3 Questions we have to answer before abolishing Auckland’s city limit

Geoff SimmonsProperty29 Comments

As Auckland housing reaches a crisis point and homelessness rears its ugly head, our politicians seem to be slipping into silly season. Having refused to deal with investor demand for housing, they are forced to flog the dead horse of increased supply even harder.

Yesterday Labour’s Phil Twyford came out with a surprise announcement calling for the Government to abolish Auckland’s urban growth boundary. This boundary is essentially the line between the suburbs and lifestyle blocks/ farms and the details are covered well here.

Buoyed by the new political consensus, Finance Minister Bill English repeated his calls for Auckland Council to open up more land for development (or else). All this politicking is taking place despite Auckland Council being in the midst of developing a unitary plan, as it is required to do by the Government.

Mr Twyford’s argument is that the Government should manage growth on the city fringes through “properly integrating land use with transport and infrastructure planning” and “more intensive spatial planning of Auckland’s growth areas in the north, north-west and south.”

On one hand, Labour’s new position is understandable. Having an urban growth boundary hasn’t stopped sprawl – it’s been chipped away at through ad hoc adjustments like “special housing areas”, which merely creates a windfall for the land owners who strike it lucky.

But by ditching the boundary is he just signing up to the Government’s recipe for unmitigated urban sprawl? Mr Twyford claims it isn’t – under his plans the sprawl will just be better managed. Here are three big questions Labour needs to answer.

Who will pay the costs of sprawl?

As we have pointed out before, Auckland’s sprawl is a false economy, the cheaper house prices are offset by higher infrastructure costs. Mr Twyford has addressed the issue of ratepayers subsidising new developments on the urban fringe:

“It is also essential to reform the way infrastructure is financed. The cost of new infrastructure must rest with the property owners of new developments to prevent the ratepayer carrying the can for expensive infrastructure investment in places where it’s too expensive to build. Labour proposes using bond financing paid back by targeted rates over the life of the asset. This can range up to 50 years in some of the jurisdictions using this mechanism.”

Ok, so if the people living in the new suburb are paying for the new roads, water supply, sewage system, etc., that’s a start. The bond approach he is backing is a nifty system picked up from Houston and pushed here by the New Zealand Initiative.

It all sounds logical on the surface, but there is a dirty little secret: these bonds don’t contain all the costs to the area.

Transport is a prime example, because the residents of this new suburb aren’t going to drive only on those new local roads – they will put more stress on the transport network at large and add to Auckland’s already chronic congestion problems. The inescapable reality is that more spread out development leads to more car dependence, which means more congestion that everyone ends up paying for.

Take Houston where this bond idea hails from – transport costs there are double those in more compact, European style cities. The costs don’t end there – car dependence is linked to obesity and air pollution, all of which makes people sick – another bill for the taxpayer. If all these costs are included, sprawl generally ends up being more expensive overall than building more densely in town.

What about public transport, can that solve it? Integrating mass transit with the new developments might help reduce the congestion burden, but providing those services to far flung suburbs is much more expensive than to inner suburbs. That means either taxpayers and ratepayers or other public transport users have to pay more in subsidies every year. How will Mr Twyford’s financing proposal address this?

One way to charge for the true costs of sprawl and make some money for infrastructure would be via congestion charging, which Auckland Council has previously requested the power to implement. Up until now both Labour and National have been cold on the idea, which means that the true costs of sprawl will not be internalized, and so we will see more sprawl than is optimal.

How will he overcome the NIMBYs?

Without taking care of the inner city NIMBYs that are blocking denser building in Auckland, abandoning the city limits will see developers taking the easy option – more sprawl.

Mr Twyford does mention freeing up density rules to allow more flats and apartments in existing areas. But in the context of the announcement, this feels a bit like lip service. Until Labour produces a plan for silencing the NIMBYs and allowing denser building in Auckland, his policy sounds more hopeful than plausible.

What will he specifically do to overcome the rowdy and powerful NIMBY brigade – especially once the urban boundary has gone? What will stop politicians from taking the path of least political resistance and opting to let Auckland just sprawl out and out?

What about the environment, Phil?

Lastly, as Gary Taylor of EDS has pointed out – what about the environment?

The first big factor is carbon emissions – a sprawling, car dependent city chugs through more fossil fuels. New Zealand is already struggling to reduce our emissions as we have pledged, and a sprawling Auckland won’t help. Electric vehicles may be an answer long term, but that doesn’t solve your congestion or cost problems.

There are many parts of Auckland’s city limits that are environmentally sensitive. The market gardens of the Bombay hills are crucial for feeding Auckland – will they soon be a suburb? Will the Waitakere ranges and other areas of precious rainforest disappear? Mr Twyford assures us special areas can be set aside, but how is that different from the current approach?

More importantly, how will he take care of cumulative environmental effects? The Kaipara Harbour is the nursery of most West Coast snapper – will it be dusted with the sediment from subdivisions? And all those new lawns and gardens will mean even more water piped up from the Waikato river. When will the people of the Waikato be compensated for having their resource appropriated?

The current approach is far from perfect but it is at least acting to contain sprawl. We know National wants to see the city sprawl – particularly if someone else is paying for the infrastructure, but is that really what Mr Twyford is after too? If not, his plans need more thought to assure us otherwise.

If we really want more affordable housing, truly affordable rather than shunting the costs onto someone else, then we have to remove the barriers to greater density in Auckland.

3 Questions we have to answer before abolishing Auckland’s city limit was last modified: May 19th, 2016 by Geoff Simmons
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Geoff Simmons

Geoff Simmons

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Geoff Simmons is an economist working for the Morgan Foundation. Geoff has an Honours degree from Auckland University and over ten years experience working for NZ Treasury and as a manager in the UK civil service. Geoff has co-authored three books alongside Gareth.