• Commission chair Murray Sherwin said an aggressive approach is needed to keep up with the demand for housing.
• Tolls and congestion charges could also be established to help fund infrastructure development.
• Land regulations could be loosened to enable, smaller, more affordable housing developments.
A Government-commissioned report has recommended the creation of an authority with the power to acquire private land for large-scale housing developments.
The suggestion has been made as part of a draft Productivity Commission report, titled, "Using Land for Housing", that has looked at the challenge of freeing up land.
The urban development authority, which would hold the acquisition power, was one of 38 recommendations made in the report.
Other recommendations included taking advantage of funds from user paid services such as water and the establishment of tolls and congestion charges to further fund public infrastructure.
Greater public-private cooperation and charging the Government to pay local councils rates on Crown-owned land were also included in the list of recommendations.
Chair Murray Sherwin said "business as usual" was not enough and a more "aggressive approach" was needed to ensure the issue of land and housing supply was addressed.
He said an urban development authority model that would enable greater coordination around housing development was one suggestion.
Sherwin said such powers would not be used for widespread acquisition, but for one off holdouts where a single owner was impeding the development of a large block of land.
"It's a power to be used as a last resort...in the case where one particular land owner doesn't budge."
However, while Executive Director of The New Zealand Initiative, Oliver Hartwich, broadly supported the Commission's other recommendations he wasn't convinced acquisition powers would work.
"I'm not sure it is the right way forward, we have some reservations about that."
Hartwich said a similar approach had been tried in Christchurch.
"It just didn't take off, basically nothing happened large blocks of land sat idle," he said.
Hartwich would rather see the issues around infrastructure and local government funding addressed.
See a Productivity Commission presentation on the topic here:
But Sherwin said not unlocking land for development risked further increasing land prices.
"If we don't make progress, we end up with a major city that is underperforming and unable to capture the benefits of a high-performing city," he said.
"Without it [progress] we end up with a major city that is underperforming and unable to capture the benefits of a high-performing city."
Sherwin said the consequences of doing nothing is particularly harsh for those in the lower income groups.
"It's there where things really bite with substandard housing and overcrowding, which has an impact on health."
To make progress Sherwin said there also needed to be greater coordination between private developers and local and central government, greater flexibility around the use of council funds and less restrictions around how land can be developed for housing.
"Land use regulations often constrain the production of small, affordable dwellings, both in built up areas and on the fringes of our cities... the housing market needs to provide more choice of dwelling types and sizes to meet that changing demand."
Sherwin added these challenges would not be fixed quickly but a concerted effort was needed.
"But nor did we come to the conclusion that shortfall is inevitable or insoluble," he said.
Those wanting to make a submission on the report have until August 4.
Auckland Mayor Len Brown welcomed the release of the Productivity Commission's Using Land for Housing draft report.
"I am pleased the draft report has captured the complexity of the issue and that many of the recommendations are aligned with work we already have underway here in Auckland.
"It highlights the role of an urban development agency, for example, and the need for local government to explore other ways to fund infrastructure. That's exactly what council is doing in setting up Development Auckland and by proposing motorway charges.
"I am also heartened to see the report has identified the need for agencies to work together to address Auckland's housing supply and I welcome these conversations."
Mr Brown said the report talks about the need to look seriously at intensification of housing - which Auckland is already working towards.
"When I talk to Aucklanders about the future, many are comfortable with more dense housing but that people really want is range of choices of housing types and good quality homes".
"The report has highlighted some key issues and we will definitely be making a submission to the final report," Mr Brown said.
Finance Minister Bill English said this afternoon that he was interested in some of the Productivity Commission's ideas, but would not commit to any changes at this stage.
"We are willing to look at all their propositions to get more houses on the ground sooner and faster."
He would not rule out the creation of an urban agency with compulsory acquisition powers, but he said the idea was "a bit of a stretch".
Mr English said he was interested in the proposal to allow foreign developers to buy New Zealand land to build new homes, though he would not go as far as saying he would relax the investment rules.
He said that in a way this already occurred, because some large New Zealand development companies were classified as overseas companies under the Overseas Investment Act.
The minister said Government was also keen to find ways to address the issue of land-banking, and to make it easier to build apartments.
"Some of the planning requirements that look like nice ideas have a big impact on the cost of apartments.
"So it's all very well having really nice-looking $800,000 or $900,000 apartments but most people can't afford them. And if we want more people in the city we have to have more affordable apartments."
Mr English was less interested in proposals for road tolls or congestion charges, saying that Government already had a road user levy.
Labour's housing and transport spokesman Phil Twyford said he supported the proposal for a large urban development authority which could drive big development projects.
"It's the kind of hands-on role for Government in encouraging private sector-funding urban development that Labour's been calling for for the last few years."
But he was wary of giving any agency compulsory acquisition powers, saying "any Government that wanted to go down that track would need to think very carefully about it".
Mr Twyford, who is MP for Te Atatu, said there were strong arguments for road tolls in Auckland.
But he could not personally support any proposals for tolls until there were improvements in alternative transport such as public transport.