Smith blames RMA for land price escalation

Property

New Environment Minister and Housing Minister Nick Smith argues for RMA reform to focus on housing affordability; says RMA responsible for Auckland land price surge

15th Oct 14, 1:28pm by Bernard Hickey

<a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

By Bernard Hickey

Housing Minister Nick Smith has blamed the Resource Management Act (RMA) for the rapid escalation of land prices in Auckland and has argued for RMA reform that focuses on housing affordability.

Speaking to the Property Council's Residential Development Summit in Auckland, Smith detailed his area of focus as he reworks RMA reforms that were stalled last year but are now at the top of the agenda for the freshly-re-elected National Government.

Opposition from Peter Dunne and the Maori Party to plans to merge sections 6 and 7 of the RMA and to elevate economic development as a guiding principle stalled the RMA reforms in 2013, but the Government can now pass any legislation it wants with the support of ACT MP David Seymour.

However, Prime Minister John Key, who has said he wants to 'hug centre', has directed Smith to look at moderating the reforms proposed under previous Environment Minister Amy Adams to win broader support of environment groups, although it's not clear how that might be done.

Smith said the RMA needed to "explicitly recognise the importance of New Zealanders' access to more affordable housing if the downward trend in home ownership over the past 20 years is to be reversed."

"The Resource Management Act must safeguard our natural environment, but it is also a crucial piece of planning legislation," Smith said.

'RMA largely responsible'

"It forms the basis for the decisions that determine what we can do on our land. So it's important we have a system that balances environmental protection with the wider needs of New Zealanders. We need a system which ensures that important environmental standards are maintained, but that which also enables growth and development - including a strong housing supply," he said.

"It is the price of land and sections that has gone up so rapidly in unaffordable housing markets like Auckland, and it is the Resource Management Act and how it is implemented that is largely responsible for this cost escalation."

'Sunset clauses'

Smith said new laws allowing Special Housing Areas (SHAs) were a short-term fix so the RMA reforms must be serious about long-term housing affordability.

"The vast bulk of consent processes under the Resource Management Act are about urban development, yet they barely rate a mention in the purposes and principles of the Act," Smith said.

"This is why the Government is determined to make changes. We need to get everybody working in the resource management area from a policy, planning and consent perspective to understand how their decisions impact on young Kiwi families who aspire to own their own home."

'Smith's full framework'

Smith noted that no previous minister had been responsible for the full regulatory framework affecting housing, from subdivisions, building consenting to occupational regulation.

"This presents the opportunity to streamline how we develop new housing so as to increase housing supply and affordability," he said.

Property Council agrees

Property Council CEO Connal Townsend said he supported potential reform to the RMA that factored the 'built environment' into its purposes and principles, including the availability of land for urban expansion and development.

"Other critical changes should include the efficient provision of infrastructure and the risk and impacts of natural hazards," Townsend said, adding he commended the Government's approach to housing affordability across portfolios.

“We now have one Minister responsible for housing across a broad regulatory framework and a Government that has signalled its commitment and intent to improve the RMA and get it working better," he said.

“We believe the time will come for a comprehensive overhaul of the RMA, which has undergone numerous reviews and amendments since its enactment in 1991. However, I understand the Government does not have the immediate luxury of time to spend on this while the housing supply crisis continues to worsen. I was encouraged to hear Dr Smith say that the day will come.”

(Updated with comments from Property Council CEO Connal Townsend agreeing on the need for RMA reform)

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90 Comments

by dtcarter | 15th Oct 14, 1:52pm 1413334379

Chris Finlayson, Minister for the Security Intelligence Service and Government Communications Security Berea is also reporting that the RMA is to blame for ISIS.

Just imagine, we get rid of the RMA, which eliminates terrorism and world poverty, then we can get rid of the GCSB and foreign aid. win-win-win.

by Kumbel | 15th Oct 14, 2:36pm 1413336987

Quo usque tandem, Nick Smith, continere abutere nostra patientia?

Or it could be that there is nothing particularly wrong with the RMA as legislation so it doesn't need environmental protections gutting to produce cheaper land. Or, lest we forget, to lift the poor little kiddies out of Tiny Tim Cratchett-like poverty.

All National has to do is pay attention to what councils are doing with the legislation. For a change. Especially since no government of the last 25 years has bothered.

Concern for the pockets of today's ratepayers is what makes councils restrict the supply of land not concern for the environment.

Just in case even Smith himself has forgotten he has already sent the issue of planning and land prices to the Productivity Commission.

This is a deeply cynical and mendacious excuse to do something that has nothing to do with affordable housing and everything to do with letting mining and fracking companies rip.

by PhilBest | 15th Oct 14, 9:24pm 1413361466

Kumbel, I think you have fingered the reality. I have been trying for years to get my head around the actual wording of the RMA and the LGA and the various amendments, and I cannot see that our elected representatives have ever had an honest crack at writing absolutely plain-English legislation that would require Councils to perform to the standards that ordinary decent people would take for granted.

It seems to me that it is possible to have "Same Power, Different Attitude", and the attitude would really make all the difference.

But it is very important how unelected judges interpret the legislation, as it is virtually guaranteed to be the cause of legal action. I believe that they have been grossly unfair and not even following the legislation in the onuses they have put on protesting developers and individual property owners.

I agree 100% with this:

"All National has to do is pay attention to what councils are doing with the legislation."

And I have been telling them exactly that for probably around 2 years now. Their "amendments" are pathetic and absolutely do not impose on Councils, anything that the public utterances from English, Smith et al might have the public believe. I now believe that National is ruthlessly cynical in making noises to soothe the many people who want a fairer go for the young, without having the faintest intention of losing the support and votes (and donations?) of the constituencies that are vested in "urban land prices to the moon".

by SimonP | 15th Oct 14, 2:46pm 1413337586

If the RMA were really to blame, undeveloped land value would have decreased due to the additional costs now required to develop. However, semi-rural land values have blissfully increased unhindered by abstract concepts such as IRR and NPV.

Credit growth and irrational exuberance are the culprits IMHO.

by PhilBest | 15th Oct 14, 7:06pm 1413353218

You raise a valid concern about a complex subject. In fact the rationing of land is what inflates the price, and whatever fees are taken off by government and other interests is merely a "share of planning gain".

You are correct that the price captured by the land vendor is lower because of these fees and charges (at least once the system is mature enough for developers to be anticipating them); however, in the absence of growth boundaries, everything works differently to this. The price of land is determined not by "the quantity of land inside the boundary", but the price of rural land which is in superabundance. The land price curve is low and shallow. And in this case the price paid to the vendor is low, predictably anchored in the price it would get as farmland, and fees are added on to this.

Generally this would result in a lower final price of housing, than where there is a boundary regardless of who captures what share of planning gain inside the boundary. In either case, if the fees exceed the ability of end consumers of housing to pay, then land will probably remain in farming use, because the price developers would pay is even lower than that.

Alan W. Evans' urban economics text books are excellent sources of this sort of analysis.

by dtcarter | 15th Oct 14, 9:08pm 1413360483

What mechanism of the RMA is it that causes the rationing of land?

by Kumbel | 15th Oct 14, 9:27pm 1413361672

Absolutely none.

Although there is no concept of zoning anywhere in the RMA councils have chosen to recreate the concept of zones from the former Town and Country Planning Act.

In part this lets them bundle some permitted/restricted activities and rules into geographic locations. I am guessing that that means they don't have to process resource consent applications for every single proposed change in land use.

More importantly this allows councils to concentrate their infrastructure expenditure into tightly defined areas. So when you hear someone like AC's Deputy Mayor Hulse say that constrained cities benefit from lower infrastructure cost she actually only means the council's cost. She doesn't care about the final cost for a citizen to live in her city.

by kiwi_overseas | 15th Oct 14, 9:28pm 1413361736

From my own experience, time is the rationer & time is money.

Time to:

1) Produce a district plan

2) Make submission

3) Make further submissions

4) Appeal to the the Environment Court - also the constraint of EC resources

It took a certain City Plan not too short of the full 10 years to become operative. Now its up for review again.

5) Time to review development submissions & gather further information.

6) For subdivision consenting, consent times have not always been met.

The RMA is good piece of legislation but very complex & still needs refinement. It needs the addition of a range of national standards to streamline its application.

by PhilBest | 15th Oct 14, 9:37pm 1413362239

Exactly! I didn't say that the RMA per se is the mechanism. It is very much a case of "Same Power, Different Attitude". Councils are not required to ration land supply; it is their choice to do so, to attain what they see as requirements for fiscal responsibility, in certain sections of the LGA. They are wrong about both the requirements for fiscal responsibility, which do NOT actually require them to use DC's INSTEAD OF RATES, to fund infrastructure; AND about the effectiveness of rationing land supply.

I think Kumbel's cynicism is justified. I also think Hugh Pavletich has been right all along, on the points he raises, one of which is "the need for clarity". I completely ceased to trust National on these reforms some months ago; prior to that I was cynical but thought their problem was "lack of spine". I now think they are exemplars of the sort of crony capitalist Tory-ism that has helped ruin the UK (along with socialists blind and economically illiterate faith in central planning, which means that neither major party is ever going to do effective reforms). Plenty of posturing to placate the growing numbers of people who want a fair go for the young, and assurances in the shadows outside the back door, to the cronies in property and finance that nothing is going to be done that will endanger their nice little gouge. The "amendments" to the LGA are as blatant a stitch-up in favour of the status quo as they could be - Kumbel is 100% right in his comment further down the thread. "NO right of appeal". The Council can continue as a law unto itself.

by Kumbel | 15th Oct 14, 9:57pm 1413363462

waymad said something along the lines of councils being able to mutate faster than a Chernobyl rat. So true.

Councils tend to think of statute as guidelines or, as we say under Key's leadership, aspirational.

Remember Smith's 2012 amendment to the LGA that redefined and restricted the purpose of councils ("back to basics"). Every single council ignored that change in their constitutional statute. Every single one. And the Nats didn't care.

by Bernard Hickey | 15th Oct 14, 3:12pm 1413339146

FYI Updated with comments from Property Council CEO Connal Townsend agreeing on the need for RMA reform around land availability.

by jh | 15th Oct 14, 3:21pm 1413339683

Dr Smith says, "under the rules of this National Government, no other cause (such as "Immigration") will be considered; unless the Property Council approves".

by iconoclast | 15th Oct 14, 4:24pm 1413343440

Sssssssshhhh not so loud

While Doctor Smith fiddles with the RMA, meanwhile

Foreigners buy one in six new Aussie homes - latest data

Foreign buyers are flocking to buy Australian property, snapping up one out of every six new homes - and that number is set to get higher. Foreign demand for new homes surged in the September quarter and is tipped to rise further next year. Overseas buyers accounted for almost 17 per cent of total demand for new properties in NSW, and in Victoria, accounted for almost 25 per cent, or one in four new homes. Foreign buyers were also more active in the established property market last quarter, accounting for eight per cent of demand.

http://news.smh.com.au/business/foreigners-buy-one-in-six-new-aussie-homes

by Ergophobia | 15th Oct 14, 4:56pm 1413345388

Nick Smith, this Statute is the Resource Management Act 1991. - In 1991 you voted for it as an MP in the Bolger - NATIONAL Goverment.

I had to pull Joycie up on this about a year ago, he actually blamed it on Labour, he at least was not a Pollie in 1991. The 4th Labour gvt drafted the Bill and the Nats just lazily came in and passed it into law; many told them that it was bad and not to do it. Rather, start again with a Resource Development Bill with a primary presumption of private property rights.

Ergophobia

by kiwi_overseas | 15th Oct 14, 5:12pm 1413346357

Its not just the RMA driving up demand for housing - it is not a silver bullet alone. It is increadibly stupid for NZ to be spending money bidding up land prices & borrowing it to do so - land is 100% unproductive - its not the physical house price that is rising except maybe in line with inflation. (Although it is interesting to note that a recent Interest.co.nz article showed that for a new housing development the land cost was only about 7% or about 10% if the envirnoment case costs were ignored)

1) Credit markets have loosened up considerably since the mid 80's in NZ. It is far easiler to get a mortgage. THE RBNZ has already restricted high LVR loans

2) We have insanely low interest rates driven by the US & EU. The Government needs to run surpluses to keep the pressure off the exchange rate so the RBNZ has more flexibilty to use interest rates to meet the inflation target.

3) The net migration rate is not managed by the Govt and is currently probably faster than NZ can currently provide infrastructure to keep up. The government needs to manage the 12 month rolling migration rate & can do so by adjusting the number of points needed to get into NZ.

4) As Gareth Morgan likes to point out there is an inbuilt risk bias for banks to lend on mortgages rather on other types of more productive loans. This could be addressed.

5) NZ doesnt have a capital gains or capital tax widely and broadly applied to assets including housing. The investor deamnd for housing is excessive, house prices are up, but conversely rents & yields remain low. Roll on a borad based capital tax - this would reduce asset bubbles and reduce income paye tax

6) Housing devlopment in NZ tends to be small scale & there are few economies of scale.

7) NZ commuter travel by car is heavily subsidised. This increases peak travel distances and demand for low density development and therefore land. The government needs to remove developer contributions for transport and allow congestion tolls to be introduced. This will drive a move to higher density housing development in nodal areas well supported by PT, reduce PT subsidies and reduce the long term expenditure on roading - we only build for peak demand.

8) High Pavletich (regular constributor to Interest.co.nz comments) has more to say on infrastructure funding models.

9) The RMA itself. Given the definition of environment in the Act and the purpose of the Act and the need for this Part 2 to be considered in most decisions under the Act, I personally don't think that too much needs to be changed (land is a physical resource). It would seem insufficient weight is has been given to the sustainable management of land and the communities economic well being. A national policy statement under the Act may be sufficient to provide more direction.

environment includes—

(a) ecosystems and their constituent parts, including people and communities; and

(b) all natural and physical resources; and

(d) the social, economic, aesthetic, and cultural conditions which affect the matters stated in paragraphs (a) to (c) or which are affected by those matters

5 Purpose (of the Act)

(1) The purpose of this Act is to promote the sustainable management of natural and physical resources.

(2) In this Act, sustainable management means managing the use, development, and protection of natural and physical resources in a way, or at a rate, which enables people and communities to provide for their social, economic, and cultural well-being and for their health and safety while—
- (a) sustaining the potential of natural and physical resources (excluding minerals) to meet the reasonably foreseeable needs of future generations; and
- (b) safeguarding the life-supporting capacity of air, water, soil, and ecosystems; and
- (c) avoiding, remedying, or mitigating any adverse effects of activities on the environment.

by Kumbel | 15th Oct 14, 5:25pm 1413347147

Ah..........High Pavletich the commenter whose name we can't mention anymore. Judging by the quality of some of his comments he probably has been smoking something different.

by cowboy | 15th Oct 14, 5:32pm 1413347562

please gives proofs for (7). With some of the highest fuel costs, vehicle prices, insurance prices in the world, hard to accept "subsidisation" of commuter travel.

Subsidisation of public transport (where it exists) yes, but again that's norm and a public good.

Likewise (5) CGT, proving to be bugbear. Doesn't help home buyers or cool property market in the slightest. Likely to end up in law just through naked greed (and ignorance)

by Kumbel | 15th Oct 14, 5:37pm 1413347865

There is a generous subsidy from non-car using ratepayers (must be lots of those :-^ ) who pay for a city/district's road system through rates. Otherwise the highway system and half of local roads is paid for entirely via petrol taxes/RUC's.

by kiwi_overseas | 15th Oct 14, 6:04pm 1413349440

To Cowboy and Kumbel,

NZ is luckly in that many of its systems are reasonably economically efficient. Roading is definitely not one of those.

The roading system is designed to meet peak hour travel demand. This causes hugh over expenditure on the roading system, or where budgets are constrained excessive congestion.

Peak hour travellers currently do not pay for the use of the roading system directly except through congestion.

All road users pay petrol tax and all ratepayers rates which fund transport infrastructure. They are subsidising the peak hour travellers.

Peak hour travellers in the main cities should be paying electronic congestion tolls similar to those that exist in Singapore and some other Cities around the world. This is no different to paying for peak air travel or peak period power as some industries do by paying the spot price. The tolls can be varied every three to six months to manage the congestion levels.

In this way:

1) Congestion is removed - peak travellers have travel time reliability

2) Some non time critical travellers choose to move outside the peak hour

3) Some travellers choose to move to public transport - this will in the long term reduce the subsidy required for PT. This will include a move to park and ride where feasible. This can be a very efficient travel mode where the PT is high frequency and the destinations concentrated.

4) The peak transport system users pay the most towards building new transport infrastructure to relieve congestion (when this is needed - eg through population growth)

5) Some users will choose to move location - thus the effect land development. As a general long term effect it will encourage more housing density around high frequency PT nodes.

6) The tolls can be hypothecated to transport. This means that the excise tax on petrol could be lowered all things being equalled. Transport funding from rates for the main roading system could also be dropped.

7) Some people will choose to walk and cycle - healthier for all.

by PhilBest | 15th Oct 14, 6:54pm 1413352479

The reality is that cities where everything is dispersed and travel patterns are dispersed, are by far the most efficient. A low, flat urban land rent curve means minimum sorting of population into location by "ability to pay", which is often at cross-purposes with proximity to their employment.

The more the destinations are concentrated - which you rightly point out is what makes public transport viable - the steeper the urban land rent curve is and the more people are "priced out" to further away from the concentrations of jobs.

Wellington is possibly a glaring example - I wish there was actual analysis of this effect. There is an excellent chapter by Philip Morrison of Vic Uni in an academic text book, "The Oxford Handbook of Creative Cities", in which he finds that the price curve of "residences" per se in Wellington region slopes up towards the centre regardless of how much smaller they become on average closer to the centre.

This is actually not the case in systemically affordable US cities that have a median multiple of 3. Some absurdly cheap accommodation can be found in Houston within walking distance of the CBD that just happens to have more Fortune 500 head offices than any other city outside New York.

Some further relevant literature examples would be:

William Wheaton (1974), “Income and Urban Residence: An Analysis of Consumer Demand for Location”

Jan Breuckner et al (1999), “Why is central Paris rich and downtown Detroit poor ? An amenity-based theory”

Florence Nagot and Yves Schaeffer (2012) “Income Segregation and Suburbanization in France”

by kiwi_overseas | 15th Oct 14, 7:24pm 1413354262

Hi Phil,

My point is that we need to get the economic signals right, then there will be better integration of land use and transport. This is currently not happening in NZ. I note Houston, apart from also has some tolled roads so they have at least started in the right direction.

The reality is that cities where everything is dispersed and travel patterns are dispersed, are by far the most efficient. - I dont believe that this has necessariliy been proven. Some serious land use - transport modelling / economic modelling is needed to consider this issue. I suspect that the most efficient economic city form is polycentric (shortens car driver trips) with high density nodes supported by PT for those that cant afford car travel or the tolls.

sorting of population into location by "ability to pay", which is often at cross-purposes with proximity to their employment. This is already happening. People live where they want due to lifestyle choice & pay through congestion & the housing prices. If they have to pay congestion charges each day they may think harder about where they live in respect to their job location.

I havent even raised the issue of climate change which ideally should be priced through an increase in the excise tax on petrol as a carbon tax. This would induce shorter trips again and further transfer to public transport and preference for development along high frequency PT lines. That said I'm not a PT advocate, my point is simply the current economic signals heavily subsidise peak hour car travel, we waste time stuck in congestion & waste money overbuilding urban roading.

by PhilBest | 15th Oct 14, 10:05pm 1413363933

Appreciate that some people are trying to think this through: but consider this quotation that perfectly sums up the problem I am describing:

Anthony Downs; "A Growth Strategy for the Greater Vancouver Region", 2007:

"......The cost of land poses a key dilemma for urban planners everywhere who want to concentrate jobs together so they can be best served by public transit. Such concentration raises the costs of land near centers; in fact, it would confer a monopoly advantage on landowners who owned such land and could exploit firms trying to locate there. Now firms want to locate elsewhere to cut their land costs.

Planned concentration of jobs in a few centers is not consistent with private ownership and control of land. Some type of collective control over that land would be necessary to prevent monopolistic exploitation of land values. In theory, this could be done with high land taxes in such areas and special zoning rules. But adopting those devices is politically difficult in a free enterprise economy.......

"......A similar but less intensive dilemma concerns land near transit stops, where it would be most efficient to concentrate high-density housing and jobs. That also creates ownership monopolies over such land unless it is specially controlled or taxed. Yet focusing development near transit stops is a key to using more transit....."

What utterly perplexes me is that there are so many advocates of "public transport oriented intensification" who do not see this (in fact is there a SINGLE one apart from Anthony Downs?); if they did see this, and advocated for compulsory acquisitions of the sites necessary to be intensified, I would actually support them. Apart from this measure, which is the precise reason that the "pricing out" effect does not apply in Japan - because the government DOES own all the sites - PT is always going to be an expensive failure. Ridership forecasts will not materialise because the intended intensification will not materialise.

There is NO example anywhere in the world of a city that has intensified the centre and/or a few significant nodes while property rights remained intact, most land was already built on, and an urban growth boundary caused the entire urban area's land rent curve to be higher to start with even before the cost of land at the "spiky" points starts to be considered.

Houston is a good example currently of intensification being driven by purely functional considerations, in the appropriate places, and because the urban land rent curve is low, flat and anchored, the prices of the finished townhouses and apartments is sickeningly cheap, young Kiwis could only drool in frustration at the RE adverts.

I am glad you, like me, are not a PT advocate; I too am merely making points about how things work in real life. The genie is already out of the bottle for dispersed travel patterns, even commuting (non-commuting travel, more than 50% of the total, is long since dispersed). I believe that more than 50% of commuting in Auckland is "dispersed" commuting; less than 20% is to the centre; and less than 30% is "polycentric" commuting. And the trend is being drive by something like a force of gravity in the direction of further dispersion.

It should not be controversial at all that dispersion is a factor for stability in average commute times as cities grow. There is no lack of papers that prove this. Peter Gordon an colleagues have been producing them since around 1989. There is an excellent Glaeser and Kahn one, and recently more than one from Alex Anas et al.

Using our intelligence to look at commuting inputs starting from a blank sheet of paper, the factors that affect commute time will be, in order of importance:

1) Co-location efficiency and the freedom to co-locate efficiently

2) Cross-directional flow conflict delays and the management of them

3) The capacity of the travel network where the travel is actually taking place

4) The speed of the travel method

Anti-car activists try to portray sprawling cities as forcing everybody into longer and longer commutes, but this is not the reality at all.

Most global data on cities commute times are clustered around 24 to 28 minutes (even Los Angeles falls within this); there are far more prominent outliers on the high side than on the low side, and all those outliers on the high side, are high density cities with high PT mode share. Stockholm is an outlier among smaller cities, on the high side. I bet Wellington would be too if only someone could do the data. Some cities do have shorter average commute times, and the majority of them are low density cities with a high ratio of major road lane-miles per capita; those that are European higher density cities tend to be very high unemployment (eg in Spain).

The fact that there are almost no outliers very far on the low side, is explained by the “Zahavi Travel Time Budget” phenomenon. People are comfortable with a certain level of travel and won’t make much effort to get it below a certain point; they will take into account other attributes of housing in making their choices, unrelated to “proximity to work”. On the other hand, breaches of this travel budget on the high side are always “forced”; somewhere in the “labour market” that the city actually is, there are “stickinesses” that are preventing workers from co-locating as efficiently relative to their employment, as is the case in more normal cities. There has to be explanations from density advocates, why the UK's cities have significantly longer average commute times than comparable cities that are 1/5 of the density.

http://news.bbc.co.uk/2/hi/uk_news/3085647.stm

“British commuters have the longest journeys to work in Europe with the average trip taking 45 minutes, according to a study. That is almost twice as long as the commute faced by Italians and seven minutes more than the European Union average…..”

The US average is 26 minutes……

http://economix.blogs.nytimes.com/2011/10/14/world-of-commuters/

by dtcarter | 16th Oct 14, 12:11am 1413371505

In UK you have London. That story didn't break down the average by city but I imagine London skews the figures somewhat. The agglomoration benefits derived there entice people into long commutes because the pay on offer is just so much higher than elsewhere.

by PhilBest | 16th Oct 14, 10:01am 1413406861

And yet New York urban area, which spreads for dozens of miles away from Manhattan, ends up around 1/5 as dense overall as the London urban area, but its average commute time is significantly shorter.

New York property prices have become a problem more recently, with the median multiple now being in "6" territory, but for decades it was amazingly affordable and in fact still is significantly more affordable than London. This is because it was "free to sprawl" and London was not.

If you check out the property 30 minutes train ride away from Central Manhattan versus the same in London, there is absolutely no contest in outright price and even less contest in what you get for your money.

And because of the superior affordability through the entire urban area, there is a much greater ability of workforces to sort themselves into efficient co-locations to their jobs. There is a minimal incidence of the monster commutes that you correctly point out that exist in London.

http://www.newgeography.com/content/004095-the-evolving-urban-form-grea…

What distinguishes commuting patterns in the NY urban area, is that overwhelmingly the workers in Manhattan live no further away than the adjacent counties (Queens, Brooklyn, etc) and the people living on the periphery (up Long Island or inland NJ) also work in either their own county or adjacent counties rather than being attracted into Manhattan for the agglomeration benefits. In fact agglomeration benefits correlate to city size rather than density anyway. A vast low density city with dispersed employment and short average commute times is no less productive than the same population crammed into a UK or Asian city. There are factors of density that undermine productivity - there is plenty of work by the LSE and the McKinsey Institute on this. The congestion diseconomy and the "pricing out" effect makes commuting in high density definitely "no more efficient" at best, and considerably worse in many cases.

I suggest that Houston currently is developing in a way that makes it surprisingly like New York when New York was affordable. There is possibly no other city in the world that is post-automobile, lacking a legacy pre-automobile core, and yet is developing a tall-building, high-intensity CBD on the grounds of functional efficiency. Ironically trying to "plan" this with mandates on where growth is to go, actually creates feedback effects in land values that are an obstruction to much happening. Only a city like Houston, which has a guaranteed low, flat urban land rent curve, can intensify almost indefinitely with the intensification remaining drop-dead affordable.

An interesting historical note about Manhattan is that even while it has been building taller and taller, its population has steadily fallen. Population density always correlates far more with crowding than with building heights. Lagos and Dhaka don't have much tall-building development. The densest ever human settlement, Kowloon Walled City in HK, was only about 8 stories.

by cowboy | 16th Oct 14, 10:06am 1413407165

But London has so much better parking ... ooops that's a motorway...

by cowboy | 16th Oct 14, 10:04am 1413407074

dispersed areas are often efficient because of lack of lost person-hours in transit. A bonus of low population density. The trade off is that dispersion is directly coupled to available goods and services. To have more goods and services requires more facilties, requires more locations to go to. That means more locations which is either higher density or wide coverage area (increase travel resource cost). connected to this is more services requires more skillsets, often including higher specialisation which directly couples to discretionary resources of population, which is proportional to available working population.

by cowboy | 16th Oct 14, 10:17am 1413407876

I'm a fan of PT, with EV based loan vehicles at the end of line. Privately financed were possible, buy a chip-key.

The fuel and time I save climbing in a expert driven aeroplane, flying to auckland, getting into a well maintained and serviced vehicle which has high daily usage (vs my 2 or 3 times a week) which is waiting at airport, so I can do my business in Akland (from Palmy North) is a major advantage over the slightly cheaper 16 hr round trip by personal car.

Personally I'd love to see more arterial EV public transport from airport to auckland cities to cut the land and vehicle cost even more. and hopefully the airport and aviation services would be able to factor in the remote check-in factor without too much difficulty. I found the "yellow bus" service an excellent support when meeting with people last few times.

by Kumbel | 15th Oct 14, 7:27pm 1413354455

Yep if you slice road users into tiny enough segments someone is subsidising someone else. The biggest subsidy in dollar terms is AKL road users subsidising rural road users. Lots of that petrol tax and RUC's from AKL go to subsidise rural councils roading programs.

So you could also say that AKL commuters subsidise Fonterra.

by cowboy | 16th Oct 14, 9:59am 1413406786

Fonterra is forced to use the roads that are already there and doesn't get a say in how or where they are placed, thus it does not count as a subsidy. If anything Fonterra's profitable use is subsidising the road-makers decisions.

Always has to come back to the decision makers

by cowboy | 16th Oct 14, 9:49am 1413406159

petrol/fuel tax doesn't go into roading. neither does taxes on vehicles, nor does registration fees.

by PhilBest | 16th Oct 14, 10:02am 1413406959

That too is an excellent point. "Automobility" in the overall is almost certainly a generator of net surpluses of tax revenue over public costs.

by cowboy | 16th Oct 14, 10:10am 1413407407

I was told it was done in an effort to Sanitise the revenue from such areas. It was not politically acceptable to use road (ie petorl driving) funding on roading as it was seen as an encouragement to impliment less efficient roading solutions to increase revenue gathering.

Of course such political jargon never works, it just means the recipients of the funding have to buy their funding with political points off those who impliment roading/fuel decisions (and vice versa, the roading people have to suck up to the minstry and executives to get their general public funding approved)...that's prolitics for ya.

by David Chaston | 16th Oct 14, 10:22am 1413408130

That is just not correct.

The Govt will collect $195 mln for registration fees, $1,268 mln for Road User Charges, plus $1,903 mln in Excise Tax collections. That totals $3,366 mln.

On the other hand Vote Transport is $4,518.7 mln, and of that they are spending $3,040.1 for roading.

Basically most of the taxes collected from motorists go into roading, within 10%.

The data is here:

http://www.interest.co.nz/news/69928/budget-2014-summary-all-spending-p…

and

http://www.interest.co.nz/news/69929/budget-2014-summary-all-tax-collec…

and this is sourced from:

http://www.treasury.govt.nz/budget/2014/data

by Kumbel | 16th Oct 14, 11:26am 1413411979

I find govt accounts more opaque than council ones but the number to look for is National Land Transport Plan not Vote Transport.

And don't forget we had some funding for pork projects out of asset sales money. Hopefully a one-off for 14/15

by David Chaston | 16th Oct 14, 12:17pm 1413415078

Agree. That is what the $3,040.1 mln is - Land Transport.

by Kumbel | 16th Oct 14, 12:30pm 1413415812

Sorry, David. Couldn't follow the threading and thought you were disputing my earlier comment. Realised my mistake too late.

by cowboy | 16th Oct 14, 1:55pm 1413420932

nope. it's sanitise - just because the numbers are similar doesn't mean it's from the same funding account. Although the MP could have been lying when he explained it, and the written reports might have been altered for public deniabillity.

They were asked several times - partly when the Manawatu gorge was closed, and the question was raised over repairs to support roads. "We pay for the roads through road fees and fuel taxes so should get that mileage back to repair the roads".

MP answer, no, those funds are earmarked for special accounts and can't be used for road building or repairs. Roading is considered "general infrastructure" and therefore must come from the general public taxation

by dtcarter | 15th Oct 14, 9:16pm 1413361000

Given that aucklands car ownership rate is 68%, and less and less of those cars are being driven, particularly at peak times, yes there are alots of us subsidising the single-occupancy-peak-hour drivers

kilometers driven per-person has been dropping since 2006, and is below rates seen at the turn of the millenium.

http://transportblog.co.nz/2013/09/05/auckland-vehicle-ownership-and-vk…

by PhilBest | 16th Oct 14, 10:09am 1413407386

What is the mode share of total travel in person km, of cars?

Stats like you are presenting look impressive, but the reality is probably in the order of "share of total travel in person km" for cars falling from 91% to 90%, and the 1% being "working from home" gain.

When you have a mode like PT that is around 5% of total person kms of travel, if that increases to 5.5% it can be presented as "a 10% increase in PT use". But even then if overall kms of travel have fallen due to economic and demographic realities, there may not even be an increased utilisation of PT vehicles at all.

by cowboy | 16th Oct 14, 9:38am 1413405523

Doesn't count as it's compulsory council activity inflicted on ratepayers .... exactly the kind of thing that needs to be broken out and REMOVED !

It's hidden costs like that which cause much of our current financial difficulties.... eg use public or Shank's Pony to reduce costs because a person is paying down debt or trying to dig themselves out of a financial hole (eg the ex-wifes credit card debt) ... but you're still paying for everyone elses roads...

by PhilBest | 15th Oct 14, 7:00pm 1413352835

I agree with road pricing on principle, but in terms of "person mile of travel", public transport is subsidised far more heavily than motorists are. It is a fraud and a very successful one, that has so many people believing the opposite.

No-one pays for a motorists car, but the trains and buses are subsidised. The same goes for a motorists petrol and running costs versus the public transport energy and running costs. PT accumulates a cost forever just moving people around; this cost is 30 cents per person km or higher.

In contrast the subsidy to "motorists", netting out what they pay in petrol taxes and as ratepayers themselves, and netting out the costs for which heavy vehicles are responsible, is more like 1 cent per person km of travel. The roads, once built, are there forever and this cost per person km tends to slowly reduce forever.

"Externalities" might be as high as 7 cents per person km if you are really adventurous - but by far the most bearing of these costs, is by drivers and other people who gain sufficient benefit from the fact tha automobility exists, that there is no way they would choose to be without it just for the sake of avoiding the externalities.

by kiwi_overseas | 15th Oct 14, 7:33pm 1413354807

Hi Phil,

Society has a social and moral obligation to provide a public transport system for those that cant afford car travel. This will always be subsidised.

Expansion of PT over and above this level of provision should then be economically justified, either through the benefits to road users of reduced congestion, to PT users through higher frequency services or to both through the use of congestion tolls and natural shift in the travel mode split further towards PT.

I agree PT is not particulary efficient. Companies like Uber are going to be quite distruptive in this respect. On demand shared ride private transit may well replace all but high frequency core PT services in the future.

by PhilBest | 15th Oct 14, 10:22pm 1413364929

The benefit of PT subsidies, which are massive burdens to local finances, is overwhelmingly hogged by commuters to the CBD. The locations where poorer people are "priced out" to (and poorer people's travel destinations are at least as dispersed as the average and possibly more so) are ill-served by PT services and the cost of improving this reality is so utterly uneconomic it would be cheaper to heavily subsidise the cost of ownership and running of a car for them. Most of them already do own and run a car, and would choose this any day ahead of having bleeding heart nanny statists dictating "solutions" for them that leave them behind the rest of society for travel flexibility and freedom.

In fact many poorer people are proud devotees of some brand of Japanese car that provides them 20 cents per km mobility. The incredible reliability and economy now of the sub-$2000 used car is one of the biggest triumphs of capitalism to the benefit of the poor. Anthony Downs points this out in "Still Stuck in Traffic" (2004) which is probably the most comprehensive book on the subject of urban travel infrastructure in existence.

"Triple convergence" is also his theory - one of the points of this is that a driver who "switches to PT" will leave a space on the road that will "induce" another driver just as surely as adding road capacity will. This gels with the reality that there is absolutely no evidence from anywhere that a lower capacity road network and funding of more PT instead, has done anything other than increase traffic congestion. Have you ever browsed the TomTom or INRIX "congestion delay by city" data? There is absolutely nothing that leaps out to support any other conclusion. The LOW congestion delays that most drivers from most cities around the world would die for, are all to be found in low density US cities that have two to four times as much highway and arterial lane-miles per capita than what Auckland or Wellington does. It is an absolute myth that the high-congestion cities, like ours and Scandinavia's, are that way because we have pursued some alleged uniquely road-mad spending program for the last few decades.

by steven | 16th Oct 14, 7:31am 1413397886

The problem with a car each is there will not be the oil, ergo electrified public transport.

"This gels with the reality that there is absolutely no evidence from anywhere that a lower capacity road network and funding of more PT instead, has done anything other than increase traffic congestion."

See above para,

oil

You refuse to understand the simple math, you cannot have expotential growth on a finite planet. What this signals is really a fundimental change in how ppl live and work.

regards

by PhilBest | 16th Oct 14, 10:28am 1413408511

And you refuse to get the reality about concentrated residential and employment patterns versus dispersed residential and employment patterns, urban land markets and land rent, and about the sustainability of a resource-scarce economy. Oh, we will all live in apartment blocks and catch trains to work, where we will write reports, sell each other financial instruments, sue each other, sell each other online services, cut each others hair, make each other coffee, etc etc - with the government printing money to keep the whole going. DUH!!!

(Plus I don't see any advocacy of nationalisation of urban land that is necessary for this to even happen at all - otherwise how does everyone "buy in" to the apartments on sites owned by an oligopoly?)

You don't think living dispersed, generating our own power on-site and growing more of our own food and stuff like that is likely to have any place in the resource-scarce economy?

Dushko Bogunovich's "Long, Low, Flat Auckland" proposal is an icon of common sense. As is Andrew Atkin's "ordinary bloke's" insights.

http://andrewatkin.blogspot.com/2009/06/smart-growth.html

The people who say density = resilience to resource scarcity would cause just as much human tragedy as the slope-brows that ended up doing all the "planning" in former Commie countries.

I guess every specialist discussion forum can do with a mascot total ignoramus to ask the stupid questions and provoke the explanations that the less intelligent proportion of the audience can benefit from, but really, endless trolling and year after year of repetition of the same stupid questions and comments is a give-away about a person's explicitly disruptive and obfuscatory real agenda. Which big rentier in property or finance is paying you to do this, Steven?

http://nextcity.org/daily/entry/this-country-is-planning-its-entire-transportation-system-around-electric-t

You can bet the war is on right now by the rentiers trying to make sure mass rail-based PT is adopted as the (non) solution......!!

by steven | 16th Oct 14, 10:36am 1413409016

Isnt this exactly what they have been doing?

"with the government printing money to keep the whole going. DUH!!!"

isnt working is it? well its letting us stagger along, its like the world's economy is on lifesupport and not getting better.

Bad news reality is going to bite us, so the future will not be an extension of the BAU past.

In the 1970s we had the orginal oil crisis and developed workld Govns decided to,

"Oh, we will all live in apartment blocks and catch trains to work, where we will write reports, sell each other financial instruments, sue each other, sell each other online services, cut each others hair, make each other coffee, etc etc"

as making a good caost too much in energy.

Its make believe la la land stuff.

by Ms de Meanour | 16th Oct 14, 10:50am 1413409820

I'm puzzled now. Does steven want us all to be forced into apartment blocks and public transport or not?

by steven | 16th Oct 14, 11:18am 1413411504

Maybe you are puzzled because you have a failure of logic probably caused by libertarian blinkers. So you then decide to attack the poster with a un-stated position of that poster.

I didnt say I wanted any such thing, what I am saying is we have an energy intensive lifestyle that with the cost and scarcity of said fossil energy has to change.

Just what it changes to /how much is the Q.

regards

by Ms de Meanour | 16th Oct 14, 11:39am 1413412764

I did not attack you. I did not state that you had a position. I asked for clarification of your position.

Are you saying then that you don't know how our energy intensive lifestyle has to change in response to the increasing cost and scarcity of fossil fuels, only that it does have to change?

How then can you be so sure that Phil's proposed change is wrong?

by steven | 16th Oct 14, 11:55am 1413413749

"how", no. How is becoming obvious, we will ignore it until forced to and it looks like in a crippling and messy way. Quite likely the 4 horsemen will be involved for many Nations.

Otherwise more like the degree of change I cannot fathom, but it wont be small as it has to de-intesify. So say people living in the Amazon rainforest, if climate change doesnt get them, not at all as they use little non-annual energy.

Phil's change(s) doesnt doesnt address energy use or climate change. I mean just what is he proposing? use more cars?, more roads? as PT is not acceptable, and have BAU which seems to be the centre of his argument. Since we cant have any more BAU and we cant use as much transport energy there has to be huge changes. So where in PB's changes is this reflected?

I am all ears.

and second PB has a libertaran political axe to grind and hence going PB's way where he's ignoring such fundimentals would seem stupid to say the least.

So from my perspective its like Im saying 4/2 = 2 and 2-2=2 where phil is saying 4+1=5 it looks fundimentally wrong or at least unsafe.

regards

by Ms de Meanour | 16th Oct 14, 1:14pm 1413418457

Your reasoning seems to be -

(1) To address energy and climate change concerns we must have more public transport.

(2) Phil's approach does not involve more public transport.

(3) Therefore Phil's approach does not address energy and climate change concerns.

Now (2) does appear to be the case. But that only leads to (3), if (1) is true. Phil has tried and tried to explain that (1) is not necessarily true. He has presented extensive empirical evidence and argumentation in support of that proposition.

by steven | 16th Oct 14, 1:50pm 1413420600

Hmm no, again you characterise strangely. So how about not trying to put words in my mouth as clearly you are and pretty much wrong every time.

a) Lets say that the interactions are hugely complex.

b) few if anyone is seeing this overal picture and some like PB arnt even looking or more leikly refuse to look as that shoots out their entire model..

1) No, sort of. We will use more public transport or cars as the only 2 options, there is a 3rd or dont do the thing or 4th use azero energy to do it. The Q is which will there be more of? So there is a third option to use a car, or use PT , its not do (or use zero method options, eg push bike, walk)

if you look at cuba as it went through its own peak oil this is what you see signs of, not doing things. Kunstler says this quite succinctly, (paraphrase) the enviros seem to think we will carry on all moving heroically to EVs and all will be well, this isnt the case.

2) Well I suppose I can agree with PB here in that PT is also not the probable outcome. ie to run around a 7tonne(? 12?) bus for 3 OAPS makes no sense economically or environmentally, the only logical outcome is not run the bus . PBs comment is then well (paraphrase) just let them use a car, that also of course makes no sense if you have to triage.

3) Phil does indeed not address less and more expensive energy and climate change. Lets look, PBs entire "design" is based on BAU? and more growth? more houses? more expansion? I certianly cannot see anything else in his words to say differently. So we'll be further out in surburbia aka the USA? Consider what happens in an energy crisis, we'll have petrol rationing, how then will ppl get to work when they used to use 4 tanks a month and now find they are only allowed 2? Or what if we ration on price? So let the richest ppl buy at $3 or $4 a litre and let the "poor" walk? or more like have no job? just how do we then pay for that?

My comment is we will be doing less and be shrinking and not doing more and growing.

Of course no one will accept the former so they will insist on doing the latter, until reality sends us bankrupt (be taht energy or $s)

In terms of evidence and argument its simple, first look at the trustworthiness of the source in this case PB. Is he qualified? is he offering genuine verifiable data and facts published in peer reviewed journals? that have been picked over by experts? or does he offer biased opinions and cherry picked data based on his ideology?

For me its clearly the latter, and hence not to be relied on.

regards

by iconoclast | 16th Oct 14, 2:18pm 1413422330

lot of difficulty with PhilBest prognostications

Much of his "empirical evidence" is based on comparisons around Houston and other American cities. People around the world respond to price signals. In the US there is "almost" no excise impost in the price of a litre of gasolene - in fact it's about 6 cents a litre - whereas in New Zealand excise and Road User Charges are significantly higher, so evidentially, you would expect people to respond differently.

US excise http://www.eia.gov/tools/faqs/faq.cfm?

Problem is, PhilBest has never provided a comparison with Teheran and Iran where gasolene is or was about 20 cents a litre, no excise, where the price of fuel was subsidised by Govt, so evidentially, you would expect people to respond differently

by steven | 16th Oct 14, 2:30pm 1413423033

Beyond that though even with no idealogy in the way its almost impossible to understand what is going on without breaking the subject into a mind managable size and have a model of it. If however you leave out critical inputs then the model is really fanciful and bears no reality to the real world.

For instance robbing Peter to pay Paul or robbing Peter to pay Paula. So its considered fine to run a 7tonne bus hourly past my house with 3 OAPs on it using gold cards, that is insane economically, PB doesnt think this is sane outside of commuter hours and I agree.

The other option is? is let them use a taxi or subsize a car as its cheaper economically to do so. There is no third option, dont do either, or 4th move closer to the shops and walk.

The latter two probably has the least climate impact and economic burden, its also the least or even the not acceptable solution. This is where we get a clash of Green V Red and Blue and where I argue / disagree so much with ppl in the Green party. Both they and PB have more in common than me in some ways.

Iran as a case is an interesting example v Texas I hadnt thought of it. Though the USA pays $4US a US gallon and Iranians pays a fraction of that? Second point in Iran the Govn wont or cant remove its subsidies as the cost increases would cause riots they fear. So the other side of the coin, as prices rise in the developed world we'll see riots? the 4 horsemen cometh maybe.

regards

by iconoclast | 16th Oct 14, 3:16pm 1413425781

They've got the OAP's transport fixed in my neighbourhood

Transport

Community bus

The community bus collects you from your home and stops at set prearranged locations such as local shopping centres, libraries and senior community centres and then returns you home at the end of the outing. Day trips to a range of interesting destinations are regularly available, and usually include lunch.

Resident transport service

Bayside resident transport is provides eligible older members of the community and those with disabilities transport to and from medical appointments when a mainstream transport is not suitable. The transport is provided by a team of dedicated volunteers

by iconoclast | 16th Oct 14, 3:22pm 1413426143

They've got the OAP's transport fixed in my neighbourhood - provided by council

Transport

Resident transport service

Resident transport provides eligible older members of the community and those with disabilities transport to and from medical appointments when a mainstream transport is not suitable. The transport is provided by a team of dedicated volunteers

by cowboy | 17th Oct 14, 8:52am 1413489165

The future of PT is not the past., but the future. More sensible vehicles, for mass transit, more portable smaller units for local travel - like the "green-bike" car towers and copenhagen wheel bikes.

Of course..Nz will quickly buy up everyone elses junk and repurpose it like a crazed Steptoe, and promote it heavily (aka Napier tour buses). Isn't that what public purse is for to pay for the silly ideas of the public servants?

by cowboy | 16th Oct 14, 1:47pm 1413420475

you forgot work at McJobs and all get licensed to sell each other real estate.

by raegun | 16th Oct 14, 10:31am 1413408694

I doubt Phil is even interested in getting his head around the finite nature of so much that we rely on, including space to live on. Trouble is, people like him either see having to work with that as restricting his ability to accrue wealth (greedy) or is driven by some sort of religious notion (won't say what I think about that). Either way the planet has to get used to the idea so might as well start coming up with ways to live good lives without growth. The interest in micro housing may be an indication that the tide may be beginning to turn, if your house is tiny your ability to buy and keep piles and piles of stuff is very limited, thus the demise of a consumet society, bring it on

by steven | 16th Oct 14, 10:40am 1413409211

earthship.com.

Self sustaining to an extent, treats its own waste, collects its own water, self heating.

regards

by Brendon | 16th Oct 14, 6:44pm 1413438274

Steven should the Green party have a nationwide development policy that residences that meet the 'earthship' standard get automatic and free approval through the consenting process? Or should 'earthships' be rationed through planning processes that allows bureacrats and favoured landowners to extract income and wealth from those who want to live the 'earthship' life?

by steven | 16th Oct 14, 7:30pm 1413441024

Standard builds should be rubber stamped almost I think myself (there are 3 std earthship builds/plans I think 2, 3 and 4 bedrooms). Of course then we dont need fancy architects n stuff to "improve" things.

I think someone up north did an earthship but then the council changed the rules so Im not sure how many more will get built as things stand today in NZ. In the future when councils that we know today are gone as such, I hope more will be built, I'd love one.

I dont know about free, there should still be inspections to make sure the building is safe and habitable. The contrubutions however are the thing that can be hacked back, lets assume we keep the potable water in but no sewerage out.

Now we are into land banking, easy fix, bring in a land tax and CGT then compulsory land purchases at agricultural land rates and then re-zone them if the two taxes above doesnt square prices enough.

regards

by Brendon | 16th Oct 14, 8:25pm 1413444322

So Steven you agree with PB that a solution to land banking is compulsory land purchases at agricultrual land rates for housing. This being an alternative solution PB has discussed to his more commonly advocated solution of liberalising planning restrictions?

P.S free consents was for dramatic effect. A fixed and fair price for inspections would be fine by me : )

by steven | 17th Oct 14, 7:20am 1413483626

Do I agree with him, or does he agree with me? Ive long said this is one effect option.

chicken and egg I suppose.

Its not an idea I love, I dont like the idea of public/council compulsory purchasing in the name of "progress".

The problem with liberalising planning restrictions is the Q of to collapse prices a lot of land has to be made available at once, so by removing land planning, all we'd probably do is pass the control to the land bankers who'd sell it off piecemeal thus holding the price up, which of course takes me back to compulsory purchasing.

It then of course takes us back to the pending problem peak oil. I purchased my property with the explicit view that I needed easy access to PT, hence I spend about $80 a month on petrol. Even if petrol was $4 a litre it wouldnt effect me severely, even if it was rationed (and I think it will be if only from brief emergencies) the 1 at most 2 tanks a month is likely to fall under that. Now I know people who have "lifestyle" properties who use 1+ tanks a week to commute (and bigger cars/SUVs) lets say 1 tank, that means today their fuel bills are $400+ a month. Take petrol to even $3 a iltre, $600 a month, crippling, if $400 isnt already. What happens if they get rationed? if its 2 tanks a month they cannot work, they are in deep doo doo.

So what price is this expansion? Lets look at the above, indeed the GFC2 that's looking like its about to explode on us within a few months, will NZ dodge it again? if not what will that do to land and hosue prices?

I guess what I am saying is we are in a housing bubble, and over-supply is one way to make it pop, the other is financial reality hitting ppl, externally driven. How or should you protect those who buy of their own free will at these inflated prices? how much of this "demand" is real and not greed or over-inflated marketing?

Strategically for me this hosuign thing is a moot argument, its eclipsed by peak oil, has lots of unknowns and hence not worth much of my time.

regards

by Brendon | 17th Oct 14, 8:57am 1413489476

Re: "Do I agree with him (PB) or does he agree with me?" Come on Steven that is just ego talk. Who cares?

I was just pointing out that you two appeared to agree on some points.

by steven | 17th Oct 14, 9:34am 1413491687

When you step back and look at peak oil then yes it is indeed "who cares" Arguing over how we build more houses we may not really need is a a waste of time for me. It is simple we wont need them.

regards

by cowboy | 17th Oct 14, 8:57am 1413489425

My "solution" to land banking is that those who don't like it, should buy the land in question, and then sell it themselves at cost or cost+handling. Simply amazing how land banking no longer becomes a problem...

by steven | 17th Oct 14, 9:37am 1413491861

Not true, those then who sell it to "me" have made the huge %s in the sale. "me" makes nothing just another middleman.

The point is to avoid that unjustified markup. ie the land is only worth its price once re-zoned.

regards

by cowboy | 17th Oct 14, 11:56am 1413500214

they made their choices.

you make your choices.

put your money on _your_ choices. They aren't putting your money on theirs.

by Brendon | 16th Oct 14, 7:22pm 1413440528

The key point about this issue is that current practice transfers wealth and income from the productive to the unproductive sector.

The productive sector could be PDK types who just want to fossick around their affordable little blocks of land living as sustainably as possible. It might be the workers who do not want to spend 50 years as mortgage slaves or hostage to a rental market where they have few long term rights to their 'homes'. Or it could be the businesses which struggle to afford the high wages needed to keep 'generation rent' or the mortgage slaves in housing.

If the world and NZ need to rekindle growth our current approaches to housing impedes this. If we need to find new opportunities for the next generation our current practice is hindering this. If we need to transition to a more sustainable economy our current approach does not help this transition either.

All that our current approach to housing achieves is a transfer of wealth and income from the hard working to the undeserving. Anyone who doesn't see this is either stupid or in the pocket of the well connected but unproductive class.

by steven | 17th Oct 14, 7:35am 1413484556

This is a godo example of my concerns. The problem with say PDK and compulsory purchasing is who decides if PDK is "productive or not? I mean we'd be trusting the local council to make that decision (yeah right). PDK makes little useful good as an output so it may well be they see him as the perfect "seller" whereas a Hong Kong land banker has money for lawyers to fight such a purchase, PDK wouldnt. So which would the council pick as the easiest target? I bet I know who.

regards

by Brendon | 17th Oct 14, 8:49am 1413488943

Steven you still do not get it, why?

It is our current system that rewards the unproductive with excessive capital gains. There is two proven ways to eliminate that -compulsory farmland purchases for the purpose of housing or liberalising planning restrictions. Liberalising planning restrictions unlike what you say is the enemy to land bankers (sellers) because purchasers can bypass the landbanking cartel and purchase elsewhere.

Note the possibility of being able to do this often makes it unnecessary. A farmer recently told me he used to get lower cartage rates because he had a truck parked in a shed.

I don't understand your example of PDK versus the Hong Kong landbanker and deciding who is productive and who isn't.

by cowboy | 17th Oct 14, 9:00am 1413489606

Brendon that interpretation is incorrect. And your market interfernece strong arm tactics are the result of that misunderstanding.

the actual reality is more scary (and then when you talk about putting in those control you mention... we're talking real danger)

by steven | 17th Oct 14, 9:32am 1413491535

Well if you just want to look a few weeks / months out,

or lack of demand + over-supply?

or just lack of demand?

or Speculators exiting the futures market and running into Govn Bonds?

various %s of the above?

Longer term,

If you look at July 2008 oil was $148, then fell to $35 ish. It was driven up so high how? lack of supply.

Everything since has pointed to huge volitility which is one of the symptoms of peak oil.

Looking forward some years it takes 5 years to bring an oil field on line and the present price of doing so is $90~$95 so at $80 no private business is going to take a loss and hence projects will be canned. lack of new fields to replace depletion of old fields means a higher probability of large % drops in supply. The effects of that can be seen historically in the 1970s oil crisis.

Unfortunately its difficult to fathom what is actually going on short term due to lack of good honest data, and opaqueness by vested interests, what "we" end up doing is seeing the truth after the event. What we can see is in the last decade is oil has gone from a stable $40 average to a highly unstable $90 (ish).

Very interesting...

regards

by Snodgrass Thro… | 17th Oct 14, 11:29am 1413498551

Oil was $148 in 2008. For less than an hour. Consumption has been growing since 2008 but the increase has been slowing and global consumption could be falling as early as 2016. Opec is cutting output especially Saudi Arabia. The chances of seeing $100 again in the next 5 years is minimal. WTI and Brent both hit five year lows last night.

The people who in 2008 were saying that production would not be able to keep up with demand, and you were one of them steven, have been proved wrong. Any time in the next ten years that every OPEC country tries to sell as much as it wants to sell the price would keep spiking down to $40.

by PeakEverything | 17th Oct 14, 11:37am 1413499065

Well to be fair oil "production" has only kept up with demand due to fracking which is a short term thing.

by Snodgrass Thro… | 17th Oct 14, 12:17pm 1413501471

Fracking has been going on for over seventy years but the technology is now improving dramatically. It is not a "short term thing." Less than 1% of the known shale currently has rigs on it. Total production of oil, gas and condensates from fracking will keep increasing for decades.

by cowboy | 16th Oct 14, 9:44am 1413405869

By breaking out some of the costs then direct comparisons can be made.

What is the charge time-wise for commuting? What is the macro-economic cost for a bunch of privately owned rusting pollution factories that are quickly aging?

Are the service costs for public transport realistic? If the cost is broken out can optimisations and population figures be determined. Many of the subway-ed cities in the world would not be possible without their subways, the cost and resources to run that many private vehicles would be ridiculous not to mention the pollution. And perhaps the rates-road grab from non-car users (which is likely to be small outside Akland and Wgtn), could be transparently compared to the cost of better public services.

by waymad | 15th Oct 14, 10:43pm 1413366214

Time for my 2c worth.

(Yes, time-money, a fact that Councils just don't get. Their injection of time into what should be simple processes causes applicant cost.)

The RMA is all about Effects. If there is to be change, let's see:

abolition of all existing zones. 'Build Anywhere, constricted only by Effects'
Make 'Effects' include the current woes: the creation and highly inequitable distribution of Planning Gain: get IRD involved: 'an Urban Zone is hereby deemed to contain taxable Planning Gain beyond a plot value of $x. 'X' to be determined from time to time by the Minister for Everything. It's what, after all, got Al Capone in the end. The tax, I mean. Not the cheap whisky.

Councils have proven themselves throughly unreliable in this entire area. Best to, as Kumbel avers, take the whole shebang away from them.

Not, I hasten to add, that any of this can undo the frighful Gordian knot that AKL and to a lesser extent CHC have gotten themselves into. A long slow unwind of median multiples is what's needed, but I cheerfully confess to being utterly clueless about how to engineer this without extensive collateral damage.

by raegun | 16th Oct 14, 8:30am 1413401406

We all know that wthout checks and balances we stuff things up big time. Fair enough for some reforms, but giving humans carte blanche, no way

by cowboy | 16th Oct 14, 9:47am 1413406034

It's all good until density starts picking up. same rules for any density calculation be it effluent or construction materials.

People complain about having to have a 7m deep road frontage.

Then later complain when houses need to be knocked down to widen arterial roads.

by Craig | 16th Oct 14, 11:07am 1413410863

My problem with your abolishing zones is it assumes people all play fair and look at their affect on others. In reality, too many people are greedy and look after themselves first. There are many examples where developers buy cheap land on the edge of industrial areas (cheap for a reason) then build house, the residents move in and start complainig about noise and smell even though that was there first.

On your second point on unwinding the knot. I have no problem with collateral damage as those damaged are mainly the ones causing the problem. Play the game, expect to lose sometimes. It can't always be win win.

by cowboy | 16th Oct 14, 1:59pm 1413421160

The difficulty is that in a open system those that are greed/cheap/dishonest have advantage over their more decent minded competitors and that the people utilising the system hasve no interest in the teleologistic effect, they are rightly more concerned about their immediate cost/benefit ratio (which is normal in a scarce and competitive resource environment)

by Basel Brush III | 16th Oct 14, 9:47am 1413406042

No comment from Bernard about the rest of the meeting as reported in The Herald

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11343089

How about the ideas on balancing investors with FHBs using tax?

Or is that another topic?

C'mon BH

by 69er | 16th Oct 14, 12:35pm 1413416147

It has been said on this forum before, why the need to have businesses clustered around the main cities? Smaller towns must be cheaper to set up a business in, and the housing is cheaper for your employees too, so you can pay them less. I'm sure most small town infrastructures could cope fine with an extra ten percent population increase, and the councils would be overjoyed to receive more in rates. People will move to smaller towns if the jobs are there for them.

by steven | 16th Oct 14, 12:55pm 1413417336

Because of transport costs and a self fullinging item, a big pool of the right labour skills.

Second item, So lets take my case I'd love to move to South Island for a better lifestyle. but there is no work on the scale or $s that make it possible. If jobs were there but it was a one company show then its difficult for me to move to a better paid job in the same town. In effect employers have me trapped in the one job and can dictate salary.

1st item, businesses are closley interinked as that is how they work, spread them out and the intercommunication costs become higher and take longer.

Businesses also like to be close to the biggest points of consumption, or where the market is.

On top of that cities do what is known as super-scale (there is a ted talk on this), so the bigger they are the more advanced, efficient and effective they are.

So really when ppls say we need to sstop the rural rot they are really damaging the Nation's economy.

by 69er | 16th Oct 14, 8:07pm 1413443260

Some industries need to stay local ie quarries, cement suppliers etc as the product can't be freighted economically. However most manufactured goods get freighted around the country anyway. As far as hiring staff, I don't see how you are limited to who is already in the locale, advertising online lets you pick from the entire country for your staff- and if the jobs are there people will move to fill them. I think big cities are efficient only if you have the money available to keep the infrastructure going to serve the population, otherwise the whole thing chokes. And it is dangerous from a national perspective to have so much invested in a small area in the event of a national disaster. If Wellington or Auckland were to be smacked as Christchurch was, NuZillin would be toast.

by steven | 17th Oct 14, 7:39am 1413484773

Freight cost time and money. a) Plus with peak oil we'd by using an expensive solution and b) increasing co2 output, bad idea and c) What you take about is globalisation in miniture where in effect we use low cost labour to make things cheaper, in such a rural seeting you describe this isnt the case.

Frankly its plain silly IMHO.

regards

by SimonP | 16th Oct 14, 1:31pm 1413419472

Geoff Simmons is not impressed:

http://garethsworld.com/blog/tax-and-welfare/bill-national-going-ape-councils-poverty-disgraceful/

by Brendon | 17th Oct 14, 9:15am 1413490503

Agreed. There is so much nonsense talked about infrastructure and housing. As a country we have tied ourselves in knots over a relatively inexpensive problem. Transport spending has always being less than Social Welfare, Education and Healthcare yet the arguments, timewasting and indecision is about transport issues. It makes no sense.

I say just get on with. Let the talkfest end and the doing start.