“Planning” to stop Aucklanders plan

Kip's Law:  "Every advocate of central planning
always — always — envisions himself as the central planner.”

“The monument to Soviet central planning was . . . a heap of surplus
left boots without any right ones to match them.”
~The Economist

“[Today’s argument is about how to pay for the Auckland mayor’s rail dreams fantasies.] There is
of course no good way to pay for something you do not need.”
- Owen McShane

There is nothing more odious than the sight of a group of politicians with no real skills between them running up the flagpole their “plans” for a region’s (or a country’s) economic future.  The spectacle of Len Brown and his equally inept councillors issuing a “Thirty Year Plan” for Greater Auckland——and an equally motley lot attempting to predict how Christchurch will develop now its east and centre have been devastated—a band of people unable between them to even manage their credit cards telling several million other people how and where they must live and work—would be amusing if not so damaging.

A myth exists that politicians “run the country.” That without them no planning would exist. Nothing could be further from the truth. The only planning that truly does exist is not the shambolic dictation of politically-diven reef fish suffering from power-lust, but the economic planning undertaken every day by all those millions of people who aren’t politicians.

The overwhelming majority of people [notes George Reisman] have not realised that all the thinking and planning about their economic activities that they perform in their capacity as individuals actually is economic planning.  By the same token, the term “planning” has been reserved for the feeble efforts of a comparative handful of government officials who, having prohibited the planning of everyone else, presume to substitute their knowledge and intelligence for the knowledge and intelligence of [hundreds of thousands], and to call that planning.

We don’t have to look at Soviet Five Year Plans to know the failure of central planning.  The feeble ability of politicians to successfully “plan” anything beyond their own TV appearances can be seen in the Auckland roading network itself, which was “planned” by the panjandrums back in the 1960s (back when a fifth-hand Morris Minor was a sought-after family car), and is only now being partially completed fifty years later.  (An “achievement” underscored by Andrew Galambos’s pithy observation that traffic jams are an example of the collision of capitalism and socialism: capitalism can produce cars faster than socialism can produce roads.)

And the paucity of “vision” exhibited by political entities can be seen in their plan to create a new government department with the power to “plan” the recovery of  Christchurch—a recovery whose possibility is daily prohibited by the very entities who will head up the department. And it can be seen in that the statements made last week by the “chair” of the Christchurch Planning Committee Sue Wells (poor woman thinks she’s a piece of furniture) that the “Spatial Plan” previously drawn up by her Committee of Super-Importance will need only “minor tinkering” now the city they purport to “plan” has been devastated by two of the biggest earthquakes in modern history.

Perhaps she and her colleagues could look at the history of West Berlin, and how (after the devastation and dislocation of the war had ripped out both its heart and its other half) the heart of the newly-divided western part of the city quietly relocated away from the Wall that had cut right through its former centre to a newer, less damaged centre around the Kurfürstendamm that was both more logical and more economically viable in the changed post-war environment than its former heart around Potsdamer Platz.  (A move to ponder in considering the resurrection and probable relocation of Christchurch’s heart.)

Or perhaps they could just get the hell out of the way so people can plan their own futures with all  the planning and economic coordination made possible by the price system and voluntary cooperation rather than by grandstanding and political prohibition.

This is what it really would mean to “unleash Auckland.”  The debate in Auckland at present however is the manner in which Auckland’s elected and unelected diktatoriat wishes to put a leash around Aucklanders’ necks.

In this guest post below, Owen McShane comments on the new “Spatial Plan Discussion Document” issued by Auckland’s would-be central planners last week, saying the battle lines are being drawn “between retro vision and current realities.”

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Retro Visions vs Current Realities: The Chips are Down
by Owen McShane

Auckland’s Spatial Plan – Council's Discussion Document.
    1. Evidence or Visions?
    The battle lines are being drawn.
    The Government legislation that created the Auckland Council included a requirement for an “evidence-based” Spatial Plan as a general planning framework for the region to be governed by the new Auckland Council. Government has recently presented a set of position papers establishing its preferences for an approach based on rigorous analysis of existing patterns and trends rather than utopian and coercive visions. The position papers flag the reasonable position that Government will not ask the taxpayers to fund major projects focused on the Auckland CBD unless they are supported by rigorous analysis, including costs and benefits.
     The Council has today published its own discussion documents – Auckland Unleashed – and it seems New Zealand may be entertained or mortified by a long battle between two opposing attitudes towards developing an appropriate “spatial plan.”
     The Government has the whip hand insofar as the Council hopes the taxpayers will fund many of the visionaries’ bills. Those who are asked to pay the piper can reasonably expect to call the tune.
    On the other hand, over the past few decades, the ARC and its Smart Growth friends have had the advantage of enthusiastic support from the news media, and a host of commentators and influence brokers, who have backed these Smart Growth utopian visions with unalloyed enthusiasm. Our local regional governments and advisors have been slavishly following the patterns already established in a multitude of cities and regions in the New World.
     However, over the last few years these Dense Thinking coercive policies have delivered their inevitable downside and the costs have come home to roost.
     The recent collapse in the property and finance markets has certainly generated some second thoughts within the New Zealand Herald. Recent editorials, and columns by informed commentators such as Fran O'Sullivan, are raising questions, and challenging assumptions that should have been asked and challenged in the past.
    The Herald has even recognised that people's responses to surveys often indicate what those surveyed believe other people should do, rather than reflecting their own real-world choices or preferences. Much of the public support for public transport reflects a desire for other people to ride on trains to free up the roads for their own convenience. [Ninety-five percent of people surveyed think other people should use public transport. – Ed.]
    So before the “discussion” gets underway we should all insist that the policy makers and planners open their conversations with questions asking “How and where do you want to live?” rather than “How and where do you want everyone else to live?”
    The Council's discussion document is here:

http://www.aucklandcouncil.govt.nz/EN/AboutCouncil/PlansPoliciesPublications/theaucklandplan/discussiondocument/Pages/home.asp

    2. The Herald Challenges Past Planning Dogma.
    A good starting point for the Herald's reporting is here:

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10714546

    And useful links, including Fran O’Sullivan’s “Brown Needs to Up the Ante”, are here:

http://www.nzherald.co.nz/super-city/news/article.cfm?c_id=1501110&objectid=10714533

    However, Brian Rudman continues to hold the traditional retro-rail fort. His position is a simple one – which explains much of its appeal. His answer to every urban problem is a train.
    Professor Jonathan Richmond, author of the seminal work “The Mythical Conception of Rail in Los Angeles” somewhat wistfully observes that males do seem to be fascinated by the sexual metaphors associated with rail including the prospect of long shiny tubes plunging into deep dark tunnels.” When did you last hear a woman champion the benefits of riding on the trains?
    See the pages (13 – 16) titled Technological Sex Symbols on Steel Rails, for Richmond’s entertaining but perceptive commentary.
     Anyhow, the shift in the Herald’s thinking is a political game-changer. Maybe the editors of the motoring pages have suggested that Aucklanders are not addicted to their cars – they actually chose to use them because they provide so many benefits. Women in particular appreciate having their own grope-free zone.

    3. Auckland “Unleashed” or Auckland “Constrained”?
    Paragraph 374 of People and Place indicates the Discussion Documents’ overall bias in favour of a compact dense city where land use is constrained by Metropolitan Urban Limits.
    While the options are mentioned the document keeps returning to this current model as the preferred option. It reads:

374. The existing option is for a quality compact Auckland where growth of people and jobs is directed into our town centres along our main roading arterials, and is confined within a metropolitan urban limit where the urban area accounts for about 12% of all of the land across Auckland. The limit to growth within Auckland was based on accommodating 20 years of growth, noting that growth would need to include higher densities around the centres and more intensive patterns of development along growth corridors.

There is little discussion of who does this directing of people and jobs and where they derive their moral authority to do so. Anyhow, there is little in any of these documents to suggest that Auckland is to be “unleashed” – indeed the general tenor of the promotion plans for everything suggests that Aucklanders will remain severely constrained and must learn to do as they are told.

    4. The Unfortunate History of Metropolitan Urban Limits.
    Metropolitan Urban Limits, of one kind or another, have a long history.
    A villa was originally a Roman country house built for the aristocracy who made sure their country estates were not surrounded by plebeians by containing them within the city walls. Many plebeians lived in tenements called insulae. Some were above or behind their shops. The Romans were early adopters of mixed use and MULs.
    More recently, the urban Jews of Europe were contained in ghettos with clearly defined limits to keep them in their place. Around 1800, the Russians engaged in the first modern exercise in social engineering, treating the Jews as earth or concrete to be shoveled around. They confined the Jews behind the limits of the Pale of Settlement. Those who emigrated were “Beyond the Pale.”
    More recently again, the US cities confined their black populations to the “red line” districts which were an informal system of urban limits which set the territories where properties could be sold to blacks and where they could not.
    Kathryn Stockett, author of The Help, reminds us (or should remind us) of another consequence of urban limits when she describes a black neighbourhood in Jackson, Mississippi, in 1962:

So Jackson’s just one white neighbourhood after the next and more springing up down the road. But the colored part a town, we one big anthill, surrounded by state land that ain’t for sale. As our numbers get bigger, we can’t spread out. Our part a town just gets thicker.”

    And rents get higher. The American black families were only able to join the middle class when they were unleashed from these constraints and able to move into the suburbs and buy their own homes and secure family assets that could finance their children through college.
    Metropolitan Limits, whether stone walls, informal understandings, legal zoning rules, or some variation of the Pale have always been used to keep the poor and unseemly in their place.  As I said to a committee of Rodney District Council some years back:

 These MULs work at one level. You don’t see many Maori families in Rodney District do you?”

 

    5. Put Bad Data in – and Bad Plans Come Out.
    The Herald story is accompanied by claims that “by 2050, 2.6 million people will live in Auckland”. This meaningless statistic is used by Auckland central planners to justify massive spending on rail tunnels etc, all serving Auckland’s central core.
    Actually, four future populations for “Auckland” have been “mentioned in dispatches” – 500,000 more, 700,000 more, and 1,400,00 million more (double), and the total of 2.6 million listed above. (Critics should always ask “What and where is Auckland?”)
    These population projections for the Auckland region, or wherever, make no attempt to identify where in “Auckland” the growth will actually occur.
    It may be true that Auckland’s population will grow by some large number over the next 30 years but where, within Auckland, will this growth actually take place?
    The international evidence is that Auckland’s urban core will lose population and jobs and yet that is where the central planners seem determined to spend most money on infrastructure. (See my previous Digest for the evidence.)
    Clearly the Auckland planners want to stop people living and working where they want to and force them to live where they will supposedly use public transport rather than their evil cars.

    6. The suburbs will grow and the central core will shrink.
    Wendell Cox's  analysis of all the US and Canadian cities of more than 1 million people strongly indicates that the urban core will lose population and jobs to the suburbs and beyond.
    Phil McDermott's work suggests this is already underway in Auckland. Go to Cities Matter at:

http://cities-matter.blogspot.com/2011/03/new-zealands-changing-settlement.html

    We are in for a fight between the central planners and the believers in spontaneous order. The Herald editorials of the last two days, and the columns by Fran O'Sullivan, support the argument that the market and people’s preferences will prevail. The costs of trying to stop this natural churning (The central planning penalties) will be high.

    7. New York Suburbs grow twice as fast as the Core.

    Wendell Cox reports on New Geography (25^th March) that the growth of New York population reflects the general trends of cities in the US and Australia. (Note: the census period is ten years and the 2.1% core growth occurred over ten years and is not per annum growth.) This is hardly a triumph of agglomeration and densification. Wendell Cox writes:

  Just released census counts for 2010 show the New York metropolitan area historical  core municipality, the city of New York, to have gained in population from 8,009,000 in 2000 to 8,175,000 in 2010, an increase of 2.1 percent. This is the highest census count ever achieved by the city of New York.”

    Nonetheless, the figure was 245,000 below the expected level of 8,420,000 (based upon 2010 Census Bureau estimates). The higher population estimate had been the result of challenges by the city to Census Bureau intercensal estimates. The city of New York attracted 29 percent of the metropolitan area growth. Approximately 43 percent of the metropolitan area’s population lives in the city.
    Overall, the New York metropolitan area grew from 18,323,000 to 18,890,000, an increase of 3.1 percent. The suburbs grew approximately twice as rapidly as the city of New York, at 4.0 percent, and attracted 71 percent of the metropolitan area growth.

    8. Auckland's Place in the Economy.
    Para 48 of “The Big Picture” says:

Nationally, Auckland contributes around 35% of New Zealand’s GDP annually, and is one of a handful of world cities that generates more than 30% of its nation’s GDP. Auckland’s share of the national population (33.4%) and its population growth rate (1.6% per annum), are both relatively high in international terms. The goal now is to use our strengths to improve our economic performance and contribution to the national economy.

    This ratio is not so unusual if we look at the Federal States of the USA, and even of Australia – which would seem to be a more reasonable comparison. After all, if New Zealand became a State of Australia, would Auckland generate 30% of Australia’s GDP?
    Phil McDermott’s take on this is that “the policy-makers lean too heavily on the notion that scale begets growth (agglomeration economies) when the reality is that Auckland has been underperforming the rest of the country (and our trans-Tasman neighbours).”

    9. Paragraphs 43 and 44 of “The Big Picture” trot out the standard myths
    which supposedly drive “urban intensification”:

44. The third megatrend is urgency to fix the environmental problems of the modern world. In today’s world, being green is a minimum standard. Global warming, pollution, peak oil, loss of biodiversity and water scarcity are driving public concerns for action by central government, local government and the corporate world.

    Curiously, all these issues encourage decentralization rather than intensification – unless of course you base your conclusions on dogma rather than evidence.

44. The Auckland Plan proposes playing a leading role in promoting a low carbon footprint for Auckland. We need to lead by example in energy efficiency, in the promotion of walking, cycling and public transport, and in landfill and waste management. The discussion document sets out some proposals for Auckland to harness the global trends in these areas.

    The Australian Research summarized in Consuming Australia concludes that inner city dwellers have larger carbon footprints than those living at low density on the periphery.
    Maybe the authors of the discussion documents should focus more on learning from the research on these global trends rather than on “harnessing them” – whatever that means. Could it be “constraining them”?

    10. Conclusion.
    These are no more than a few initial thoughts from a brief scan of one or two chapters of the “Discussion Documents”, and of “The Big Picture” in particular.
    But Council’s visions do not bode well for the economic growth and development of most of Auckland. The Council decision-makers seem determined to carry on with more “Smart Growth.”
    Rod Oram claimed on television that all the international research shows that cities that “ooze” into the greenfields are less creative etc and more expensive etc than dense cities with high quality public transport.
    Actually the international research shows quite the opposite. But it seems that Oram cannot distinguish between academic research and central planning dogma.
    Anyhow, we now have a document to get our teeth into, and it is encouraging to have Central Government, and the Herald, increasingly on our side.
    It’s time for those with concerns for the future of Auckland to challenge these vision-based false claims, one by one.
    We have access to the resources and skills, both local and international, to do the job.
    Christchurch appears to be seizing the opportunity to become a modern multi-nodal connected city, and end up as the dominant urban economy of New Zealand. The people may have loved their Heritage Buildings. But Auckland seems determined to create a heritage economy.

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The weasel words of “planning” power-lust

What do town planners mean when they talk about things like “affordable housing” and “community”? 

What they don’t mean is making houses affordable, or about anyone other than themselves.

The terms that planners use, and the way that planners use them, are nothing more than euphemisms for control. What they mean is nothing more than fog used to “transfer many of the most important decisions about the use of private property from the rightful owners to the political process, dominated by planners and the … most powerful and vocal special-interest groups.”

Michael Sanera of North Carolina’s John Locke Foundation has done us a favour by translating a few of the more arcane terms used by planners, all of which are used “to cover the reality that their recommendations reduce basic individual freedom.” Some of my favourites:

• affordable housing: An extortion scheme to force homebuilders to sell their houses at below market prices.
  The political demand for affordable housing is created by restrictive land-use policies, such
  as those recommended by town planners.
• auto-dependent: People who prefer to drive automobiles, and communities that fit their preferences.
• best practice: Whatever are the latest planning fads.
• compact development: Congested, crowed housing conditions.
• growth: City development the satifies to the whims of planners and special interests.
• incentives: Legal extortion systems operated by the city.
• mixed use: A combination of commercial, residential and other uses in the same area.
  An example of mixed use would be retail shops on ground floor and apartments or condos
  on upper floors. For most of the last century, this practice was prohibited by zoning “best
  practices”…
• open space: A requirement that homebuilders provide more land than homebuyers desire.
• public realm: Anything that can be seen from a street.
• stakeholders:  Special-interest groups consulted in the development of land-use plans and
  regulations.
• subdivisions: The revealed consumer preferences in neighbourhoods, which planners therefore dislike intensely.
• sustainability: Absurd idea that without government planning, builders would create developments that fail to meet people’s needs.
• trees: A valuable natural resource that planners (1) assume benefits everyone, (2)
  want planted and protected for everyone’s benefit, and (3) want the costs of
  the forced planting and protecting borne solely by the affected landowners.
• walkability: Designed to discourage driving.

Read them all here: A Planners' Glossary: Understanding Raleigh's New Development Code, the Diagnostics & Approach Report .

And bear in mind that town planners everywhere use these euphemisms for control—including here in Auckland, where Rodney Hide is about to give the scum more power over your property.

Sanera’s sign-off line from author C.S. Lewis is apposite:

    “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It would be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”

The nannying never ends.

Content is copyright PC.BlogSpot.Com © Please contact author for permission to republish: (organon at ihug.co.nz)

Rising house prices not the result of a ‘strong market’ but of a totally malfunctioning market [updated]

Bad as the Reserve Bank’s focus on bogus “price stability” is, which as Phil Goff bewailed last week it targets with the blunt instrument of interest rates, it turns out there is little it can do about housing prince inflation – but as we’ve explained many times before, and as Owen McShane explains in his latest newsletter, there’s something Phil and crew could do that could, and would:

    “The Reserve Bank is well aware that local government policies that restrain the supply of land raises house prices because supply cannot respond to changes in the scale and nature of demand.
    “The only way the Reserve Bank can respond to these real estate bubbles is to increase interest rates which in turn increases the value of the dollar.
    “New Zealand’s housing supply is even more constrained than ever because massive compliance costs and development contributions mean the cost of creating new lots now exceed their sale value.
    “These rising prices are not the result of a ‘strong market’ but of a totally malfunctioning market.
    “New Zealand cannot blame low interest rates for our housing bubble.
    “We have had one of the least affordable housing markets in the world and yet during the bubble years the RB maintained a high interest rate regime.
    “Indeed, international urban economists cite NZ as the counter-factual case study to challenge those who blame the bubble on cheap money rather than constraints on supply.
    “The so-called “Smart Growth” planners refuse to learn. They insist we have unaffordable housing because we have not had sufficient Smart Growth (dense thinking.)
    “Their response is to have even more restrictive plans, and in Tauranga they are now proposing enforced minimum densities.
    “Most true communists believe the Soviet Empire collapsed because its communism was not pursued with sufficient rigour.
    “Most central planners blame their failures on other people’s failure to do as they are told.
    “So beware. Smart Growth is coming to a town near you.”

‘GREAT DAY OUT’ UPDATE:

 

Why not join Owen and supporters at Alan Gibbs’s Kaipara farm for the Great Day Out?  Great food, great beer, and some alleged art – all in aid of a good cause.

Come and support Owen’s Centre of Resource Management Studies and Muriel Newman’s Centre for Political Research – and have a great day out.

Standard Donation supporters will enjoy a day at the farm and the Champagne lunch, and have a chance to share ideas with the Trustees and Directors and their friends and colleagues.

Premium Donation supporters will also be able to chose from:

• A guided tour of the alleged works of art by jeep.

• A ride in the Aquada on the lake.

• A helicopter flight over the farm

Head here for details, and to register.

‘Smart Growth’ and the coming ‘Housing-Led Recovery’ – or, to put it another way: ‘Oxymorons for Morons’ [updated]

I don’t know about you, but if I keep hearing excited talk about the oxymoron of a so-called “housing-led recovery” I’m either going to scream or blow up a housing project. News that mortgage lending is outstripping business lending by several percentage points is not news to about which we should be excited, but alarmed.

Haven’t we learned already that family homes are not productive investments but consumer goods? That buying consumer goods with investment capital is a great way not to recover, but to go broke?  That durable consumer goods whose prices are inflated by truckloads of the central bank’s counterfeit capital don’t represent “growth” but an asset bubble ready to pop?

If any other class of goods inflated as fast as houses do, and have, we’d want to do something about it.  But not when it’s housing.

The inflation and then the popping of the housing bubble, for which we’re all now paying, was brought about, in simple terms, by the ability of banks in a fractional reserve system to create credit out of thin air; all that newly created credit going predominantly into housing instead of genuine productive investment; and the supply of new housing being kept down by so called “town planners” – more specifically. those planners’ obsession with what they amusingly call “Smart Growth.’ 

None of these things has changed.

There’s no pressure to change or rein in the fractional reserve banking system, and little understanding of the urgent need for this to be done.  There’s very little mainstream understanding of the difference between productive investment and unproductive consumption.  And planners are still obsessed with so called Smart Growth.

If you only come here to read the economics posts, then you probably still unaware of the effect of this Smart Growth delusion on the economic disaster, so do yourself a favour and read Randal O’Toole’s latest critique of Smart Growth – which as Owen McShane says “is a ‘must read’ seeing so many local authorities are rushing to write Smart Growth into their current Plan Reviews” – go here to read How Urban Planners Caused the Housing Bubble. And in case you think this will be totally American centred, or of little interest to economists, then note this quote from page 17:

“In a recent survey of 227 housing markets around the world, former governor of the New Zealand Reserve Bank Donald Brash observes that ‘the affordability of housing is overwhelmingly a function of just one thing, the extent to which governments place artificial restrictions on the supply of residential land’.”

Would that Don, or his successor in the Reserve Bank, understand the effect of that particular institution on the housing bubble.

UPDATE: Vin Suprynowicz points out that continual government interference during the  Depression served only to delay economic adjustment and recovery.  As it was in the Great Depression, so too for this one.

How does it feel? [updated]

So to all those people claiming that Auckland’s new super-bureaucracy is a ruse to permanently remove leftists from political power in Auckland, how do you feel now that former Alliance leader and unrepentant Stalinist Laila Harre has been appointed to “help” in the transition from eight intrusive bureaucracies to one unchallengeable megalith?

• You think with her on board ensuring a “smooth transition” we’ll see the unleashing of a “hidden privatisation agenda,” as some have hopefully claimed will happen?
• You think with her “appointed to oversee the transition of staff into the new Auckland super-city council” we’re going to see to “savage” job cuts, as most of you have vainly hoped for?
• You think with her finger in the management pie, you’re going to see your rates bill go down, as so many of you desperately need?

Ever get the feeling you’ve been cheated.  Again.

UPDATE: Owen McShane comments at Farrar’s (who, all too predictably for His Wetness, thinks this is a “very smart appointment” – sheesh!).  Says Owen:

    Wendell Cox, a colleague of mine in the US who has made a reputation for his studies of mega mergers of Local Government, tells me that while mega-mergers are often driven by an alliance between business and the left, the end result of the-mega merger is to move the politics of the whole area to the left. Think of Red Ken in London.
    The mergers create great hostility at the local level which the left is more able to exploit. So while many seem to think that John Banks will wear the crown of the Super City, it is more likely to be Mike Lee of the ARC, or someone else from the left. . .
    The appointment of Laila Harre is entirely predictable from Wendell’s studies and we see the standard drama unfolding. Mike Lee will be the Mayor, Craig Shearer [a promoter of the Orwellianly named Smart Growth] will write the plan. and Laila Harre will be personell officer. Welcome to the mega world.
    Of course we will be proud of our world first achievement. There is no city in the western world of over one million population governed by a single council. Indeed Wendell and I cannot find one with only eight. Paris has 1300.

Planners still stitching up home-owners: NZ cities world’s second-most unaffordable [updated]

Despite the recession, houses in New Zealand cities are as unaffordable as they’ve ever been – that’s the conclusion of the fifth annual survey [pdf] by international organisation Demographia, who’ve found that the average price of houses in NZ’s eight major cities are still more than 5.7 times the average household income in that city.

In the parlance of the study, this makes the New Zealand housing market seriously unaffordable – just as it has been for the last decade. The survey of English-speaking countries finds that UK, Ireland, Australia and New Zealand have no affordable major urban markets, while Canada has 10 (of 34) and the United States 77 (of 175). There are no moderately unaffordable urban markets (at and below 4 times household income) in Australia, New Zealand, Ireland and the United Kingdom.  Reports NBR:

    The 2009 Demographia study of international housing affordability found Australia has the most unaffordable housing at 6.3 times annual household earnings.
    New Zealand was second on 5.7. Ireland registered 5.4, the United Kingdom 5.3, Canada 3.5 and US 3.2.
    None of the eight urban markets in New Zealand covered by the survey are considered to be affordable. Seven were severely unaffordable and Palmerston North was considered seriously unaffordable.
    A figure above five is regarded as severely unaffordable.
    Auckland is the least affordable larger market, with a median multiple of 6.4, while Christchurch (6.1) and Wellington (5.9) are also severely unaffordable.
    Tauranga-Bay of Plenty was the least affordable market, with a median multiple of 6.6. Out of the eight New Zealand markets only Palmerston North is not severely unaffordable on 4.9.

Just to clarify what this degree of unaffordability means, this is unprecedented both historically and geographically – so simply saying that young couples need to hunker down and save like their grand-parents did is not even the beginning of the whole story.   Outside the current period, at no other time in NZ’s history has this price-income multiplier been so high.  And outside New Zealand, only Australia has a higher price-income multiplier.

The reasons for contemporary NZ cities being so seriously unaffordable compared to other cities (and to other times in NZ’s history) can be deduced, if you’re smart enough, from the policies of those cities at the upper end of the Demographia survey. 

The reason for some cities being more unafforable than others is not just the excessive demand created by loose credit in recent years, since that loose credit operated across all markets; it’s not just the increased cost of construction in recent years (although that hasn’t helped the level unaffordability), since (especially across the US) those increased costs have been imposed across all markets; it’s not just the increasing attractiveness of these unaffordable cities, since domestic migration figures for most of these cities are showing either strong outflows or decreasing inflows from (and to) these cities; and it’s not like some of the world’s most unaffordable cities are running out of land: there’s no shortage of land in the likes of British Columbia, California, Victoria, or the deserts of Western Australia (and nor is there in NZ).

No, to see why some cities are more unaffordable than others you have to look at the differences between those cities, and the biggest difference is in how the cities regulate land. 

In Tauranga, for example, 'planners' have enthusiastically embraced the anti-development 'sustainable' philosophy of so called 'Smart Growth'. At a multiplier of 6.6, Tauranga has the country's most unaffordable houses. At a multiplier of 6.4, Auckland has the second most unaffordable housing – and for years Auckland’s planners have rationed the land supply, ring-fenced the city, and restricted the range of urban housing.  No wonder.  If you ration supply while demand stays the same (or increases), then you’re going to ensure prices go through the roof.

And in the most unaffordable places land is being rationed.  Ring-fencing cities to slap down “sprawl” is squeezing the supply of land in those cities; heavily regulating land-use and subdivision in cities is squeezing the supply of land in those cities.  The fact is, as I’ve pointed out before, that the world’s most unaffordable cities are almost without exception those cities who cite themselves as being the most “sustainable” –- another example of the price of fashion.

But in this case the fashion victims are us.  And even as the followers of fashion defend their advocacy of land-rationing – an imposition that all of us get to feel --  the evidence from around the English-speaking world is clear: that "smart growth" cities are unaffordable cities.

Frankly, both ring-fencing around cities and enforcing lower densities within them are the twin causes of the problems (and it’s the state giving planners power to do both that needs to be expunged).  

There's no problem with “sprawl” if the ring-fencing were relaxed: New Zealand's urban areas account for less than 1 percent of the total country, one quarter of that in the Auckland region. If all of NZ's 1,471,476 existing households were to be rebuilt on an acre of land -- which was the sort of thing proposed by Frank Lloyd Wright in his Broadacre project-- we'd all fit in an area less than one-quarter the size of the Waikato , and just think how easy it'd be to thumb a lift out to Raglan!. 

And there's really no problem with higher densities within cities if the planners are muzzled, if the private sector gets to offer buyers what they want, and if the state is barred from building the sort of thing the state always likes to build -- which is building the slums of tomorrow.

What it comes down to is choice.  If people were only left free to live in the way they wanted -- however apoplectic that made all the many enemies of choice -- the problems of housing unaffordability would disappear overnight.

For further information, read all PC’s posts on …

Keep ‘em in the dark, and feed ‘em the RMA [updated]

On the same day that National’s Nick Smith’s announced the members of his “expert group” of advisors to help him “review” the Resource Management Act, news broke that indicated why the Resource Management Act so urgently needs to be reviewed – if not axed altogether.

Meadow Mushrooms' Morrinsville plant -- a multi-million dollar business employing more than 180 people -- is being shut down.  “The closure has nothing to do with the recent economic downturn,” says plant manager Roger Young.  "It's only because of this (Environment Court) action."  In case you didn’t know, the Environment Court gains its powers under the Resource Management Act.

The problem, you see, is that they smell.  They smell worse than a dirty nappy on a wet dog.  The plant might have been pumping out bad smells for fifty years but, when you smell that bad, you pick up some enemies. 

Some of Meadow Mushrooms’ enemies are neighbours (four farmers in particular who moved in knowing the plant was there), some of them are trade competitors, but under the Resource Management Act both these groups acquire the power to bring down their foe – with the result that the farmers get to raise the value of their land at the expense of their neighbour, and the trade competitors get to increase the value of their businesses, but again its at the expense of this long-standing employer, the biggest in the Waikato-Piako business.

There’s something here that smells alright, and I don’t just mean the smell of rotting compost. 

There's a very real injustice that would have been so easy to avoid.  Let me remind you of the doctrine of coming to the nuisance which should so obviously have been invoked here – except of course that the RMA has made its application impossible.

The doctrine of coming to the nuisance is a common law principle of long standing.  Under common law you have, as Cactus Kate correctly points out, “Freedom to do what you want on your property as long as it doesn't impinge on others' right of peaceful enjoyment of their property,” but if you’re not impinging because you’ve initially either no neighbours on which to impinge or your neighbours have no problem at all with your emissions of noise, or smell or smoke (or with the money you’ve agreed to pay them so you can emit), then ipso facto you aren’t actually creating a nuisance to anyone, and this pre-existing situation acquires legal standing.

So if some new party them moves into this situation knowing that you’re creating a smell, a noise or otherwise creating a nuisance, then they have no legal right to complain.  Since they came to the nuisance by choice, then under this doctrine the law recognises the pre-existing situation and the acquired rights, and not the complaints that newbies might care to raise. They knew you were there; they presumably got their property cheaper because of it; then the doctrine of coming to the nuisance applies, or should do.

The Coming to the Nuisance Doctrine is an enormously powerful principle protecting pre-existing rights, and quickly establishing rights in situations of apparent neighbourhood conflict. Move next door to a clean and well-run chicken farm or a pig farm for example (even if the place has been ‘re-zoned’ since the farm opened), and under this doctrine you have no right to have them thrown out. Move next door to a speedway track, and you have no right to complain about excessive noise.

I assume you see the difference with how things presently work.

If the farm or the speedway track or whatever it is was there before you chose to buy next door, and if it’s well and properly run, then those pre-existing rights should and can and once were protected in law; and if they were still you and I and Meadow Mushrooms’ neighbours would then have a strong incentive to either make a more careful choice in future (whereas now the incentive is there to move in and force them out), or to buy out the farm, or buy easements or covenants over the neighbouring land to create the new rights they’re now acquiring by using the RMA’s big stick.

Either way, when the coercion is removed and bargaining is all that’s allowed, the tendency is for property to end up in its highest value use by peaceful resolution. This is not something planners can ever claim to have achieved.

And what this principle demonstrates, or would do over long use, is that zoning and ‘planning’ as district planners do it is not only coercive, but unnecessary. Coming to the nuisance is THE antidote to zoning and ‘planning’ and all the bureaucratic bullshit. Implement the coming to the nuisance doctrine – which would be as easy as introducing a codification of basic common law principles including this one, and then abolishing the RMA --  and then you don’t have all the conflicts, and nor do you need the whole expensive farrago that’s been created by the RMA.

Instead you would have clearly delineated property rights that can be peacefully traded until ‘equilibrium’ between neighbours’ desires and what they’re prepared to pay for them is reached, and life mercifully free of the diktats of the planners.

NOW, HAVING SAID ALL THAT about the iniquity of the plant being closed down, I’d normally be in sympathy with the owners. But not in this case.

One of the major shareholders in the plant is one Philip Burdon, magnate and former trade minister in Jim Bolger’s National Government – the same same government that imposed the Resource Management Act on us.

Talk about being hoist by your own petard.

Like I say, I'd normally be in sympathy with the owners, but Mr Burdon at least has brought this on himself.  For him, I feel no sympathy whatsoever.

BUT WHAT ABOUT THIS REVIEW of the RMA by the new National Government?  And what about Nick Smith’s new expert group –- what does that tell us about the likely course of the review? Is there any hope?

Frankly, the membership of the group tells you everything you’d expect from a man who was Minister of the RMA in the last National Government, who calls the RMA “far-sighted environmental legislation, and who said just recently that he intends to “review” the Resource Management Act to, quote, “look at how companies win the right to take private land.”

Alan Dormer looks to be the only decent one there, and he is undoubtedly the choice of Rodney Hide. His submission on the original RMA Bill back in 1991 was a cracker.

The others are as wet as a tidal wave.

Penny Webster is the Rodney District mayor who’s presided over enormous rate increases in the Rodney district, but even in straitened time doesn’t think “this shouldn't entail pruning.” [Scroll down here to see what I think of that.]

Guy Salmon is a blowhard ‘Blue Green’ opposed to any notion of property rights. He is a great advocate of Scandinavian style ‘consultation’ and ‘community values’ crap, and a personal friend of Nick the Dick.

Mike Foster ‘works’ for Beca Planning, who are effectively an arm of the Environmental Defence Society and are great advocates of the nonsense of so-called ‘Smart Growth’ and detailed structure plans.

Dennis Bush-King is from Tasman District which is a Smart Growth town with some of the least affordable housing in NZ (a feature shared by almost all of the world’s smart growth cities).

Mike Holm was a founder of the Environmental Defence Society, and a lawyer who makes a killing off the RMA..

Wyatt Creech is ... well, I did mention 'wet,' didn't I.

Neither Owen McShane nor myself got a phone call.  I can’t say I was surprised.

The last time all these people got together in a room, we were all left worse off.

At least with these appointments Smith is making his intentions plain: More of the same, only more so -- with the major change being an exemption for Government so they can get on with ThinkBig 2.0.

There should now be no excuse for any optimism from National voters about what to expect from this ‘review.’  It will make whitewash look the colour of creosote, and smell just as bad.

So if you’re thinking of making investments based on the expectation of positive changes to the RMA, then don’t bother.  You won’t get them.

UPDATE:  Speaking of Owen McShane, his latest newsletter has superb commentary on the RMA and the Meadows Mushroom malady. See Can we increase the Security of Rural Industry? and The High Risks of Growing Food.

A pyramid of foolishness

Many of the more sober critics of the US government's bailout package have realised the present economic turmoil is not a failure of capitalism, it's a failure of government, but they've still failed to get their head around the fundamental cause of the crisis, or of the bubble that set it off.

They've talked about Smart Growth and the dictatorship of the planners that locked up land and sent housing prices soaring in the more planned markets, but they haven't realised that it only 'directed' the inflationary bubble into housing; it didn't directly cause the bust.

They've talked about the complications of bundled securities that leave even the organisers of those securities clueless as to what they're really based on -- but they haven't understood that this was just a way bankers chose to deal with the flood of easy credit coming down the pike'; and they haven't yet understood that it was the flood of easy credit that was the primary problem.

They've talked about Jimmy Carter's Community Reinvestment Act and "community organisers" like Barack Obama who pushed indigent non-payers into sub-prime 'first-home,' 'easy credit,' 'low-doc' loans, without realising that without the flood of government credit, the number of sub-prime loans being made would have dried up like a pub without beer.

They've talked about Fannie and Freddie, which since 1938 (in the case of Fannie) have been accidents waiting to happen, but they've failed to notice that up until the latest blow out the accidents have only been small.

Each of the proponents of these points is correct in their analysis, at least as far as they go, but in ignoring all the other factors involved they don't go far enough, and in ignoring the more fundamental explanation -- that we've been floating a sea of counterfeit capital fed by a spigot of paper money, and jacked up by a fractional reserve banking system that "leverages" those paper dollars to turn the flood of paper into a tsunami, and every dozen years or so when the spigot is eventually turned off, we see another crisis -- the bubble blows out the same every time, it just blows out in different places.

As Hans Sennholz points out, the fundamental cause of the problem goes back several decades, nearly a century, all the way back to 1913, and the creation in the United States of "the Federal Reserve System," which was never anything but "a creature of politics." 

    It sprang from the most revolutionary single piece of legislation in American currency and banking history, the Federal Reserve Act of 1913.  It meant to improve the earlier financial system created by the National Banking Act of 1863 which placed the federal government in the very center of American money and banking.  Both Acts were designed to reform the market order which was deemed to be unstable and unresponsive to the needs of the federal government and the national economy. 
    Actually, they constituted early steps toward a hybrid fiat system which in time spread to all corners of the world.  It is neither a command system in the manner of radical socialism nor a market order on a gold standard; it probably is the most unstable financial system conceivable which no human being, no matter how brilliant and distinguished, could manage satisfactorily.
    The American money and credit system now resembles an inverted pyramid that rests on legal-tender Federal Reserve notes and credit.  These support various forms of bank money such as commercial bank deposits, savings accounts, large time deposits, and other liquid assets.  The base of some $672 billion may expand rather moderately, presently at some 6 percent a year or $40 billion; the layered superstructure of $8.333 trillion bank money (M3) may grow at a similar rate or $529 billion (as of 10/23/2002).  Commercial banks tend to "securitize" their loans, converting them into marketable securities for sale to investors which enables them to grant new loans in a continuing process of lending, securitizing, selling, and lending again. 
    Massive non-bank credit constitutes the upper layers of the money pyramid; there are Federal Home Loan Banks, thrift institutions, life insurance companies, brokerage firms, mutual funds and other credit grantors.  Last but not least, offshore banks in the Bahamas, the Cayman Islands, Panama, Hong Kong, and Singapore, enjoying favorable regulatory and tax treatment, provide the top layer of the multitrillion dollar money pyramid.  And high above the American pyramid hovers the international pyramid which builds on the U.S. dollar standard. 
    The Chairman and his fellow governors are expected to balance it all with their high-powered Federal-Reserve-dollar base.  They are expected not only to manage this monstrous pyramid of fiat money and fiduciary credit but also to safeguard the stability of the American economy, to maintain asset prices, protect the value of the dollar, and avoid the business cycle.  They are supposed to manage a monstrous structure which politicians built for their own use and glory.  That's too much to ask of any mortal.

You see, even if they had a clue, it would still be impossible.

Making nanny state bigger one dead rat at a time

When one points out to would-be National voters all the dead rats John Key is making them swallow, they suck it up, wipe off their chin, and talk with glazed-over enthusiasm about the new age that Flip Flop Boy is going to usher in once the present dishonest corrupt government is replaced with another one of different hue, but similar policy outlook.

The dead rats are worth it, say the strategists. If we don't frighten the horses, then we'll come stampeding home come November. The dead rats are worth it, agree the poll respondents -- just as long as the dishonest corrupt government is our dishonest corrupt government.

As a strategy it's barmy, and just crying out to be sucker punched.

You see, it's not just the dead rats of the past that you and John Boy are going to swallow -- and here I'm talking to those of you dopey enough to swallow this 'appeasement as election strategy' strategy -- you need to think about all the dead rats to come.

Yes, you've sucked up all the dead rats served up so far when you thought you had to, and you've even swallowed on occasions. You've said to yourself, "I can accept this," while holding your nose and swallowing ... but smart Labour Labour strategists will already be drawing up lists to try and see if you'll also swallow this, once John Boy plants his 'me too' kiss upon it.

If you were a smart Labour strategist (and in this context 'smart' only means 'smarter than Murray McCully, so we're not talking rocket scientists here), you wouldn't be complaining that Key's "innoculation" of National's "scarier" policy positions makes it hard to paint them in the privatising, Roundtable-hugging way you'd like to be able to, instead you'd be observing the me-tooing with glee, and looking for a chance to use it.

How? By making nanny state bigger one dead rat at a time.

The smart Labour strategist would already be drawing up a list of election bribes so rat-like in their cunning, so obviously socialist in their aim, that John Boy and his supporters will be left with splinters on both cheeks as they try to perch on both sides of an irreconcilable fence in response.

Labour can't lose here, if they do it right: if John Boy and the Flip Flop Team do keep signing up to the dead rats -- and the latest student election bribe may be just a trial balloon in this respect -- then the election agenda for the next three months and the policy agenda for the next three years will both be set by Labour strategists, with all the growth in nanny government that will ensue, and all the election bribes that implies -- and all the drop in support for the Flip Flop Boys that can be predicted as even the blindest blue-tinged supporter realises that the effect of his party's strategy is that his party's leaders are in reality batting for the other team.

Socialism to the left of me, socialism from the right -- how could a Laborite really lose?

The job of the smart Labour strategist will be to find that 'equilibrium' point at which the dead rats being swallowed by the Blue Team start to choke their blue-tinged support, and then just go a little bit more. 'More,' in this case, meaning more bribes, more nannying, more socialism.

The job of the smart National strategist -- if such a person actually exists in their 'zero from three' strategy team -- should be to realise this now, several weeks before the election, while there's still time to promote a vision in which National actually represents a significant policy alternative.

And the smart National voter? That's another oxymoron. If more bribes, more nannying and more socialism is what you want, then keep right on supporting the Blue Team's 'me too' strategy. As long as you do, they'll keep right on offering it, as indigestible as that will eventually prove to be.

UPDATE:  Another dead rat has just washed up on the electoral beach: Liberty Scott reports "Labour has now pledged over $400 million of your taxes (not petrol tax but general tax) to pay for the frightfully expensive Transmission Gully motorway. This doesn't even cover half the cost."

And John Boy's response?  "Me too."

Planners' spin spiked by housing researchers

News posted here recently at NOT PC that "While housing in much of the western world has become seriously unaffordable, the city of Houston remains unzoned, and its housing among the most affordable anywhere" attracted the eye of a vigilant Tauranga City Councillor.  On the basis of the evidence linked to in that post, he asked the Tauranga town planners to justify their stated claim that the so called 'Smart Growth' polices they are imposing on the city have no effect on the cost of housing.

In reply, the planners put together a memo which, in the way of these things, was utterly self-serving.  And also in the way of these things, it leaked. It leaked to Wendell Cox and Hugh Pavletich, who have replied to it online at the Demographia blog: Tauranga Staff Memo on Houston Misleads Council. Their reply concludes:

New Zealand’s housing affordability loss is the result of overly prescriptive land use planning (smart growth or urban consolidation policy). This connection has been identified by some of the world’s top economists and is detailed in our 4th Annual Demographia International Housing Affordability Survey. The situation was best summed up by former Reserve Bank of New Zealand Governor Donald Brash, writing in the Demographia report: the affordability of housing is overwhelmingly a function of just one thing, the extent to which governments place artificial restrictions on the supply of residential land.. In short, where there are no prescriptive land use policies, housing is affordable. Among the six nations surveyed in our report, there are no exceptions.

More meddling while houses turn (updated)

Attention is finally being paid to the problem of housing unaffordability just as the housing market itself shows signs of turning, and there's naturally a lot of talk this morning about the policies announced to combat the problem of housing unaffordability -- specifically the problems of over-regulation and consequent undersupply which have been compounded by the massive amounts of credit pouring out of government printing presses.  (You can see what I said yesterday about the policy announcements here and here.)

Affordable homes in the world's cities cost about three times the average incomes in those cities.  In New Zealand's main cities that factor is now closer to seven.  (See studies here.) There is an affordability problem, and even a thirty percent market correction won't fix that.

Despite taking at least half-a-dozen years for politicians to even notice the problem that they themselves created, there's nothing new in the unaffordability problem.  Let me make it simple.  Over-regulation of land and construction has pushed up land prices and strangled construction on the little land the planners have left available.  What we now call housing unaffordability we used to call a housing shortage.   The main difference now is that for at least a decade the printing presses of the world's central banks have been pouring credit into people's pockets, which in NZ has mostly found its way into the under-supplied housing market -- a market that's about twelve-thousand houses a year short. 

Too much credit chasing an artificially restricted supply of houses and, 'bingo!' you have an unaffordability problem. 

If those huge price rises happened in the market for any other product -- if petrol, food or phone services rose by the huge amounts that houses have -- there'd have been an outcry before now.  That there hasn't been is first of all because middle class NZers have been able to borrow on the back of their house price rises, making them feel richer than they really are; and, second, because incumbent governments generally like middle class voters to feel richer than they are, which tends to come back to incumbent governments in the voting booths.  (It's also because a spineless opposition has never had a clue what's been going on, just as they haven't now.)

Naturally, nothing from either main party is proposed to combat the rampant credit expansion, which Alan Bollard and his fellow central bankers continue to ramp up (the latest name for the expansion of counterfeit capital is a 'stimulus package').  And very little of what's been proposed by either main party will 'fix' the problem of housing unaffordability, since the only two things that can have a substantial effect are the immediate removal of the planning profession's grip on our cities, and a bonfire of the growing mass of building regulations strangling innovation and supply.

In other words, get the hell out of the way.

Despite some little talk, that's never seriously on the agenda of either major party.  Both parties are blowing hard in election year to try and look good, and they're mostly blowing in tune, but neither are willing to perform in the only manner that's seriously needed.  instead we have more meddling.  Let's look at how Clark proposes to meddle again in housing, since in most respects her plans are the same as those of John Key (you can read what I've said before about U-Turn Boy's similar offerings here).

* Clark wants to force developers to produce so called affordable housing on land made unaffordable by earlier regulatory force

   The first refuge of the political scoundrel is always force.  The second refuge is scapegoating.  There is no better scapegoat in existence for the failures of a socialist government than someone who looks wealthy.  A developer is perfect.  Clark clearly hopes that forcing developers to act against good sense will play well in the voting booths, and that no-one will notice how poorly it plays out in reality.  
   The result of forcing developers to build low-cost housing will be to build the slums of tomorrow, and at a cost much greater than building affordable houses would be without the force.  Developers already hamstrung by rising costs will simply be forced to build cheaper houses on land worth far more than the houses they'll be forced to build, and to pass on the cost of the new slums to the buyers of other houses on that same land which will lose value immediately by their proximity to the slums.
   King Canute could have done no better in trying to turn back the tides.
   The bill purports to foster a method by which more affordable housing can be built: it does so by making life impossible for the builders and developers who will deliver them.  In Ireland, builders have been walking away from being forced in this manner.  Over a ten year period, in US markets where mandated affordable housing mandates have been implemented, they have reduced supply, on average, by ten percent, and increased house prices, on average, by twenty percent. [Hat tip Owen McShane]. In San Francisco, the scheme has added up to one-hundred thousand dollars to the cost of new homes in new developments.  The Prime Minister told Morning Report this morning that these programmes are "working" in Australia and elsewhere, but as Owen McShane points out, while they may be "operating" they are certainly not "working" -- if by "working" we mean generating genuine public benefits. Governments everywhere are prone to confuse a pledge to spend taxpayers' money with delivering tangible results.
   The fact is that forcing the construction of 'affordable' houses makes housing affordability worse, and has done so everywhere it's been forced on homebuilders.  I suspect that unlike the illiterate Chris Carter who first announced the scheme, Clark and Maryan Street both know that.  The thing is, they just don't care.

* She wants to force land-owners to build even when they're unwilling to build.

   Clark has signalled she intends to strip land-owners of their property if in the view of state goons and council planners their land isn't being used as the goons and the planners would like, and give that land to other developers to use.  As he announced at last year's National Party conference, John Key agrees.  We knew that property rights were almost dead in New Zealand; we didn't know we'd be slapped in the face with that fact from both sides so soon. If you want a simple image of why this is wrong, think of Daryl Kerrigan in The Castle.  
   As is the case with the growing abuse of 'eminent domain' in the U.S., this is a signal for the government to play favourites with large private partners, giving them the power to steal from smaller property owners.  Donald Trump used it to have the New Jersey legislature try and throw people out of their houses in Atlantic City, so that he could build a new parking lot for his casino. It was in the 'public interest' he argued. General Motors had Detroit City authorities condemn a whole neighbourhood to make way for a new auto plant.  This too was in the 'public interest,' they argued.  70 families in Fort Trumbull, New Connecticut were targetted by the City of New London to make way for a 90 acre private development -- 'public interest' was once again misquoted, and once again private interests used the government's gun to steal what they couldn't have acquired otherwise.

* She wants to use spare crown land to contribute to new urban housing projects.

   This is an unsuccessful 'Army Surplus' approach to housing pinched from British Labour in which the bottom of the Crown land barrel is scraped to provide spare land, in a way and at a rate that will have no impact at all on housing prices, while providing plenty of scope for election-year photos of ministers in hard hats.  Like much of New Labour, it's another victory for spin over substance.
   The announcement pretends that using the spare half-percent or so of unwanted Crown land around the country to build new government slums will somehow have more impact than would be achieved by removing the planning controls that keep ninety-nine percent of the country's land locked up, and the remaining one-percent that is urban New Zealand enmired in planning restrictions. 

* Clark promises to "tackle issues in the building consent process which were adding unreasonably to the costs of building a house, beginning with simplifying the design and building consent processes for first homes."

   Good luck.  Anyone who thinks this is anything more than the empty electioneering we hear every three years from every major party should give me a call about a bridge I have for sale.

* The Department of Building & Housing is also looking at "a proposal by Building Minister Shane Jones to design a standard simple 'starter house' which could be fast-tracked through the building consent process, to cut the price of getting a consent."

   What makes Shane Jones think he's so special? 
   There are already literally hundreds of designs for simple starter homes around the country, any or all of which could be 'fast-tracked' -- just as every single housing project in the country could be fast-tracked if the growing mass of building regulations strangling innovation and supply were put to the blowtorch, and the number of people on the 'dark side' administering the regulations went back to their jobs of producing houses rather than getting in the way of house production. 
   This is nothing more empty attention-seeking that makes about as much sense as a former Labour housing minister's plan to have all the country's state houses lifted up and rotated so they all face the sun.

* The Clark Government is working on a shared-equity housing scheme where the taxpayer puts up part of the capital of a house and takes a share of the gain (or loss) when the house is sold. This could cut the amount first home buyers themselves have to put up by as much as half.

   This plan to make the taxpayer a sub-prime lender is in the end as empty an electioneering policy as Labour's 'Welcome Home' Loans, which have been taken up with all the enthusiasm people have for flat beer the morning after, and are just as flatulent.    
How empty it is can be seen in the fact that the scheme already been announced fourteen times before, and the many problems associated with its introduction have still yet to be ironed out so it can be introduced.
   And in a market in which the problem is under-supply, even the likes of Michael Cullen, Bill English and any other random observer of U.S. sub-prime lending should be able to work out what happens if you try and supercharge demand with another subsidy for high-risk buyers. 
   Put simply, to the extent the scheme is picked up to any great extent, the greatest effect of it will be to fuel price rises of the very 'starter houses' it's supposed to help people into.

So there you have it.  Another winning combination of flatulence and force.  And if you think you've heard much of my analysis before, then it's very possible you have.  Most of it has already appeared before in my swathe of posts on housing, building and urban design.  Help yourself if you want to know more.

Cheers, PC

UPDATE 1: Now here are three genuinely creative solutions to making housing less unaffordable that don't rely on smacking builders, developers and land-owners around the head: three simple solutions that can be effected tomorrow to bring about cheaper rural, urban and suburban housing.  See 'Three Simple Remedies for Housing Affordability.'

UPDATE 2:  Owen McShane points out that "land-banking," which is blamed by planners, politicians and all assorted busybodies for the problems they themselves have created, is actually a symptom of the problem -- it is not the cause of it.  "'Speculation' only takes place when prices rise faster than holding costs," and it is planners, politicians and sundry assorted busybodies whose meddling has driven prices up.

There is nothing to be gained from holding on to land unless the increase in value of the land is greater than the total holding costs over the same period... if annual holding costs are higher than the annual increases in value then the landowner has every incentive to bring the land to market.  So we should not blame the landowners. We should blame those whose rules and regulations strangle the supply of land and inflate prices.

The real offenders are not the landowners, but are the regional and local councils who administer the Resource Management Act and the Central Government for endorsing and encouraging these policies of Growth Management or Smart Growth.

The solution is release land for market and reduce compliance costs.