Bernard is an economics columnist for the NZ Herald

Bernard Hickey: Shooting for the housing moon

Building up, in intensified multi-storey apartments, is part of the ambitious proposed solution to Auckland’s crisis.
Building up, in intensified multi-storey apartments, is part of the ambitious proposed solution to Auckland’s crisis.

John F Kennedy's famous words about America's quest to be the first to the moon before the end of the 1960s were invoked at least once this week by New Zealand politicians talking about a "big hairy stretch target".

"We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organise and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too," Kennedy said on September 12, 1962, at Rice University football stadium in Houston. "To be sure, all this costs us all a good deal of money."

Nasa's budget had tripled in one year to US$5.4 billion ($7.6b) and the space programme went on to cost US$34b.

That didn't deter Kennedy, though, and his final sales pitch was aspirational as well as inspirational.

"But if I were to say, my fellow citizens, that we shall send to the moon, 240,000 miles away from the control station in Houston, a giant rocket more than 300 feet tall, the length of this football field, made of new metal alloys, some of which have not yet been invented, capable of standing heat and stresses several times more than have ever been experienced, fitted together with a precision better than the finest watch, carrying all the equipment needed for propulsion, guidance, control, communications, food and survival, on an untried mission, to an unknown celestial body, and then return it safely to Earth, re-entering the atmosphere at speeds of over 25,000 miles per hour, causing heat about half that of the temperature of the sun - almost as hot as it is here today - and do all this, and do it right, and do it first before this decade is out, then we must be bold."

There was an element of that crazy, bold ambition in this week's announcement the Government was committing to achieving a rat, stoat and possum-free New Zealand by 2050, inventing new technologies that don't yet exist to do it.

But that's where the boldness ended. Prime Minister John Key and Conservation Minister Maggie Barry committed to spend $7 million a year for four years - and only if philanthropists stumped up a further $14m.

Barry cited Sir Paul Callaghan's vision of a predator-free New Zealand in the announcement.

"This is the big hairy stretch goal that he called his Apollo mission," she said at Zealandia on Monday.

This is of course a laudable target, but it pales in comparison to the Apollo programme in cost, commitment and impact.

What would be a real "moon shot" for New Zealand?

The best suggestion came this week from the faceless Independent Hearings Panel for the Auckland Unitary Plan.

They proposed a truly ambitious set of zoning rules that would allow the building of 422,000 new houses in an expanded Auckland - both up and out - by 2040.

On the face of it, it seems an impossible target at a time when skills shortages abound and the political and financial obstacles are apparently enormous. Anyone who has tried to employ a builder or tradie in Auckland in recent months or order a truck of concrete would wince at the thought.

Building those houses would cost at least $65b and require an unprecedented level of co-operation between central Government - which has to pay for the schools and hospitals and motorways to enable such growth - and the Auckland Council - which has to approve the zonings and pay for the pipes and local road and public transport.

Such a "moon shot" seems an astronomically unattainable target for a nation, yet it would make an enormous difference for everyone up and down the country.

New Zealand needs Auckland to grow in a fast and sustainable way.

Future generations need the affordable, healthy and stable homes that build productive and happy communities, which we certainly don't have for a substantial chunk of the population now.

Politicians often steer clear of the "big hairy targets" because they are risky and open up the targeters to attack.

Green Co-Leader Metiria Turei took a big risk this week when she said New Zealand should target a house-price-to-income multiple of three to four, which would imply a near-halving of house prices if it were to happen overnight without any wage increases.

Labour Leader Andrew Little described that as irresponsible and Key said Turei wanted to "destroy the savings of New Zealanders".

Turei was just adopting the stance already expressed by a couple of very conventional economic thinkers - Don Brash and Arthur Grimes - which the Auckland Council has talked about in its strategy for a multiple of five-times-income by 2030.

The best way to start to get there would be to adopt the biggest and hairiest and most meaningful moon shot in our history - committing to building those 131,000 houses in seven years.

- Herald on Sunday

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Bernard is an economics columnist for the NZ Herald

Bernard Hickey is the publisher of Hive News, a Wellington-based political and economic subscription news email service. He also writes for Interest.co.nz and appears regularly on Radio New Zealand, Radio Live, TVNZ and TV3. He has been a financial journalist for 25 years, having worked for Reuters, the Financial Times Group and Fairfax Media.

Read more by Bernard Hickey

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