Because it has not delivered any answers on urban infrastructure, the National Policy Statement on urban development looks to have died on delivery.
The statement was released by Housing Minister Nick Smith yesterday and simply it sets up the monitoring on a quarterly basis of a whole raft of demographic and house and land price statistics which will feed into three yearly assessments of whether an area needs more land zoned for housing.
The assessments will be required from Councils in high and medium growth areas.
They will have to amend local plans and policy statements to take account of the statistical evidence with the intention that the Council should have provided for 20% more land over projected short and medium term demand.
But this emphasis on greenfields development comes at a price.
And that price is the infrastructure required to service it.
The Auckland Council pointed out that Auckland will require $17 billion of new infrastructure investment over the next 30 years to cope with projected growth.
That includes roads, rail, the so-called “three waters” — fresh water, storm water and sewage — along with parks, swimming pools and other amenities.
It is how all that in a new subdivision will be funded that is now the biggest unanswered question in the housing debate.
A Department of Internal Affairs study three years ago found that Councils were already charging developers $20,000 – $30,000 a section as a development contribution.
Mr Smith said the cost of water, the sewer, stormwater drainage and footp[aths should rest with the developer.
“While there are some developers who would love this to be picked up by others so that they can grab the windfall gains of converting the land into sections and have someone else do the work or pay for it, in my view that would be wrong.”
Mr Smith said the Government would pay “billions” for rail road and schools as a consequence of population growth.
“But Councils have to come to the party too,” he said.
“With each extra 10,000 homes that are built in Auckland, the Council gets an extra $25 million a year in rates.”
But Tauranga Mayor, Stuart Crosby, who was part of a Local Government New Zealand delegation which met the Minister yesterday morning for a preview of the proposal, told POLITIK the question of infrastructure funding was the elephant in the room.
“It has not been addressed in this piece of work,” he said.
He said that even after collecting developers’ contributions Councils were never on the positive side in economic terms when providing infrastructure for a new subdivision.
AHis Council was currently instaling a new waste water plant to cope with the high growth in Tauranga, and only 35% of that was able to be funded by developers; the rest came from rates.
Auckland Mayoral candidate, Mark Thomas, pointed to restraints imposed on Councils’ ability to charge developers for infrastructure as another problem.
These are part of the better Local Government programme and were introduced in 2013.
“Auckland has made provision for 110,000 new houses in greenfields areas around Auckland,” he said.
“However, these can’t be brought forward because of funding constraints.
“The statement implies council should be charging developers more for the cost of new developments, yet recent government development contribution policy changes have gone in the other direction.
“Council can no longer charge developers for libraries and swimming pools.”
The Auckland Employers and Manufacturers’ Association was also critical of the failure to address infrastructure funding in the Policy Statement.
“Our view is that infrastructure should lead development – rather than follow,” said EMA CEO Kim Campbell.
“There is still a mindset, that infrastructure should keep pace with growth and this needs to be reversed.”
The right wing New Zealand Initiative was harsher.
“The government’s draft national policy statement (NPS) on urban development, while a step in the right direction, will not fix Auckland’s housing crisis because it ignores infrastructure,” the business lobby group said in a statement.
“While the NPS is broadly headed in the right direction it is unlikely to make a material difference to housing affordability levels in Auckland by itself because it fails to address the real constraint on councils: infrastructure funding.
“The reason councils trickle out land supply for housing is that infrastructure is costly, and it is existing residents that have to carry these costs upfront.
“Even Minister Smith admitted it’s not a silver bullet – but without provisions for infrastructure, it’s really just firing blanks.”
POLITIK could not find one credible statement supporting the Statement all through yesterday afternoon from anyone.
Labour’s Phil Twyford would probably have got more support for his critiqueue of the plan.
“It fails the two crucial tests. It has nothing to say about how infrastructure will be financed, leaving Auckland ratepayers to wonder whether they will be left to pay the $17 billion cost of new infrastructure needed to support Auckland’s growth,” he said.
“And for all National’s huffing and puffing about getting rid of the urban growth boundary, it says nothing about abolishing the boundary and replacing it with a smarter way of managing urban growth.
“The NPS sets up a bureaucratic system for assessing the projected demand for housing and business land, and measuring that against the estimated capacity of land and dwellings. If the development capacity falls short, then the Council is expected to amend its plans to free up more land.
It was almost as if the Government realised it had lost this battle even before it had begun because two hours after Mr Smith’s press conference; the Finance Minister was confirming that he was talking to the Reserve Bank about income to debt ratios on mortgage lending.
Over the weekend, he told POLITIK that he thought the Reserve Bank and the Policy Statement could work together with the Statement affecting supply while the Bank managed demand.
The Bank though is likely to have much more impact because debt to income ratios can be implemented overnight if necessary.
The Policy Statement will now undergo a round of consultation and will be gazetted in October, but Mr Smith told the press conference he expected that it would work alongside the new Auckland Unitary Plan and the RMA Reform Bill, and he expected that would not be till the new Council met in November.
Given the lags written into the NPS, it is hard to see to it having much impact until well into next year – at the earliest.
That leaves the pre-election housing field to the Reserve Bank.