COMMENT:

"Our cities are failing," declared Minister of Housing and Urban Development Phil Twyford in a speech to New Zealand Initiative members three weeks ago.

The housing crisis has kids growing up in cars and garages, or with respiratory damage from cold, damp housing, he said. And then there's the $2 billion a year the taxpayer is spending on rent subsidies.

As Bill English once said of prisons, it is a moral and fiscal failure.

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Part of the Government's response is legislation, due soon, to establish a Housing and Urban Development Authority.

Its function, Twyford said, would be to "cut through the red tape and lead large scale, master planned urban development projects that build whole communities at scale and pace." These would be projects whose scale and complexity mean the private sector alone cannot make them happen.

The UDA (the H, it seems, is silent) would have sweeping powers to over-ride land use rules in the district and regional plans that local authorities are required to develop.

It will have a range of mechanisms to choose from in funding the necessary infrastructure to ensure that those who benefit from the new or improved infrastructure pay their fair share of the cost.

Local Government New Zealand, for its part, agrees there is a housing crisis and sees merit in the UDA concept.

But it argues that the provisions for over-riding existing plans demonstrate the need for — and are no substitute for — fundamental reform of the Resource Management Act.

Likewise, enabling special purpose vehicles to raise infrastructure finance independently of councils with dedicated funding streams demonstrates the need for — but is no substitute for — fundamental reform of the financing and funding of local government.

That issue is the subject of a Productivity Commission inquiry hopefully nearing completion.

Local Government NZ chief executive Malcolm Alexander says there is clearly a systemic issue with the whole planning regime that the councils are legally obliged to follow.

Arriving at district and regional plans is slow, cumbersome and costly. Objectors' legal rights to challenge them can mean that judges get to make the planning rules, "which is essentially what happens when they go to appeal all the time."

The planned UDA is designed to cut through all that. And that is fine for those who will benefit from the projects concerned.

"But we are concerned about the potential risk that a two-tier planning system is created where there is the fast nimble version the Crown can use, hopefully in collaboration with the relevant local authority, but everyone else is stuck with the old regime," Alexander said.

The proposed process for the "special development projects" provides for public input at several points.

Public feedback will be invited on the strategic objectives and area of a proposed scheme, and again when a draft plan is drawn up. There is also provision for submissions to independent commissioners before a final decision is made.

But while councils' agreement will be sought at a couple of points, it is not required. They have no veto.

Local Government NZ has argued that a veto would create a more balanced and constructive power relationship between central and local government in a context where partnership is clearly preferable to a Wellington-knows-best approach.

As it is, where there is disagreement between them — for example, over bulldozing a district plan which is the result of long and painstaking public consultation — the prospect of judicial review, and the attendant delays, would appear to arise.

"Scale and pace" is a great slogan but there could be tension between those two things.

In his speech, Twyford was critical of a planning system he sees as based on urban containment.

"We want to break the current land market model which sees the planning system and infrastructure financing logjam create an artificial scarcity of land," he said.

"Incremental relaxation of the Urban Growth Boundary and zoning changes simply drip feed small amounts of new land, and new subdivisions into a highly speculative market. This is the land banking and speculative model that characterises the greater Auckland land market."

Twyford also lamented height and density restrictions which hobble vertical growth and the development of more affordable options like apartments and terrace housing.

"Environment Minister David Parker and I are working on national direction under the RMA that will set clear parameters for council plan making to incentivise quality intensification."

Local Government NZ's view is that ad hoc band-aids, work-arounds and stopgaps aren't good enough.

"Our argument is that we have to grasp the nettle and move on to a fundamental reform of the planning system," Alexander said, "and fundamental reform of the funding and financing regime. We have argued for a long time that the rating system is unsustainable."

Reform of the RMA would require participation and buy-in from all stakeholders, not only central and local government but the business sector and environmental NGOs.

"It is not about giving away environmental bottom lines."

It would also need to face up to the challenge of adaptation to climate change, preferably before insurers and banks force the issue.

And it would require a whole-of-government approach. Alexander points to the example of taskforces, such as that which addressed producer board reform, which involved officials from all the relevant government departments as well as outside advisers.

"I do note that the Government has indicated they intend to bring RMA reform on to the agenda," he said.

The sooner the better.