This week's OECD report about New Zealand's economy may have appeared a dry and remote treatise on how to increase growth and reduce poverty. It was anything but.

It detailed how a small group of well-connected and extraordinarily wealthy property owners on a small isthmus of land between Auckland's CBD and Mangere Bridge were, in effect, holding New Zealand's economy hostage and entrenching hundreds of thousands of children in the sort of poverty that kills them in winter and costs taxpayers billions each year.

It recommended the Government work with the Auckland Council to try to convince landowners to allow more dense housing developments in the likes of Ponsonby, Grey Lynn, Mt Eden, Remuera, Parnell and Epsom.

If they don't, it suggested the Government intervene to force them to do it.


There are blockages to more dense development on the isthmus, including new heritage overlays stopping the redevelopment of land occupied by pre-1944 homes, restrictions on the height of apartments and on developments within "view shafts" that fan out from Auckland's volcanic cones.

They have been inserted into Auckland's planning rules since the late 1970s and include the watering down of an attempt through the proposed Auckland Unitary Plan to allow more dense development.

The Auckland 2040 lobby group applied so much heat in mid-2013 the council was forced to gut the densification provisions in the draft plan. Council insiders say professionals in the leafy suburbs mobilised quickly to fire off submissions and lobby councillors.

The successful lobbying by a few has had an enormous cost. Auckland house prices have risen 35 per cent since that mid-2013 revolt against densification. Auckland's housing shortage is already 30,000 dwellings and growing at 5000 a year.

Auckland's high housing costs were a major reason why 20 per cent of children in New Zealand were living in material hardship, the OECD said.

Recent deaths from respiratory illnesses caused by living in leaky, cold and damp homes in Auckland illustrate the scale and the desperation of the problem.

So what could be done?

The OECD said the Government could use the RMA to recommend the council allow more density. The unitary plan is also not a done deal, with hearings now going on before the Independent Hearings Panel.

That will be one venue to encourage more density.

But before the iron fist of the Government comes crashing down it would make a lot more sense for all and sundry to sit down and explain the costs of blocking densification to the opponents, and the potential opportunities if they relent.

Accords seem to be all the rage at the moment. The Government came to a housing accord with Auckland Council to create special housing areas and puncture holes in the old metropolitan urban limit, which allowed Auckland to grow "out".

There is even talk of a transport accord to allow all those new residents on the fringes to move around.

Auckland needs to grow "up" and it needs political leadership to convince those on the isthmus to embrace that growth.

Such a densification accord could help take some of the political heat out of the issue, or at least put an intense national spotlight on those who are blocking development.

It may also help show that change could not only be good for the nation but very profitable for them. As Westpac chief economist Dominick Stephens has said, increased freedom to develop land more densely simply increases the value of that land.

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