get the numbers to pass it.

That’s why bodies like Environmental Defence and the Property Council are calling for an in-depth debate on the Commission’s report; the Auckland EMA and Infrastructure NZ have suggested that debate be channelled through a Royal Commission.

But the problems are urgent. So how long have the politicians got?

“They’ve got two decisions.

“Do we start again with a new Act and this report is intended to give them some basis for making that consideration and if we start again what would it look like.

“So I would think, are we going to go for it I think they probably will.

“I would have thought it would take them two or three years to work their way through to test these principles, refine them and then craft up a piece of legislation that could make its way into the House.”

Ultimately, as one Auckland business lobbyist who has been participating in the process, put it, the objective of this report is to unlock Auckland’s prosperity.

That can’t happen with soaring house prices and with the city’s population constantly stuck in traffic jams.

That’s why this report is so important and why the work that the Commission has been doing is so important.