English says Auckland Council should design planning system that recognises consequences for current and future generations, and rest of NZ; says rising house prices driving inequality, increasing fiscal costs and financial instability

By Bernard Hickey

Finance Minister, Deputy Prime Minister and Housing NZ Corp Minister Bill English has told Auckland Council to design a planning system that recognises the consequences for current and future residents, and the rest of the country.

He addressed the issue of urban planning in a speech in Auckland in the wake of Auckland Council’s decision overnight to withdraw its more dense Unitary Plan maps from the Independent Hearings Panel process on the Plan.

He said the Government was focused on rapidly rising house prices for three reasons.

“They can have a significant effect on the macro-economy and financial stability. They can drive inequality, as high prices favour current owners. They are a fiscal risk for the Government,” English said.

“We spend $2 billion each year on accommodation subsidies. Sixty per cent of all rentals are Government subsidised, and the Government owns one in every 16 Auckland houses. When house prices skyrocket, it means these services become more expensive,” he said.

“There’s no quick fix to the Auckland housing shortage. Lack of land supply, and hence higher prices, occur when the planning system isn’t working properly. We want a planning system that recognises the consequences for all current and future residents, and for the country. One that coordinates these interests, but does not restrict growth.”

‘New rules appear to having effect on house prices’

English said the Government had taken various measures to increase housing supply.

“But because increased supply won’t be immediate, we’ve also taken other steps,” he said.

“New rules ensure investors, particularly those from overseas, now pay their fair share of tax when buying and selling residential property for profit. And Inland Revenue has extra funding for compliance and enforcement. Combined with the Reserve Bank’s tighter loan-to-value rules, these changes appear to be having some effect on Auckland house prices,” English said.

“Regardless of whether these figures signal a turn in the market, we need an enduring solution to housing supply. By 2045 Auckland is expected to grow by more than 700,000 people. It is essential that central and local government works together in deciding how to best meet these demands So there is plenty of work ongoing,” he said.

English hopes Govt relationship with Auckland isn’t hurt

“And as an aside, it is my hope that election year in Auckland won’t affect the positive relationship between central government and Auckland city, developed in recent years,” he said.

“We have developed a focus on generating solutions based on a common understanding of the problems. I hope mayoral and councillor candidates will feel the same pressure we in central government feel – the need to solve obvious problems faster.”

The Auckland Council would have to respond to the Independent Hearings Panel on the Auckland Unitary Plan this year, he said.

“It is critical that the plan provides enough scope for increasing housing supply to meet the demands of this growing city. Exactly how that is delivered – the combination of up and out – is something that Auckland should decide for itself.”

English then mentioned an ongoing Productivity Commission review of resource management, urban planning and transport planning.

“Longer term, we are looking at a wider set of options for regulating our housing market, because our cities need to grow efficiently,” he said.

“Over the past 25 years New Zealand has gone through extended processes to reform our electricity, telecommunication and financial markets. In each case it took years to understand the impact of existing rules, and how to change them to achieve a more efficient market. Now we are addressing housing in the same way. Often politicians are accused of being focused on the short term.

“That’s one of the reasons issues like long-term social dysfunction and housing market reform haven’t been dealt with properly in the past. This Government is taking a long term view.”

(Updated with more details on economy and urban planning)