New NZ housing minister makes all the right noises

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By Leith van Onselen

I noted in the lead-up to the New Zealand General Election, held on 23 September, that Labour had an excellent housing platform that addresses both supply and demand distortions via negative gearing reform, banning foreign buyers of existing homes, tighter capital gains taxes, removal of urban growth boundaries, plus bond financing for infrastructure. Its plan to reduce immigration by around a third is also sound, and would help to relieve chronic housing and infrastructure pressures, especially around Auckland.

Over the weekend, new housing minister, Phil Twyford, confirmed that Labour would pursue its reforms to both the demand and supply-sides. From NZ Herald:

New Housing Minister Phil Twyford wants to scrap Auckland’s regulated urban boundary to let the city spread.

He told Lisa Owen on TV3’s The Nation today that solving Auckland’s housing crisis will require “fixing” both the system of financing new infrastructure and the rural/urban boundary fixed in the current Auckland Plan.

“Given the shortfall of housing in Auckland and the population and growth projections, this city is going to have to go up and out,” he said…

“On the question of the Metropolitan Urban Limit, we are going to build affordable houses, we are going to tax speculators, we are going to do all those things.

“But if we want a lasting solution to this problem, we have to make reforms that will allow the market to deliver better outcomes on its own, and the two really big things that we have to fix are the broken system of financing infrastructure that stops the city from growing, and the highly restrictive planning rules like the urban growth boundary.

“But you can’t fix the urban growth boundary without fixing the financing issue.”

Twyford said he was working “as a matter of priority” on developing infrastructure bonds to finance new roads, water and sewerage. He has said previously that the bonds could be issued by a central Government agency and repaid over 50 years by targeted rates on properties in new developments served by the infrastructure.

He has also said that the regulated rural/urban boundary “has created an artificial scarcity of land. It is an open invitation to land bankers to speculate on rising prices”…

It’s obviously early days, but Twyford and Labour are making all the right noises.

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Australia’s delinquent politicians should take note.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.