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

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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.

29 Comments on “3 Questions we have to answer before abolishing Auckland’s city limit”

  1. Absolutely agree with this. I lived in NY for years which was the easiest and most fun city I have ever lived in. Everyone walked as no one had or needed cars, it didn’t take long to get to work or entertainment, it was festive and lively and everyone met up at neighborhood parks and bars and restaurants….which is good for the economy. Contrary to the myth, there was a great sense of community and friendliness. I can’t understand why Auckland’s population is so hell bent on holding onto its awful sprawling, depressing suburbs, sitting in traffic for hours and spending the weekend mowing the lawns and doing maintenance. The kids don’t even play in them anymore. The suburbs are dead zones. Most of Auckland doesn’t know what they’re missing.

      1. The future of Auckland needs to be discussed properly and logically. Not decided by Phil Twyford or Nick Smith or John Key or property developers – they aren’t town planners. We can’t screw up Auckland as a quick-fix for a housing crisis caused by immigration, poor tax structure, lack of other investment opportunities and people scared of change. I have driven around America several times and it is one big hideous sprawling mess of freeways, feeder roads, car parks, box stores, industrial parks and shopping malls. When I worked in Seattle, my motorbike broke down so I had to catch the bus to work a couple of times which entailed me walking in a ditch besides a dual carriage way for a couple of km’s to get to an awful, industrial park. I stayed in a hotel somewhere in California and had to get a taxi a few metres across the motorway to go and see a movie. Much of the US is seriously dysfunctional due to lack of planning and reliance on an outmoded 1950’s way of life. It’s what happens when you do dumb shit like abolish the urban growth boundary. I heard Matthew Hooten and Mike Williams bang on about how NZ’ers don’t want their green spaces destroyed with condensed living. We need consultation with young people. The old people can go and retire in Tauranga.

  2. Totally agree with Geoff and other respondents so what we really need Geoff are some thoughts/ideas on strategies to get the Auckland NIMBYs on board. We have a government that wants to take the decision making away from local governments and does not provide any standard processing mechanisms (or budgets) for local government to drive the (unitary planning) processes. Has the government provided councils with templates for producing unitary plans or is the planning process just another opportunity for jobs for over-paid government snouts?

  3. In south auckland we have some of the best market gardens in NZ because of the micro climate, and they export too. You cant do that when some developer makes it into overpriced sections
    I here that if the gardens closed we would have to import onions, for one crop I dont know what else would be the same

  4. Infrastructure is the biggest problem with any idea to increase the sprawl that is Auckland. When the new infrastructure is built and operational it won’t come close to being able to properly service the new house which is already planned. Build up, not out. It’s a city. Cities don’t have huge detached houses in them. The suburbs, if they are going to work, need to be connected to the city, if that’s where the majority are going to work, by infrastructure which just isn’t there and isn’t planned to be there. Then there’s building housing that the people who need it can’t afford. It’s a complete mess and, there is no political party or movement that can or will deal with it.

  5. The problem is Auckland
    1/3 of the nation’s population in one city is silly
    We need to do more to encourage people to live away from Auckland

    Either a “JAFA Tax”
    Or a subsidy for everybody who doesn’t live in Auckland

    Either would need to be big enough to make a difference – and should be applied until Auckland is below 10% of the Nation

      1. Hi Russell
        When you get a mass of people together you get a positive feedback – that makes that population larger
        More customers, more workers – and so on
        In the UK this effect has destroyed the northern cities – the pull to London killed them

        We need something to counter this effect – subsidies or taxes – or????

        1. Agglomeration happens for a reason. We have to make sure it is for the right reasons. I’m personally not against a big Auckland, if it is a good quality international city that can compete with Melbourne and Sydney for talent.

          1. Hi Geof
            It’s a question of scale – Singapore operates as a “City State” – but if you are going to operate as a country you should NOT have too much of your population in one place

            This is made worse by the fact that most immigrants get to Auckland and then stay there so not only is too much of the population in one place but too much of the growth is there as well

            “that can compete with Melbourne and Sydney for talent”
            What makes you think that a big city attracts talent?
            The smart people know that they can have a better lifestyle away from the big cities.

          2. If you were right then we would have no problem. Unless you are saying that the growth of Auckland is down to people’s stupidity? If that were true Auckland is doing the rest of the country a favour soaking up all the silly people!

          3. Hi Geof
            That would be fine if all of the “silly people” fell into a black hole or something but Auckland is part of NZ – so we end up with policies that are wrong for the rest of us because of the distortion caused by Auckland – like housing!!!

  6. This face off with local and central government is interesting. Youve got both Labour and National agreed that if the Auckland council dont do as theyd like then they will legislate against them. Wow!
    This stupid immigration policy it the biggest factor. Too many people not enough houses. Its simple math. Stop immigration until the houses are there otherwise more and more will be living in cars. Does anyone truly believe that another hundred or two hundred thousand immigrants will improve the lives of people living in Auckland already?

    Unfortunately I think our economy is feeding off this immigration and house price appreciation with a massive increase in Money supply along with huge growth in household debt. Killing the golden goose is not something National will do. The consequences are that the poor are getting much poorer with ‘native Aucklanders’ earning an average wage are now priced out of home ownership.

    Its like any investment boom. People will keep investing from everywhere as long as they think the tax free returns will increase. Lower interest rates here will just further the boom but at some point houses will have to return to a point where the people living in them will be able to afford them.

    Maybe I think differently to the government but for me a house is a necessity of life. Its a shelter. Perhaps National think this is what a cars for? All future governments need to get back to houses being this necessity and not an investment vehicle.

    1. Right on Mark. I agree citizens should have access to affordable housing. Too much immigration helps GDP, but damages the quality of life of present citizens. Much better to build lots more lower cost homes. Oh, we tried that, with State Houses, and it worked!

    2. Couldn’t agree more. Property is an easy tax free investment and until such time as this is addressed the ability to be a home owner will become increasingly more difficult as the market continues to be driven by greed. New land becoming available on the fringe of Auckland is being priced beyond affordable rates, I mean $500k+ for 600sqm 40kms from AKL CBD, is frankly daylight robbery. Then you add the excessive services and rates pricing all because of it being a new subdivison. Building covenants only allow a certain type of build so your low cost kit set home, prefab home, container home etc which could all be built for under $200-300k are all ruled out and your base build cost today is around $2000/sqm so even a modest 180-200sqm (covenants again at play forcing single level with minimum foot print of 180-200 sqm) home is going to set you back $400k, so effectively you’re in for a cool million. How a house is built in Sq metres is a factor to, take for example a house which is 10m x 10m. This house equals 100sqm of space with 40 lineal metres of outside walls and structural construction material. You change the design to 5m x 20m, the Sq metre is still 100, but now the lineal metre equals 50, an increase of 25%, which means your build cost just increased by 25%. Most people don’t even consider this when designing a house and most build companies don’t explain this. Single story building is inherently stupid when you have small plots of land and a housing shortage.

  7. Absolutely agree. What a pity that our media are so dumb about the hidden costs and miseries of urban sprawl.
    The family hunkering down for the night in a car in Mangere better keep that car if they finally get a shack in Tuakau or Pokeno – because they will need it to crawl to and from their minimum-wage jobs along the burgeoning-but-never-decongesting motorways for 4 hours a day. Goodness knows how a decent education or family life fares in this situation.
    And let’s not mention any climate change issues (Mr Key won’t).
    High-speed electric rail linking strong decentralised employment centres and plenty of protected horticultural land (itself a major employment generator) in between and isthmus density equal to the norm for liveable cities overseas, is beyond the current Government’s – and apparently the Labour Party’s – understanding and sympathies. Not enough in it for the highway lobby and the minimum-taxed speculator/landlord constituency pulling National’s strings, I guess.

  8. Some thoughts on the issues which don’t seem to have black and white solutions.

    I thought that the point about sprawl and infrastructure is misleading because increased density creates the same problems – pressure on existing roads, sewage, public transport – i.e. additional infrastructure development is required either way. Lake Road in Devonport (or any of the arterial routes in Auckland such as Pah Road, Dominion Road etc) is an example of how current infrastructure is bulging at the seams – all of the solutions will require truckloads more infrastructure investment however you achieve the additional homes.

    Development and incentives for businesses to locate out of the CBD would seem a necessary part of the solution – the current intensification of commercial space in downtown Auckland appears to be a big part of the problem. A bigger rating burden on inner city commercial properties is an option to reflect the transport infrastructure costs that their decision to setup in the CBD creates.

    Congestion charging in London works because it has a brilliant public transport system. In Auckland its likely to just add costs to commuters without choices. Just noticed the comment about living in New York which would be nice apart from the obvious differences between NY and Auckland.

    Immigration settings which don’t flex to changing circumstances is another example of the politicians and the public sector turning their blind eye to the issues (as MPI have so ineptly demonstrated in an unrelated resource issue). The unwillingness to honestly face up to the issue of rampant population growth beggars belief. It was revealing that the new migrants actually dragged down our per capita GDP in recent stats.

    Imposing artificial limits seems to just enrich land bankers is an unpalatable outcome for the ordinary folk who can’t afford expensive apartment solutions or don’t want to live in high rise rabbit hutches. Infrastructure investment is a given whatever the solution. A free market democracy should facilitate solutions that allow individuals to choose according to their aspirations and not impose black and white solutions dreamed up by the control freaks of the world.

    And on the environmental impact I suspect that the long term impact of new subdivisions may well be less than that of the cattle/daily/sheep currently relieving themselves freely all over the pristine landscape.

    1. Denser cities have reduced congestion because people don’t require cars to get around. It is a lot easier to supply public transport in a city like London because…. density. You can’t compare congestion at nodal points of density in Auckland with a completely different model for urban development.

      1. Actually London has enormous sprawl and commuters travelling in from quite some distance – enabled by a public transport system that’s had centuries of investment. Public transport there is a consequence of the city’s long development over the hundreds of years. Arguing that London is a good example of a dense city tells me that you haven’t actually looked at the facts and that your solution is more glib than fact based… Descend into jargon (nodal points…) if you like, it doesn’t mean that you actually have addressed the big picture. Complex problems are not going to be addressed by slogans or simple minded solutions. Thought you guys were supposed t be fact based?

  9. Geoff, you would be the first person through the media to actually address the environmental and biodiversity costs of urban sprawl. I even thought the unthinkable – the demise of One Tree Hill Domain and Cornwall Park; these so-called icon reserves and focal points, not to mention places to jog, simply enjoy a pleasant stroll, to partake in sports and for children’s play. One Auckland University professor has even looked at the impact on the Auckland treescape of increasing housing densities – no room left for trees. These may seem mundane and unimportant but are critical to the concept of a liveable city. Why on earth aren’t we addressing what is now fast becoming a problem we can no longer ignore – rampant immigration? This is the equivalent of the population of my city of New Plymouth every year: 68,000 last year. We not only have infrastructure crises to face but environmental and amenity issues as well. Here in New Plymouth we are blessed with wonderful places to enjoy the outdoors, but there are few new subdivisions that have catered for amenity and recreation. Residents are unable to contribute amenity because their sections are too small to grow significant trees. Auckland must be far worse! There are just too many people in the world and New Zealand is now starting to feel it.


  10. Geoff, I’ll respond to your three questions, but two of your assertions need a reply first.
    a. Labour hasn’t ignored the demand side. Property speculation needs to be dealt with. I have said consistently we’ll address the range of tax policies that cause the massive flows of investment into real estate speculation. And for a start we’ll ban non-resident foreign buyers from buying existing homes and if they want to invest in housing here they can build new ones.
    b. You seem to suggest the Special Housing Areas have encouraged windfall gains for speculators. They certainly have, which is why so few houses are being built in them. But that is not confined to the SHAs. It is a feature of the entire urban land market, and especially on the fringes.

    Your questions:
    1. Who will pay for sprawl?
    You acknowledge we’ve argued costs of a new development, including connections to the networks, must be fully internalised. And you say our proposed model of bond-financing and targeted rates doesn’t include transport costs. But logically there is no reason a fair share of the required road or transit capital costs, and possibly ongoing subsidy, couldn’t be included in the infrastructure package. On the other hand if government (central or local) wants to develop a certain area then they could finance the transit out of taxes or rates, for example electric rail to Pukekohe or a rapid transit busway into Auckland’s north west. I agree network charging looks increasingly like an important part of making this new approach work, and I think we are going to have to look at it. David Lupton’s post at interest.co.nz makes some good points on this. http://bit.ly/1WHCiaA

    2. How will he overcome the NIMBYs?
    We’ve made it clear our policy is to use a National Policy Statement to direct Auckland Council to free up controls on height and density to allow more medium density, particularly around town centres and transport routes, so the city can grow up in a sensible and equitable way (not just in West and South Auckland).

    3. What about the environment?
    a. You assume there will be lots of sprawl (and thus more carbon emissons) under our plan, but if we free up density controls, properly internalise costs of new developments, and promote at-scale urban renewal projects in the city as we intend to do, and invest more in transit, those changes will tip the scales in favour of intensification.
    b. We will build the Congestion Free Network, with rail in the south, and busways in the north and north-west, so those growth corridors are served by rapid transit. Better PT in the city, more intensification, uber and ongoing demographic trends are all taking us in the direction of a city where people will no longer have to own a car to live.
    c. We’ve advocated for protection of special areas and cited the Pukekohe soils, areas of ecological value like the Waitakere Ranges and the coastal strips, and I would have thought protecting catchments that feed the Kaipara Harbour a no brainer.

    Two final points. You say the current system is containing sprawl. But it is not doing it very well. Look at Pokeno. Second, you say that more density will deliver more affordable housing. I want density done well, and hopefully it will deliver more affordable options like apartments and terraces in places where people want to live. But more density, as desirable as it is, won’t fix the underlying problem of massive land price inflation which is at the heart of the problems we have. Which is why we need a better way of managing urban growth on the fringes.

    Great headline, but I haven’t joined ACT. Labour has always been about fighting privilege. I don’t think there is anything progressive about supporting restrictive land use rules that entrench privilege and allow speculators to get fat while families live in caravan parks.

    1. Thanks Phil, kudos to any politician who takes the time to debate and substantiate their ideas.

      1/ I’m happy to debate how much “foreign” buyers (however defined) are the problem, and whether Labour’s policy would make much difference. Suffice to say I don’t think that policy would take care of the demand side.

      2/ It would be methodologically very difficult to embed the ongoing costs of congestion and public transport subsidies in a one-off charge, and if you did there is a huge risk you’d get it wrong. As Lupton suggests, a congestion charge is central to the answer here, and if an announcement around that had been part of Labour’s package then it would have gone a long way to answering our concerns. Simply copying Houston as currently suggested by NZ Institute and your policy is not tomorrow’s solution.

      3/ Apologies if we missed a previous policy announcement about using the NPS, but in the debate about the limit that change is a vital pre-requisite to reforming any limit. Without doing that prior to removing the limit, it will just result in sprawl. Your announcement has been painted as a political consensus for sprawl which is incredibly concerning, particularly given Auckland Council is wrestling with this stuff right now.

      4/ I’d love to believe you about environmental protection, but NZ has been terrible at preventing diffuse environmental damage in the past. Forgive me for being cynical about that changing without substantial reform of environmental regulation.

      5/ You’ve hit the nail on the head re land prices being at the heart of the problem. I don’t think your solution will resolve that either – Auckland is already far bigger than most other cities of the same population. Which brings us back to the demand side… if Labour were truly progressive that is what you would deal with.

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