A new look KiwiBuild is “not that far away,” according to Housing Minister Phil Twyford.
“We’ve almost landed it, it’s got to go to Cabinet and so on. We’ve got to talk to colleagues, it’s not that far away,” Twyford told Newsroom on Tuesday.
The flagship policy had to be reworked after the startling admission earlier this year that it would fall far short of its first-year goal of 1000 homes. Since announcing his targets last year, Twyford has suffered withering attacks from opposition housing spokesperson Judith Collins on the targets, prices and popularity of the policy.
But while KiwiBuild suffered under sustained attack, Twyford was busy pushing other parts of the Government’s housing agenda.
This has impressed some observers, including Eric Crampton of free market think-tank, The New Zealand Initiative.
Twyford spoke at the think-tank’s member’s retreat on 22 March, and laid out the Government’s reforms across areas like planning and construction, which Twyford hopes will help increase housing supply and bring down the cost of housing.
While the New Zealand Initiative and Twyford have butted heads on KiwiBuild, the think-tank is more supportive of Twyford’s wider reforms. It’s director Oliver Hartwich even co-authored an op-ed with Twyford on the subject when Labour was in opposition.
“He understands the incentive problems that underlie the housing shortage,” said Crampton.
Twyford specifically took aim at the way infrastructure is financed in New Zealand, and the impediments the planning laws place on development.
Currently, councils foot the bill for big infrastructure projects, like roads and pipes, which are essential for new developments. While the projects are themselves expensive, councils keep almost none of the additional revenue that developments raise. Although they pocket additional rate revenue, most additional income accrues to central government leaving councils out of pocket.
Twyford’s solution to this is to allow targeted rates to be charged on people living in particular developments, which levy additional charges to pay for the cost of a development. It is hoped this will encourage councils to be far more pro-development, by taking some of the financial risk off their shoulders.
While a version of this was trialed last year at the Milldale development, north of Auckland, where The Government will soon pass legislation making developments like Milldale even more common.
Crampton told Newsroom the new model will allow several landowners to develop their land together, using funding vehicles like those at Milldale.
Twyford said the changes would help to make housing responsive to demand, rather than the vicissitudes of politicians and bureaucrats.
It’s about trying to create a system that is responsive to demand and doesn’t require the infrastructure for new developments to go through elected representatives and public servants to give them the tick. If a project stacks up, it should be able to go ahead,” he said.
Twyford was optimistic the changes would allow several developments to finance infrastructure.
“There are literally dozens of potential projects in the pipeline where this could help,” he said.
Two laws for one stop shop
Twyford’s main piece of legislative work, is to establish the Housing and Urban Development Authority or HUDA. The entity will have wide-ranging powers, and require two pieces of legislation to create, but ultimately it will act as a one-stop-shop for large-scale housing developments.
The legislation creating the authority will be split into two parts. The first will establish HUDA, the second will look at some of its more complex and contentious powers.
The first piece of legislation will be introduced mid-year. Twyford hopes to have it passed by the end of the year.
Twyford said the legislation dealing with the powers and safeguards of the bill would be split off into a second bill to be introduced later this year and passed next year.
Neither bill had yet been progressed to Cabinet stage so further detail on what each would entail is sketchy at this stage.
Up and out
Twyford is also trying to ease up development restrictions to allow cities to grow up and out. Currently, restrictive planning enabled by the Resource Management Act acts as a brake on densification.
With Environment Minister David Parker, Twyford used a national direction under the RMA to give councils “pretty clear direction” to encourage intensification in their district plans, and when they consent new developments.
Twyford said density would allow “diversity of housing types that young people and modern New Zealanders want”.
There would also be work on allowing cities to grow out as well.
“We have to allow our cities to grow out, because if we don’t, we simply drive up the cost of land by creating artificial scarcity and it’s high urban land prices that are at the root of the problem we’ve got,” Twyford said.
“Intensification on its own doesn’t solve that problem, it can create lots of housing opportunities and affordable dwellings but actually because you’re increasing the potential yield of urban land you drive up the price even higher, so we have to tackle growth on the fringes,” he said.
In the case of Auckland, addressing this problem required working with multiple councils.
Time to forget Kiwibild
Crampton reserved his criticism of Twyford for the Government’s flagship housing policy KiwiBuild.
He believed the “political imperative” around the policy had drained policy resources away from the other parts of the Government’s housing agenda as it became clear the policy was in trouble, a claim Twyford strongly denies.
“It can draw those resources away. They’re working on the thing that matters for the political imperative,” he said.
Crampton believed the logjams in the wider construction sector were responsible for making KiwiBuild difficult to deliver. He said fixing wider problems in the sector would make the programme “easily achievable, but completely unnecessary,” as the private market would then be able to deliver affordable housing on its own.
Twyford for his part is still committed to the policy, saying it drives much demand for large-scale development in residential construction.