Housing Minister Chris Bishop has unveiled the Government’s plan to “flood the market’ with land for development in a bid to end New Zealand’s housing crisis. Video / Michael Craig
Opinion by Thomas Coughlan
Thomas Coughlan, Political Editor at the New Zealand Herald, loves applying a political lens to people's stories and explaining the way things like transport and finance touch our lives.
Housing Minister Chris Bishop will announce plans to increase land for development to tackle the housing crisis.
Bishop’s reforms will remove council powers over urban boundaries and development standards.
The Government will require councils to plan for 30 years of housing growth.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
OPINION
If there is one thing that was remarkable about Housing Minister Chris Bishop’s plan to “flood”the market with housing unveiled this week, it is not how it differed from the status quo, but how it reinforced it.
Bishop leaned on the National Policy Statement for Urban Development (NPS-UD) for his reforms, extending it in one key way (councils will now be forced to live-zone 30 years of feasible development capacity at once, rather than just three at a time) and clarifying it in others. There’s a layer of irony here: the NPIS-UD was drafted by Phil Twyford, whom National pilloried during his tenure as Housing Minister in the Ardern Government (although the NPS-UD was published after Twyford lost that portfolio).
New Zealand is allergic to regulatory certainty. We have brief three-year political terms, a political culture generally unfavourable to bipartisanship, and a unicameral Parliament that makes it very easy to get rid of something you don’t like.
Politicians, international observers and businesses - particularly in the infrastructure sector - know this is weird and a problem. However, no one can agree on the solution because no one really wants to be the first Government to give up the right to easily turf the other lot’s stuff out.
That makes bipartisanship all the more remarkable and usually, though not always, more lasting. Parliament is in a reforming mood. New Zealand marked the 40th anniversary of calling of the schnapps election last month, which ushered in the last great age of reform. Almost everyone in Parliament is addicted to The Spinoff’s “Juggernaut” podcast about the fourth Labour Government, aurally scoffing new episodes each Thursday, and subtly lusting after Roger and co’s zeal for ambitious and lasting reform.
Unsurprisingly, many self-proclaimed under-appreciated geniuses end up in Parliament, and not a few of them look back on the reforms of the 1980s and 1990s with nostalgia. Received political wisdom holds that gradual reform is what tends to stick. The 80s and 90s proved to New Zealanders the opposite can also be true.
Chris Bishop announces a new housing policy that will, among other things, allow the market - not councils - to decide minimum size of floor areas and apartment sizes. Illustration / Rod Emmerson
What’s often lost is how messy this bipartisanship appeared to contemporaries. It’s forgotten that National, the party of stable money, took a long time to come around to the Reserve Bank Act, only giving its support after its finance spokeswoman, Ruth Richardson, twisted the arms of Jim Bolger and Bill Birch in Opposition.
The Resource Management Act - that Lazarus of the statute books - was drafted by the fourth Labour Government and had its first reading under Labour and passed under National - but only after a review (ironically, by Tony Randerson - the man picked by David Parker to lead the working group that would eventually recommend the RMA’s repeal) recommended some substantial changes.
The Fiscal Responsibility Act, arguably the last of these great reforming pieces of legislation, had an even rockier path to bipartisan timelessness - owing to the fact it’s no longer on the statute books, having been repealed by Labour’s Michael Cullen in 2004.
But Cullen’s repeal copied and pasted the substance of that bill into the Public Finance Act. Cullen’s decision means we still have the Befu (Budget Economic and Fiscal Update) and its relations the Hyefu and Prefu, and Governments are still required to set debt and surplus goals, and hold themselves to account. It’s strongly “neoliberal” stuff and thanks to the most electorally successful Labour Government since 1949, it’s survived.
The focus on Bishop’s reforms has understandably been on how they differ from the status quo.
The Medium-Density Residential Standards National had agreed to in Opposition will become optional, provided councils zone Bishop’s 30 years of growth, which they have to do anyway.
Councils will no longer be able to impose arbitrary rural-urban boundaries, more development will be allowed on the city fringe, as long as it pays for itself infrastructure-wise. Here the devil will be in the detail - if these developments pay the true cost of their infrastructure, they might become uneconomic to the point they are technically allowed, but not economic to build. If they pay only part of the cost, they will be built but ratepayers will suffer the cost of cross-subsidising sprawl.
The bigger story is how the policy represents continuity. Despite concerns on the campaign that National’s decision to follow Act and break from the housing accord inked with Labour that produced the MDRS, in substance, this policy means that all parties in Parliament are now pro-densification.
The reforms build on those by Labour's Phil Twyford.
Act, which shocked Labour and National by not following its libertarian instincts and opposing the MDRS, published a video of leader David Seymour arguing why it was “so important” to flood cities with development land.
NZ First, the other party that might be turned to for opposition to densification, has now signed up to them in two separate Cabinets, the first in 2020 and again this year. Shane Jones, who provides a lot of the intellectual heft for the party’s policy work in government, sees land use as an engine for economic development.
The real opposition to land reforms is coming from within parties, rather than between them. Labour is not entirely united against abolishing the ability of councils to set rural-urban boundaries (the party ran on abolishing Auckland’s in 2017). National is not united behind density. The party nearly opposed the NPS-UD in 2020, and internal opposition to the MDRS led to a small civil war in 2021 and contributed to the instability around Judith Collins’ leadership.
The perfunctory opposition all the parties have put up to the other side’s ideas are reminiscent of the quibbles Labour and National had with one another on either side of 1990, or over polices like the RMA or Fiscal Responsibility Act. To focus on that would be to ignore the fact they agree in substance.
In quite typical New Zealand fashion, and again reminiscent of the 1980s in the space of four years, we have gone from having some of the world’s most restrictive urban land markets to having some of the least. The Economist, an enthusiastic cheerleader of our 1980s reforms, has written warmly of New Zealand’s efforts to improve housing affordability through deregulation. Praise isn’t just coming from Britain’s liberal right; the British Fabians have said the reforms should be looked to by Britain’s next government as a solution for the UK’s own housing crisis.
Bipartisanship in Parliament should not be mistaken for consensus from the community. In fact, the opposite is often true; bipartisan deals are often an indication that politicians from all sides consider a policy end to be of such importance the electorate must simply lump it (see the 1993 superannuation accord between Labour National and the Alliance). That is certainly true of this case, with all parties fearing New Zealand’s affordable housing, which is expensive even by anglophone standards, will be the ruination of the country.
Everyone has compromised. The left has had to embrace free-market thinking as a pathway to reducing the social ills of the housing crisis, the right has had to give up on its ability to control picturesque urban environments and to use the family home as a neverending stream of unearned wealth.
The reforms will go a long way to resolving the housing crisis, but the road will not be easy. The crisis was not born of pure cynicism. Rising house prices have been wonderful for the majority (and it is still a strong majority) of the New Zealand households who enjoyed them. They’ve provided easy savings and rising wealth for the bulk of New Zealand households. When that ends, as it inevitably must, and voters cease to be grumpy about their children being unable to afford housing, they may begin to grumble about their own home values falling - some, wilfully or not, won’t connect these two data points.
The vast savings stashed away in New Zealand’s homes could slowly erode (house prices are unlikely to collapse quickly - labour and infrastructure will continue to constrain supply).
In the short term, this could be bad news for the economy. While the housing crisis might be the source of most of New Zealand’s social ills, rising house prices have underwritten New Zealand’s economic success in recent decades. It wasn’t for nothing that the Reserve Bank aimed the money printer at New Zealand’s homeowners during the pandemic. New Zealand’s deluded homeowners, wallets stuffed with Weimar money, were as responsible for the country’s bizarrely low pandemic unemployment rate as any wage subsidy.
The positive aspects of household wealth are no reason not to tackle the housing crisis - but they do mean that fixing it won’t be painless.
There’s a lesson from the 1980s in that, too. Reform is most fondly remembered by the reformers. For the reformed, the legacy is often far more painful.
