Bernard Hickey argues the case for the Government to rapidly ramp up its program of building and selling affordable apartments on Crown land

By Bernard Hickey

The national quest for more (actually any) affordable new homes in Auckland took a few welcome turns this week, but there’s still much, much more to be done, and it needs to happen with much more urgency and clarity.

The Government needs to emulate Waisake Naholo’s direct approach in the first test against the Welsh when a try was desperately needed in the 62nd minute. He called for the ball and just bolted low and hard and fast for the try line. There was no faffing around passing it 15 phases and hoping for a break-through.

John Key’s tentative moves towards an Urban Development Authority this week and Nick Smith’s announcement of the first housing development agreement with Fletcher Building in Auckland were signs that the sense of urgency about the Government getting directly involved is building.

For way too long, the Government has taken a hands-off, incremental and deflecting approach to Auckland’s housing supply crisis. It had hoped the private sector would step up to solve the housing supply crisis on its own. When that didn’t happen through 2013, 2014 and 2015 the Governments (both in Auckland and Wellington) spent a lot to time milling around, consulting maps and pointing in various directions. There was a giant team talk behind the goal line with Bill English and Nick Smith gesticulating and pushing Auckland Councillors in the chest over land supply, consenting delays and asset sales. The end result was not much forward momentum.

English’s allocation of NZ$52.2 million to Smith in the 2015 Budget to then go and buy Crown land to then commission Fletcher Building (was it ever going to be anyone else?) to then build and sell affordable houses in bulk was a sign the Government realised it couldn’t just sit back and wait. That it took another year for the first deal to be signed and that the first home won’t be built on that land until August 2017 shows that the Government is no Waisake Naholo.

Now the issues are clearer and the team seem to shaping up for a more direct approach. 

English allocated another NZ$100 million in the 2016 Budget last month to buy more Crown land for more of the deals like the one agreed with Fletcher Building on June 17 to build 196 detached, terraced and duplex homes on 9.2ha of land at Massey East, including 59 for social housing.

The Government then appeared to acknowledge indirectly this week that the Auckland Council just can’t afford to borrow much more to fund the infrastructure needed for all these houses. John Key started talking publicly about the need for a central-Government-sponsored Urban Development Authority (UDA) that would enable developers and infrastructure builders, possibly from China, to pay for and build entire new sections of the city. This would be independent of Panuku, the Auckland Council version of a UDA.

Another sign that the Government is shifting came this week when it dropped its long-standing reluctance to allow congestion charging, which has been another source of contention borne of the Council’s inability to easily fund new infrastructure. That was on top of the Government’s (again) belated concession at the beginning of the year about funding a share of the City Rail Link.

But all of the Government’s actions so far have been begrudging, delayed, stuttering and lacking in conviction.

Now it needs to step up and use its balance sheet, its land and its ability to kick-start a major structural change in the way houses are developed, built and sold in Auckland. It knows how to do it. The ramping up of a mix of affordable duplexes, apartments and stand-alone homes at Hobsonville and Tamaki over the last two years, along with the latest Massey East plans, show the models are there. The Government has also taken confidence from similar build-and-sell programmes in Christchurch, where 1,020 homes were built inside a couple of years.

I understand there is a growing appetite within the Government to ramp up these build-and-sell programmes, both through Smith’s Crown land projects and through Housing NZ, which has plenty of land to build on. A UDA could also fill the infrastructure funding hole in certain areas.

The Council has also created a pipeline of land equivalent to 96,000 sections over the next 14 years for developers to build on, particularly inside the city’s boundaries. Even before the Unitary Plan is decided, there is plenty of space for developers to build the sort of three storey apartment and townhouse developments with one and two bedroom houses that are desperately needed inside the city’s old boundaries.

The Government can set the example and lead from the front by showing private developers that these sorts of projects can be built and are marketable. It has shown the way in Christchurch and Hobsonville. 

Now it is time to step up Naholo-style and just blast through with a much bigger programme of house building on Housing NZ and Crown land that can be sold on to first home buyers at affordable prices. It would cost several billion dollars to kick-start, but it could prove the model for private developers to kick their addiction to big and unaffordable bespoke houses on the fringes, and more importantly, give the land bankers a fright with a rush of supply.


A version of this article was also published in the Herald on Sunday. It is here with permission.