sign up log in
Want to go ad-free? Find out how, here.

Bernard Hickey argues a much hairier target for this and future Governments would be to enable the building of the 131,000 extra houses in Auckland that the Unitary Plan creators say is needed over the next 7 years

Bernard Hickey argues a much hairier target for this and future Governments would be to enable the building of the 131,000 extra houses in Auckland that the Unitary Plan creators say is needed over the next 7 years

By Bernard Hickey

John F Kennedy's famous words about America's quest to be the first to the moon before the end of the 1960s were invoked at least once this week by New Zealand politicians talking about a 'big hairy stretch target.'

It's worth reprinting the President's entire quote to get a sense of the power of his speech and why it had such a galvanising effect.

"We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win, and the others, too," he said on September 12, 1962 at Rice University football stadium in Houston.

"To be sure, all this costs us all a good deal of money," he said, noting NASA's budget had tripled in one year to US$5.4 billion or 50 cents per week for every American citizen. This was almost 1% of US GDP at the time and the space programme went on to cost US$34 billion or 0.5% of GDP through the entire decade of the 1960s.

That didn't deter Kennedy though, and his final sales pitch was aspirational as well as inspirational.

"But if I were to say, my fellow citizens, that we shall send to the moon, 240,000 miles away from the control station in Houston, a giant rocket more than 300 feet tall, the length of this football field, made of new metal alloys, some of which have not yet been invented, capable of standing heat and stresses several times more than have ever been experienced, fitted together with a precision better than the finest watch, carrying all the equipment needed for propulsion, guidance, control, communications, food and survival, on an untried mission, to an unknown celestial body, and then return it safely to earth, re-entering the atmosphere at speeds of over 25,000 miles per hour, causing heat about half that of the temperature of the sun - almost as hot as it is here today--and do all this, and do it right, and do it first before this decade is out - then we must be bold."

There was an element of that crazy bold ambition in this week's announcement by the Government that it was committing to achieving a rat, stoat and possum free New Zealand by 2050, and would have to invent new technologies that don't even exist yet to do it.

But that's where the boldness ended. Prime Minister John Key and Conservation Minister Maggie Barry committed to spend NZ$7 million a year for four years (or 0.003 % of GDP) to do it, and only if philanthropists stumped up another NZ$14 million.

Barry cited Sir Paul Callaghan's vision of a Predator-free New Zealand in the announcement.

"This is the big hairy stretch goal that he called his Apollo mission," Barry said at Zealandia on Monday.

Removing all predators by 2050 is of course a laudable target, but it pales in comparison to the Apollo programme when it comes to true cost and commitment, or impact for that matter.

So what would be a real 'moon shot' for New Zealand?

Strangely, the best suggestion came this week from the faceless collection of town planners, environment lawyers and an Environment Court judge on the Independent Hearings Panel for the Auckland Unitary Plan

They proposed a truly ambitious set of zoning rules that would allow the building of 422,000 new houses in an expanded Auckland - both up and out - by 2040. In particular, they pointed out there was already a shortage of 40,000 homes and an extra 131,000 houses needed to be built in the next seven years to whittle that away and keep up with population growth.

To put that in context, that is over 18,000 houses a year or more than double what was built in Auckland over the last year. On the face of it, it seems an impossible target at a time when skill shortages abound and the political and financial obstacles are apparently enormous. Anyone who has tried to employ a builder or tradie in Auckland in recent months or order up a truck of concrete would wince and shrug at the thought.

Building those houses would cost at least NZ$65 billion and require an unprecedented level of cooperation between central Government, which has to pay for the schools and hospitals and motorways to enable such growth, and the Auckland Council, which has to approve the zonings and pay for the pipes and local road and public transport.

On the face of it, such a 'moon shot' seems an astronomically unattainable target for a nation, yet it would make an enormous difference for everyone up and down the country. New Zealand needs Auckland to grow in a fast and sustainable way that doesn't inflate housing costs and doesn't hold the currency and the export sector hostage, as is happening right now. Future generations need the affordable, healthy and stable homes that build productive and happy communities, which we certainly don't have for a substantial chunk of the population right now.

New Zealand politicians often steer clear of the 'big hairy target' because they are risky and open up the targeters to attack. Green Co-Leader Metiria Turei took a big risk this week when she said New Zealand should target a house price to income multiple of three to four, which would imply a near-halving of house prices if it were to happen overnight without any wage increases. Labour Leader Andrew Little was the first to criticise such a hairy target as "irresponsible." Mr Key said Turei wanted to "destroy the savings of New Zealanders."

Ms Turei was actually just adopting the stance already expressed by a couple of very conventional economic thinkers in Don Brash and Arthur Grimes, and which the Auckland Council has talked about in its strategy for a multiple of five times income by 2030.

The best way to start to get there would be to adopt the biggest and hairiest and most meaningful moon shot in our history - committing to building those 131,000 houses in seven years. 


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

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

25 Comments

"The best way to start to get there would be to adopt the biggest and hairiest and most meaningful moon shot in our history - committing to building those 131,000 houses in seven years.">>>>>>> very well put.
We have the best chance available to make Auckland where it needed to go about 20 years ago. Its not too late. The least we can do is adopt the plan now. In my opinion it (AUP) needs to be intensified further but hanging on to this view might be a bit problematic and may be will be better digestible after about 7 years.

Up
0

Remember that supply is just one part of the housing crisis and the bigger culprit is demand specially speculative demand.

Government for hidden interest do not want to act on demand as a result are trying to divert nations attention to supply side of the problem only/unitary plan as if that is the only solution and till now have been succesful BUT not any more as people have realized their motive and more experts are now, not falling for government prey and talking about real issue of Demand / Speculation for which the government is shying away of talking also to cover their vested interest and support their rich n asian friends- which is very much obvious to all, atleast now.

http://m.nzherald.co.nz/property/news/article.cfm?c_id=8&objectid=11684…

Up
0

Best chance of it happening is Labour's kiwibuild policy.

We know what the status quo is already.

Up
0

Read interesting article by an expert and is correct to say that whenever the housing bubble burst in NZ ,do not blame the catalayst but the system

http://www.nbr.co.nz/article/picking-stocks-and-housing-bubbles-ck-1507…

Up
0

stop the immigration madness.
Read Croaking Cassandra, by Michael Rendell former Reserve bank Economist. Think Big AKL has not worked, NZ is getting poorer and poorer.

Up
0

Completely agree. Stop diluting our productive output with poor quality immigrants.

Up
0

"New Zealand needs Auckland to grow" why??? And should it be allowed let alone encouraged, especially given the gross lack of infrastructure and the likely effect on the environment??

Up
0

I ask myself the same question and it seems the human race is too stupid to figure out how to prosper without this growth nonsense. Growth only ever ends in one thing, and its not eternal growth.

Up
0

Yeah, the answer to how to build 131,000 houses in 7 years is so simple, don't build them!!!!
We don't need all these people, Shut the door. It will take a couple of years for the housing to catch up to the population once we shut the immigration door.
It will take a lot longer for the cities infrastructure to catch up and become a functional city again and it will; take billions of taxpayers dollars but the longer we leave it the bigger the bill and the bigger the mess.
Stop this crazyarsed, free for all, immigration policy now!
When JK has finished destroying this country he won't even be living here, was he bullied at school or something?

Up
0

Price caps all up 50k for fhb's.

As a % this is a big shot in the arm for secondary cities who now have a cap of 400k. Beauty. All stand alone on 600sqm sections will be 400k in Palmy within 12 months. Easy 100-150k to be made there

Up
0

watch house prices leap again as more demand is added, this current governments policies are keeping it going
they keep pointing to Christchurch as proof but if you look at the demand side i.e migration it is nowhere near the volume of auckland
The loss of an estimated 16,600 people through net migration from Christchurch City in 2011 and 2012 was a consequence of the 2010-2011 Canterbury earthquakes. This net loss has since reversed, with estimated population gains of over 5,000 people in Christchurch in each of the last two years.

Up
0

You know you should not be stating the bleeing obvious to counter any of Nick Smith's arguments, go sit in the corner till you come to your senses.
Edit meant as reply to sharetrader, everyone else can leave the corner

Up
0

LOL to point out nick smiths points as shallow are not hard, they are so shallow the top of my toes get sunburnt
you know this government is not serious about curbing price increases when they appointed him as minister in charge.
its like the blind man leading the guide dog

Up
0

Experts in nzherald have realised and comming out with expose of government on demand side.

Experts in this website should too not fall for government ploy of discussing only supply to divert attention from demand side of the problem.

Supply too should be discussed along with demand as all the discussion is to solve housi g crisis and it cannnot be solved just by supply.

Up
0

You only have to look at America's property market after the 2008 GFC where whole neighbourhoods are boarded up and abandonned and China's ghost cities. There is no housing shortage in the world. Cheap money creates over investment, it brings forward spending from the future. If we build all of these houses as discussed in this article we will be creating future unemployment in the building industry, just as there will be no further growth in the NZ Dairy industry.
Economically stable cities will grow organically around the need for labour based on industries. Where will the people who live in these 131,000 houses work?, or are we potentially creating another ghost city?

Up
0

furthermore how many houses and appartments around Auckland are being held empty as investments? These properties would be making handsome capital gains. How much does this distort the true demand and supply and rents for Auckland property.

Up
0

Why so much arguments and discussion when the problem could be solved by proper tax system in the country.

This is all politicaly created situation and the solution lies with them but do they actually want to solve.

If yes than politicians will be out of business and also all so called experts and media as they too need news and bad news is good news.

Up
0

We don't want more taxes and road tolls. just stop the population growth.

Up
0

Swedish housing market dropped for first time since 2008 in June data. If it does not keep on going up , how far will it drop. Given the recent gains in the NZD , once again on track for AUD parity, will the RBNZ be forced to cut harder, on the assumption of lower inflation, or is the real reason the RBNZ will cut is that if the housing market has topped there is no glide path and fanciful soft landing , but a cliff edge awaiting. There is no housing shortage in Auckland if the pool of buyers has been so far depleted.

Up
0

Why all this if the house price after unitary plan will still be more than a million.

Why and for whom

https://www.tvnz.co.nz/one-news/new-zealand/labour-most-aucklanders-won…

National government has a lot to answere and council dhould not pass it blindly.

Up
0

Because credit availability and foreign capital are setting prices more than any physical housing shortage?

Auckland is ground zero for neocolonisation.

Up
0

RBNZ is trying to address credit availability but government is doing nothing to control forign capital.

If they too do their part, it may help.

Up
0

Several points; Andrew Little's criticism of Metiria Turei - he doesn't want house prices to fall, so for houses to become affordable does he want incomes to rise? How will that be achieved other than rampant, out of control inflation (and if that happened house prices would probably rise with it)? IMHO Metiria should be lauded for being the only politician to actually say out loud what needs to be said, that house prices must fall, the only question is by how much and how quickly, and this is where Metiria falls short I believe. the longer this mess goes on the more painful it will be. The sooner and sharper it happens the quicker we'll get over it.

The other points that are not addressed, but are hinted at; to build so many houses where will the resources come from? From release of productive land, to skilled trades people, to building materials. How will the Government and councils stop commercial operations just ripping everyone off.

Up
0

If the council RUB were eliminated, we would free up the several $billions that are wasted by the existing Auckland market.

Auckland median land costs are higher than Sydney, they should not be anywhere close.

Up
0

How about ... A proper House Building Programme needs to be funded with a $55bn to $65bn Capital Injection. There's $154bn sitting in deposits in NZ bank accounts, $43bn sitting the ACC account, $29bn in the Superfund and the Govt gives Fletcher's free money (Contracts to do nothing) every year, avg. $3.5bn. Stop that. If they borrowed from each fund $5bn-$10bn to get a "Fund" together of $25bn-$30bn to pay for the "Build", the loan, interest, ROI of market rate of about 3% - 4% with the RBNZ borrowing from offshore for 0% to pay the interest component. Can start a proper building programme .... by lunch time under a government building company. No foreign multinational Corp. needed as they've proved that they're incapable, inefficient & have done nothing for the past 8 years! 84,000 homes needed now nationally.

Up
0