Government and Auckland Council set to announce deal for fast tracking development of new houses

The shortage in Auckland is putting upward pressure on house prices, 

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And Goverment policy is pushing up demand:

3. The government is explicitly aiming to grow Auckland’s population as a means of achieving “agglomeration” benefits for economic growth which accrue from high interaction amongst economic players.

http://www.davidwhitburn.com/blogs/the-bnz-chief-economist-s-view-on-the…

Any productivity boost would help Auckland firms compete more effectively against those

in other locations. However, considering the official projection of population growth in

Auckland (43% over the next 24 years), even elasticities at the top end of the international range would result in (agglomeration-sourced) productivity gains of only 3% in total, spread over the next two decades.

Drivers of Economic Growth in Auckland

A report prepared for the Royal Commission on Auckland Governance

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So is the attraction of this policy the sugar rush of population increase? Does it reflect political influence from outside government? What do Labour and the Greens think? Zzzzzz!??

Do we figure the downside of it all against the (alleged) future benefits?

Japan is an extreme example but where is NZ economic policy headed other than growth and achieving economies of scale and being smarter than everybody else:

• Japanese debt is already nearly 500% of GDP when you add up public, private, and corporate obligations. That’s the highest on the planet and makes Europe’s spending look positively miserly. Mimicking Bernanke’s helicopter hijinks won’t help on anything more than a short-term basis.
• More money does not equal greater innovation. Many Japanese companies are struggling to remain competitive in industries they once dominated. Examples include Sony, Matsushita, and Fujitsu.
• Japanese utilities literally can’t produce enough power to fuel a Japanese recovery . Only three out of 54 nuclear reactors are running, and the national LNG import bill hit ¥621 billion in March. That’s more than double pre-quake limits, according to the Ministry of Finance. These costs will continue to rise as the yen weakens further. I doubt very seriously that any increase in export sales will be enough to offset rising energy costs, because margins are going to get pinched.
• Formerly deep trade surpluses are now deficits.
• Prices in Japan are rising faster than income at the same time that taxes are being raised. That’s a lethal combination that is serioiusly pinching consumers.
• Japanese corporations, once keen to return profits home, are now expanding overseas and keeping money outside Japan.
• Japan’s population is aging so fast that, effectively, there are no new workers, a problem that is compounded by the near complete lack of a workable immigration policy.

The Mothballed Savings Working Group said:

“The big adverse gap in productivity between New Zealand and other countries opened up from the 1970s to the early 1990s. The policy choice that increased immigration – given the number of employers increasingly unable to pay First-World wages to the existing population and all the capital requirements that increasing populations involve – looks likely to have worked almost directly against the adjustment New Zealand needed to make and it might have been better off with a lower rate of net immigration. This adjustment would have involved a lower real interest rate (and cost of capital) and a lower real exchange rate, meaning a more favourable environment for raising the low level of productive capital per worker and labour productivity. The low level of capital per worker is a striking symptom of New Zealand’s economic challenge.

”

http://www.treasury.govt.nz/publications/reviews-consultation/savingsworkinggroup/pdfs/swg-report-jan11.pdf

Oh, FFS, let's stay on topic, chaps and chapesses.

I wanna hear what Len and Nick have hammered out, not what Japan's latest demographic-death-spiral-induced disaster du jour is.

San Francisco rent prices are notoriously sky high, bolstered by the onslaught of newly minted tech millionaires moving up from the peninsula.

Here is their solution

http://www.wired.com/gadgetlab/2013/05/airbnb-disrupting-sf-housing/