Hallelujah. The political fix at national level on Auckland housing has finally been made.

Labour's Phil Twyford has embraced the market by promoting the abolition of the Auckland urban limits so the city can expand.

Finance Minister Bill English last night made it abundantly clear that there is now a "majority in Parliament" to ensure a sensible national outcome if the right decisions are not taken at Auckland Council level.

A number of other players, from the right-of-centre Act Party through to the New Zealand Initiative, are singing in unison on this one.


It is an important breakthrough for common sense in addressing a pressing national issue.

As English observes, the Government is subsidising 65 per cent of rentals in Auckland.

If the number of Aucklanders who cannot afford to shoehorn their way into mortgages and buy residential houses continues to grow, rents will get pushed up further as the competition for houses continues to grow. That will result in an increasing subsidy bill for the New Zealand taxpayer to fund.

Twyford reckons abolishing the city's urban limits will help get people out of cars, caravans, garages and tents. On its own, it won't of course.

In the first instance it will help incentivise the land bankers to flick land to housing developers and realise capital gains.

Arguably, the abolition of the metropolitan urban limit should also be coupled with the introduction of an aggressive land tax targeted solely at land bankers. Any incentive to continue to sit on valuable land will quickly be eroded.

The available land within the current metropolitan urban limits is still relatively limited. Land bankers also own considerable swathes of land outside those same limits.

If the politicians want to ensure that developers do in fact build affordable houses they should "think Chinese".

I'm not talking here about the perfectly rational choices that many Asian investors - both on and offshore - have made to invest in Auckland residential property. Plenty of New Zealand investors have done just that.

But to employ the planned approach that China's governors have applied as they have overseen the largest urban migration in history ("the invisible hand of the market guided by the visible hand of Government").

But there is something frankly obscene about allowing land bankers to massively profiteer from the current situation.

The Government has the ability to step in and set a reasonable price for some of that land - by acquiring it through the Public Works Act - and funding the development of new housing estates in partnership with the private sector.

This is an interventionist move.

And if the simple abolition of the urban limit does not have the desired effect the politicians may well have to take further steps.

Auckland's growth is being driven by the big influx of migration, which is a positive when it comes to New Zealand's prime commercial city.

Auckland is also in a sweet spot when it comes to international economic settings.

At the Tripartite Economic Summit in Auckland this week there was considerable chat among the visiting Los Angeles and Guangzhou entrepreneurs, investors and bureaucrats on what a desirable city Auckland was to live and work in. And anecdotal stories of several visitors taking themselves off to open homes while here.

As investment banker Scott St John observed in the Herald's Capital Markets report out today, the tyranny of distance is no longer an issue when it comes to New Zealand. That very distance from the rest of the world has become an asset - no crowds, peace and open spaces.

But the lack of sufficient new housing supply - combined with growing demand - has had the inevitable effect.

It is also forcing a rethink among younger Aucklanders as to whether they can build a future here.

Labour and the Government have finally jumped on a bandwagon worth rolling. The councillors know what they have to do.

Why stop here?

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