This is an OpEd piece sent to NZ Herald a couple of weeks ago. Unpublished. So here it is:
While it is concerning that all of Auckland’s and
Northland’s mayors are resigning ahead of
upcoming Council elections, it is not particularly surprising given the
unprecedented and unrelenting attacks that have been aimed at Local Government
by the present Central Government and which threaten local democracy and
community planning in particular.
Kaipara District Council’s Mayor Jason Smith has given the
Three Water Reform which forces all Councils to divest public water assets to
entities established by new legislation as his main reason for resignation.
That reform is the latest in a salvo of change striking at
the very heart of what local governments in Western countries around the world
are for, with New Zealand already near the bottom list for functions and
responsibilities delegated to local government, lagging significantly behind
Japan, Switzerland, Australia and the USA for example.
The previous National Government was the foundry for much of
Central Government’s appetite and ammunition for local government reform. The
Hon Nick Smith, past Minister of Local Government and Environment, championed
the argument that Local Government development planning and infrastructure construction
activities were the principle cause of the steep rise in house prices, and that
reform was needed.
He argued that Councils were slow to release land for
development, making it scarce and thus forcing up land prices needlessly, and
inept at building necessary supporting infrastructure such as roading and water
and wastewater networks, thereby driving up the development contributions fees
payable on each new lot.
The reforms he led included several Resource Management Act
changes requiring large councils to review District Plan documents and make
property development less restrictive and quicker.
For the past few years Auckland Council has routinely
published data showing that despite its new Unitary Plan releasing huge tracts
of land for development, and the consequent yearly construction of thousands
more homes than have ever been built before, house prices have persistently
shown strong upward growth well before COVID supply line restrictions on
construction materials.
The present Government has adopted this argument
wholeheartedly, and it continues to underpin its plan of attack on Local
Government, despite growing recognition and acceptance of the counter argument
that the main driver for house price increases since the Global Finance Crisis
is the combination of near zero interest rates, cheap loans and mortgages, poor
returns on traditional term deposit savings unlocking that money and further
increasing demand for housing investment assets, and few meaningful taxes on
capital gains.
In the last two years economists and policy advisers in
Australia have accepted this counter argument, and, interestingly, recent and
anticipated reserve bank base rate increases here in New Zealand are cited by
economists as the main cause of reductions in house price increases now.
But still Central Government’s local government reform machine
grinds on with consequences for local democracy and communities.
Decades of careful community planning have gone into the
District Plans that shape the way towns and urban areas develop, change and
grow. These have been tossed aside by
Central Government’s Resource Management Housing Enabling Act which permits
three homes, three stories high to be built on most urban lots without need for
resource consent.
While this reform should produce more homes, some of which
might be “affordable”, the impact of additional housing on infrastructure has
been ignored. There will be more pressure on water and transport infrastructure
which will require upgrading. This needs to be planned and budget provided. Increased
density means more people using community facilities such as halls, libraries,
schools, sports facilities, parks and reserves. These community concerns are
built into local government plans, and are why local government exists, but
they are ignored by Central Government’s edict.
While there is room for improvement in local government
three water infrastructure provision, there are many informed reasons not to
proceed with the current Three Water Reform proposals which very much risk
throwing the baby out with the bathwater.
Key among these are international trends away from
centralisation of wastewater systems to de-centralised systems where wastewater
is treated as close as possible to its source of generation. Considering the
three basic components of a wastewater management system - collection,
treatment and disposal – collection infrastructure costs account for about 60%
of the total budget for a centralised system. Whereas in decentralised or more
local systems, this component is reduced and focused mainly on wastewater
treatment and disposal.
Local Government is ideally placed to be incentivised to work
with its local communities, invest in new technologies, work hand-in-hand with
local iwi, and build and operate efficient and sustainable three water systems
that fit the local environment.
Central Government needs to work in partnership with strong
and motivated Local Government attracting the best staff and local
representation to get the best outcomes, and deliver democracy.
