Nick Smith emphasises 'the importance of the Council concluding' the Unitary Plan process; Says he'd opt for an over-supply of housing over developers securing a monopoly on the market

The Government has tepidly welcomed a panel of experts’ recommendations the Auckland Unitary Plan should allow for enough sprawl and densification for 422,000 new dwellings to be built in the next 25 years.

Environment and Housing and Building Minister Nick Smith says he’s reluctant to comment on the details of the proposed plan put forward by the Independent Hearings Panel while the semi-judicial process is underway.

Yet he is assertive is encouraging Auckland Council to either approve or agree on how it wants to modify any of the panel’s recommendations by its August 19 deadline.

The Government’s supply-side solution to solving Auckland’s housing crisis hinges largely on the Council passing the Unitary Plan that’s been five years in the making.

“It’s not for me to be trying to influence the Council as it now works its way through those recommendations and comes to a decision. So today I’m not going to be expressing a view on the plan and trying to influence the Council’s decision.

“I just want to emphasise the importance of the Council concluding the process,” Smith told those gathered at a media briefing.

“It is certainly the Government’s view that a failure to provide adequate supply and plans, is at the core of the housing supply and affordability issues that Auckland has.”

Finance Minister Bill English earlier this month said the government could force the Council’s hand through legislation to free up more land for housing if it had to.

Speaking on TVNZ’s Q + A programme, English said that if the Council refused to ratify the plan, the government “would certainly be having discussions” with it.

The Council has until August 19 to consider the Panel’s recommendations and decide whether to accept or reject them.

If it rejects a recommendation it must explain why and provide an alternative solution that is within the scope of submissions made on the 2013 Proposed Auckland Unitary Plan.  

The Council may be eligible for a 20 working day extension if it gets permission from Smith.

Nick Smith: “It is far better to over-supply the market”

Smith has refrained from praising the Panel for recommending enough land be freed up for 22,000 more houses to be built by 2041 than projections deem necessary.

Yet he says: “The National Policy Statement that the government has approved, makes plain that it is far better to over-supply the market to get genuine competition in the housing industry, than it is to have a situation where a few developers have a monopoly and are able to extract very high prices for houses. That has contributed to the issue of high house prices in Auckland.”

Nonetheless, the Government in the past hasn’t been keen to ‘over’ over-supply the market, with Prime Minister John Key earlier this month rejecting former Reserve Bank Chairman Arthur Grimes’ challenge for politicians to embrace a 40% fall in Auckland house prices.

“I think it’s crazy”, Key said.

“Go and ask the average Aucklander who has got a mortgage with the bank whether they want see 40% of their equity disappear on a sort of notion from an economist that you’re gonna crash the market.”

Smith recognises the reality is the construction sector is under pressure and isn’t on track to building as many homes the Panel’s plan creates capacity for.

He says over the next six years, industry has the capacity to build nearly 80,000 homes. Auckland currently has a shortage of 40,000 and the proposed Plan makes way for 131,000 dwellings to be built in the next seven years.

Smith says 9250 dwellings were built in Auckland last year, 12,000 are expected to be built this year and 13,000 next year.

“Over the last five years we’ve had about 20% compound growth in residential construction in Auckland. We’re going to need to keep up that sort of growth… if we are to meet the sort of growth Auckland needs.”

Andrew Little: The Panel’s done the “bare minimum”

Labour Leader Andrew Little backs Smith in saying “The pressure is now on Auckland Council to do the right thing, and back the recommendations.”

Bear in mind the Auckland’s local body elections take place on October 8.

Yet Little is calling for the Government to explain why the Panel removed affordability requirements at the behest of the Ministry of Business, Innovation and Employment and Housing NZ.

“[The Panel] recommended removing the requirement for developments over 15 dwellings to contain 10% affordable houses (report section 6.2.6). It beggars belief the Government asked the panel to scrap affordability requirements when Auckland is desperately short of affordable housing,” Little says.

“Labour believes the panel has done the bare minimum to help Auckland deliver just the number of houses it needs. But by retaining the urban growth boundary and adding more land, it simply risks feeding Auckland’s speculative frenzy.

“Labour would like the panel to have gone further and replace the urban growth boundary with a smarter way of managing the city’s expansion that includes:

– More intensive spatial planning 
– Protecting areas of special value, ie sites of Maori cultural significance or the Pukekohe soils
– Mapping out roads and infrastructure
– Ensuring new developments carry the cost of their infrastructure
– Investing in rapid transit to support new developments