Minister trying to hoodwink public over real causes of crisis

The new political year has barely got into first gear, but one senior politician who should know better has already tried to pull the wool over the public's eyes.

Nick Smith deservedly got plaudits for his 10-point plan to radically overhaul the Resource Management Act (RMA) from those who are most affected by this hapless piece of legislation - the business community and local government.

But the Environment Minister blotted his copybook by releasing a lopsided Treasury sponsored report which made the financial burden imposed on developers by town planning regulations look to be far higher than is likely to be the case.

There is no question that many of the changes that Smith is contemplating making to the RMA make sense or, in hindsight, are long overdue. That is a tribute to his capacity for innovative thinking.


But things are not always straightforward when Smith is running the show. The tone and strength of his language in his savaging of the RMA this week prompted immediate concern in the environmental lobby that he was trying to manufacture a crisis where there wasn't one - just as he did at ACC in 2009 - in order to implement ideologically based changes.

The fear was that Smith was using the same blueprint in order to throttle the environmental principles in the RMA to the advantage of big business.

While the coming reform will require local bodies to give greater recognition to the virtues of economic development when handling resource consent applications, Smith says the act will remain focused on environmental impacts.

Anyway, he has other fish to fry. He has become obsessed with pinning most of the responsibility for the Auckland housing crisis on the failings of the RMA. Until now, however, he has had to rely on anecdote as much as fact to justify such an assertion.

Smith, who is also in charge of the Building and Housing portfolio, admitted this week that it had been difficult - to use his words - "to make the connection" between the labyrinth of rules in the RMA and the "significant decline" in housing and home ownership during the 25 years that law has been operating.

There may well be a connection. But it is piffling when placed alongside the economic forces influencing supply and demand in the housing market.

National's reluctance to address ever-surging demand - for example, by following Australia's example and banning foreigners from purchasing established or "second-hand" homes - has forced the party into the ludicrous position of putting up the RMA as some kind of straw man which it can pretend is responsible for the crisis.

How convenient, then, that research on the impact of the RMA on apartment construction and the building of new dwellings conducted by Motu Research, a private sector-based firm which undertakes economic analysis on behalf of clients, should suddenly surface and appear to make the connection which Smith has had so much trouble finding.


Smith seized on Motu Research estimates that the RMA has added $30,000 in extra cost to each new apartment and at least $15,000 for each section. It is notable that Smith restrained himself and chose to quote these figures which are at the lower end of the estimates and thus more credible.

In his speech on Wednesday night unveiling the broad details of his overhaul of the RMA, Smith also noted Motu Research had suggested that the RMA had reduced "development capacity" by 22 per cent, thereby cutting housing supply in Auckland by some 40,000 homes while adding $30 billion in cost to developments.

Those latter figures appear startling. But those 40,000 homes would have only been built in the absence of planning controls such as height restrictions on apartment blocks or minimum floor areas.

Bar Act, however, no one in politics is arguing there should be no restrictions on what you can or cannot build.

There are other question marks hanging over Motu Research's findings, the most pertinent one being that they are in large measure based on a survey of Auckland property developers - hardly a neutral audience. The report's authors - who include former Reserve Bank chief economist Arthur Grimes - are totally upfront about that. They caution that their report is not a cost-benefit analysis of the pros and cons of planning rules.

Affordable housing is one of three mega-issues where National is extremely vulnerable as the governing party. The others are child poverty and income inequality.

Those three issues are not going to go away simply because this is the year after the election and politics is much quieter.

The combination of economic recovery and National's increasingly lengthy tenure on the Government benches will up the pressure on Cabinet ministers to do more to help those who find themselves struggling on the wrong side of the economic or social divide.

This pressure is only likely to intensify over coming months as Opposition parties try to exploit those three issues as a means of setting the political agenda and marginalising National.

National has been something of a possum caught in the headlights when confronted with these issues, which have no easy or cheap answers.

Yet, National knows that it is going to have to find some answers, otherwise its opponents will succeed in painting the party as an archetypal third-term administration which has run out of fresh ideas and is fast approaching its use-by date.

National is acutely conscious of the danger of drifting into such a scenario and not being able to find a way out.

John Key and his colleagues are determined to get that particular monkey well and truly off its back before it has even a chance of climbing on to it.

National knows it must get on the front foot - and just as importantly stay there. Smith's assault on the RMA had National first out of the blocks in 2015.

Motu Research's report, however, reveals the cost of bureaucratic delay and inaction is not as high as might be feared. The report also contains a sting in its tail. It seems property developers are not turned on by fast-track planning procedures in the new "special housing areas" designated by councils.

They would rather progress resource consents under rules and regulations with which they are familiar. Likewise, meeting criteria for the building of affordable housing in such areas is seen by developers as just another additional cost they have to meet. But you will not hear anything in Smith's next housing speech about such policy failure.