Why is fixing the housing crisis taking so long?

Friday, 17 September 2021

OPINION It’s a little hard to remember those days when Aucklanders were still allowed outside, but back then the Government was coming under a lot of pressure over housing, and Housing Minister Megan Woods decided to make an announcement.

To set the scene: KiwiBuild was so slow it might as well be dead, lockdown and quantitative easing had caused an eye-watering spike in house prices, and Wellington was experiencing the third-highest price rises in the world, while its local politicians were mired in debates about whether it should build more houses, or not.

Meanwhile, renters were experiencing some of the largest rent rises ever, and build-to-rent was being stymied by changes to overseas investment laws, which made it hard for those investors to build-in an exit strategy.

All this while many usually resident migrants, the usual scapegoats for house prices rising and rents spiralling out of control, were locked out of the country in their thousands.

**READ MORE:

* Another housing fix goes into the mix

* Government reveals criteria for $1b funding to speed up housing development, seeks urban density

* Megan Woods on housing: ‘The market hasn’t delivered’

* Housing: Government looking to fast-track moves to force councils to allow more housing

**

You couldn’t even blame a returning flood of New Zealanders for house price rises, only 2759 more moved here in the year to April 2021 than did during the same period the year before.

Politicians are always fond of saying there is no “silver bullet” for housing, usually because they're not keen on firing any bullets at the problem.

If there were such a silver bullet it would surely be infrastructure investment, and funding for councils. These past few decades councils have kept rates at levels similar to what they took in before the mass-produced automobile was invented.

Since infrastructure is expensive, and councils are responsible for most of it, you ended up in a situation where councils stumped up for small beer items like food festivals, and put off going to ratepayers with bills for big ticket infrastructure items.

The obvious silver bullet for this problem is more money for infrastructure.

So it was that Woods arrived at a Kāinga Ora building site in Mt Roskill, Auckland in June, metaphorical shotgun in hand in the form of cash.

The announcement was for a $1 billion fund which developers, councils, and others could apply to. It was the continuation of an earlier announcement, and Woods was understandably keen to point out she was actually ahead of schedule on something related to housing.

Instead of a paper being sent to the Cabinet at the end of June, she was standing here in front of everybody with the Government’s go ahead, right now.

“We expect to be able to make decisions, all going well, if we get well-developed proposals, by the end of this year, and to be looking at starting that work next year,” Woods told reporters at the time.

No shovels would go in the ground that day, but there was a bit of a walkabout, with lots of photos taken of Woods.

An editor at Stuff complained that four high definition pictures of the housing minister in a hard hat was excessive. He didn’t have much choice: it was either pictures of her, or some pipes and muddy grass banks.

This week we found out what happened to that announcement. Expressions of interest stayed open between June 30 and August 20, and proposals worth over $5b were sent in, mainly from councils.

Now an intense evaluation process will be run so that the Government can choose the $4b worth of housing projects it doesn’t want to build, then invite the rest to send in more detailed proposals.

It hopes one or two of these projects might be fast-tracked by the end of the year, for most it will be next year by the time these councils hear if they have even received the money.

Robert A Caro’s book on New York official Robert Moses, looks at the methods used by the controversial godfather of the highways, to get things done in a similar political environment. While Moses’ planning philosophies no longer hold much credibility, there’s a lesson to be learned from his ability to make politicians deliver their promises.

Moses discovered the trick was to get sign-off for your project by any means necessary, then get so far through it that no politician would want to be responsible for telling you to stop, even if it went hideously over budget.

We’ve seen a version of that with Auckland’s City Rail link, which the Government initially didn’t agree to fund but later was forced to, after Auckland Council just went ahead with the project anyway.

It’s why, when the last Wellington City Council election was in full swing, and people started complaining about the convention centre, the mayor at the time moved to quickly “turn the first sod” on it before election day got too close. Politicians spent most of the time afterwards complaining that they couldn’t leave a half-completed convention centre just sitting there.

It is possibly why Shane Jones was so keen to go all around the country cutting ribbons on his Provincial Growth Fund projects, although the lesson not learnt there is to not just carry a shovel around, but to sink that shovel so far in the ground that no-one can pull it out again.

The problem is most of these projects do not have shovels in the ground, and barely even have anybody signed up to pay for them.

And because no-one is signed up to pay for it all, no-one invests in the capacity to build any of it.

A private developer told me one potential solution for this was to allow them to simply build their own infrastructure.

Yet these offers are often rebuffed because councils, and councillors, don’t trust developers and want it done their way.

There’s enough of that mistrust to go around, councils can’t build the infrastructure because the Government doesn’t trust them enough to just hand the cash over.

The ideal solution for the Government is being able to build all the infrastructure and housing it wants on its own terms. Because it can’t do this it holds the purse strings tight, and tries not to incentivise anything too crazy to happen without its permission.

The one exception is the National Policy Statement on Urban Development, but even here there are so many out-clauses to guard against people taking things too far, that the whole thing could very well end up creating more environment court cases than houses.

If you want the answer to why we are so far behind, it is that everyone wants to hang onto their wallets, and no-one wants to cede control.

It’s why we will probably be seeing more announcements, than houses, for quite some time to come.