The government-appointed New Zealand Productivity Commission has picked a fight with Western Bay SmartGrowth partners after suggesting their urban planning helped increase land prices.
The commission has described SmartGrowth, practised in Auckland, Tauranga, Hamilton, Wellington, Christchurch and other cities, as a containment policy that has had an adverse effect on housing affordability by limiting the availability of land for new homes.
An immediate release of land for residential development would ease supply constraints and reduce the pressure on prices, the commission recommended in its Housing Affordability report, released this week.
Western Bay partners, who adopted the SmartGrowth plan in 2004, reacted strongly, saying their urban planning was designed to manage growth over the next 40 years, linking land use, parks and reserves, transportation, infrastructure, business and residential development in an orderly fashion.
The Western Bay region is predicted to house 198,000 people by 2021 and 286,000 by 2051 - up from 130,000 in 2001.
Tauranga Mayor Stuart Crosby said the commission was naive in thinking that opening up more land would immediately solve the housing affordability problem - it did not understand the medium and long-term costs of doing that.
"My concern with the commission's work is that it rarely addresses the cost of infrastructure to service the new areas.
The cost has put an enormous debt burden on councils.
"We submitted to the commission's report, and I would claim our council knows more about the true cost of opening up land than the commission because of its experience and the data it has collected," said Mr Crosby.
He said the Western Bay SmartGrowth plan outlined "a sequential release of land and development; it's not about total containment.
"If you look at Papamoa, we are opening up Wairakei [subdivision] and then later the Te Tumu block.
"There is land that has been bought but not yet developed in Bethlehem, Ohauiti, Pyes Pa and Welcome Bay, and there are opportunities in Te Puke, Omokoroa and Katikati," he said.
Mr Crosby said: "I accept that housing affordability is a significant issue for New Zealand but land is only one part of the equation. Opening up more land won't necessarily improve the cost of housing.
The market is still ultimately in control of price, and in Tauranga the biggest barrier, in my view, to affordable housing is the covenants developers place on sections - they force people to build large homes," he said.
By 2050 there will be 36,000 people over the age of 80 living in Tauranga and "they don't want to be rattling around in a 250sq m house. One of the challenges is to look ahead and consider housing suitability for the ageing population."
Mr Crosby said his council had lowered the level of development contributions, and the market was re-addressing the price of section, in light of the economic slowdown.
"Some developers are failing and they will adjust their prices to meet the new market conditions," he said.
Ross Paterson, Western Bay Mayor, said his council provided advice to the commission and it had not investigated the cost of freeing up land and the infrastructure that would be required.
"It falls back to the local authority to fund that," he said.
"One of the biggest problems in this region is that wage levels aren't able to match the cost of housing."
Mr Paterson said SmartGrowth was working, but there might need to be one or two variations within the plan - such as balancing the residential densities in some areas, and giving developers the flexibility of releasing one or two sections earlier to help them with cash flow and financing their development.
Bill Wasley, independent chairman of SmartGrowth, said presently there was significant residential land available.
"That's why our 50-year strategy is related to land and infrastructure provision and associated funding. They all go hand in hand as a package."
He said SmartGrowth had provided certainty for developers and the community by drawing up urban limits.
"We have had to consider the rural significance to the local economy, and encourage residential development on land that is not required for agricultural and horticultural purposes."
Mr Wasley said a review of SmartGrowth was under way and would be completed by the middle of next year.
He said the plan might need to be more nimble or flexible in terms of opening up more land in some areas, both residential and industrial.
The review will also look at the opportunities of making more efficient use of infrastructure.
"Can we graft on to what is already there and increase the capacity of the pipes and pumps?" Mr Wasley said.
The productivity commission said in its report that the history of urban planning had evolved - from a narrow focus on land use provisions and ensured orderly urban expansion while maintaining a pleasant residential environment through to a heightened concern with environmental matters and other factors.
The introduction of growth management techniques is one method that planning has attempted to satisfy multiple economic, social, cultural and environmental objectives.
The increasing reliance on the principles of SmartGrowth to manage urban development meant planning was closely implicated in the impact of intensifying urban areas on housing affordability, the report said.