Reserve Bank calls yesterday for the Government to speed up Resource Management Act reform ignore a simple reality.
The Government does not yet have the votes to get any changes to the Act through Parliament.
The calls came in a widely flagged speech by Reserve Ban Deputy Governor Grant Spencer to the Northern Club in Auckland in which he said that house prices in the city had gone up by 24% over the past year.
“For the Reserve Bank, we added this to the “What keeps you awake at night?” category some time ago, “he said.
“There are good reasons to think that the Auckland market poses an increasing threat to financial stability.”
Mr. Spencer said the main demand pressure on Auckland housing was immigrants — he estimated that 30% of all property sales in Auckland each year were to immigrants.
But he said low interest rates were also a factor.
“Interest rates have been a key driver of demand, particularly investor demand,” he said.
“Investor demand has become a growing factor in the Auckland market over the past year, and this has exacerbated price pressures arising from the underlying physical shortage.”
Mr. Spencer said the bank estimated that investors accounted for 41% of all Auckland market sales in June 2015.
AUCKLAND SHORT OF 15 – 20000 HOUSES
But ultimately the Bank wants to see the physical shortage of houses addressed. Mr. Spencer said the Bank estimated that Auckland was short of 15 – 20,000 houses but building only 8300 a year.
“The key issues remain: a limited supply of land ready for building; restrictive planning processes, and a lack of coordinated planning in infrastructure development.” he said.
He said that proposals that could improve the housing supply included the promotion of less restrictive planning rules and streamlined planning processes.
“For example, reviewing and relaxing rules in district plans, clarifying the RMA to include land use for housing as a priority, and ongoing RMA reform to streamline plan development
“Much more rapid progress in producing new housing is needed in order to get on top of this issue.”
But where that progress involves changing the Resource Management Act, there is a problem.
ACT SAYS KEY MORIBUND ON RMA – DUNNE STILL UNDECIDED
ACT’s David Seymour spelt it out yesterday in the party’s weekly newsletter.
“He said as far as RMA reform was concerned Mr. Key was moribund.
“He has sixty votes with the support of ACT but the concessions needed to get Peter Dunne or the Maori Party will make any RMA reform meaningless,”he said.
Mr Dunne told POLITIK last night that he was unwilling to announce any position on the RMA till he had seen the reforms that Environment Minister Nick Smith was proposing.
He said that Dr Smith was proposing about 39 changes in all.
“The prime Minister has previously agreed an exposure draft of the Bill will be released,” he said.
“I want to see that before committing further.
“I do not want them to use process changes to make backdoor changes top Sections 6 and 7.”
Sections 6 and 7 set out the principles and objectives of the Act. They can be used as a template to run over any decision made under the Act but the Government initially wanted to change them so they included taking economic considerations into account.
Both the Maori party and Mr. Dunne opposed this.
The Prime Minister has since withdrawn that proposal.
And it now working on changing the rest of the Act so that it can get the votes of either the maori Party alone or preferably the Maori Party and Mr. Dunne.
MAORI PARTY SAY CHANGES SHOULD NOT BE PASSED BY ONLY ONE VOTE
The Maori Party’s Co-Leaders, Te Ururoa Flavell and Marama Fox say “We know there is considerable pressure and need for this Government to address the housing shortage, particularly in Auckland.
“However, one intent of the RMA, is to protect our environment for generations to come and this must remain paramount,” Te Ururoa Flavell said in January this year. “
“We’re supportive of streamlining the consents process but not at the expense of giving proper consideration to the environmental impacts of development or reducing opportunities for public participation in decision-making processes. “
Meanwhile Marama Fox said that local councils had a vital role to play in making this process cheaper and easier.
“Any reform of the RMA shouldn’t be regarded as a magic bullet to fix this country’s housing problems,” she said.
“The Māori Party says any proposed changes to the RMA needs a broad consensus of the Government’s support parties.
“Any reform of such an important piece of legislation shouldn’t be passed with a majority of one.”
Plainly the Greens will oppose any changes to the ACT but NZ has indicated they could be interested in supporting changes to make the planning consenting process more streamlined.
However the uncertainty over the votes in the House explains why Mr. Smith is preparing a “Plan B” which would involve a new National Policy Standard on urban development which could be implemented by a simple Cabinet decision.
He is replying on a Supreme Court decision from last year – the so-called King Salmon decision – to develop the Standard.
But the law springing out of that decision is still settling down with lengthy legal debate on it featuring in the recent appeal against the decision to stop the Basin Reserve flyover.
In the meantime there is little likelihood of any regulatory or legislative change to the building consent process in Auckland till the end of next year at the earliest.
There may still be a lot of sleepless nights for the Reserve Bank.