Power planning body lurking
With the general election just a week away, Sunday Business takes a look at some of the business issues tucked away in the parties’ manifestos. To start, Catherine Harris looks at National and Labour’s urban development idea.
Urban planning. The very phrase makes many eyes glaze over. Yet tucked away in National’s and Labour’s policies, is an idea for an entity which, as a last resort, could force people to sell their land.
The vehicle is called an ‘‘urban development authority,’’ and both National and Labour have championed them as a means to amassing big areas of land to get a major urban project rolling.
UDAs are fairly drastic things, but overseas they have been used to good effect. They negotiate, acquire and masterplan, and can do this without compulsory acquisition powers in their back pocket, although arguably are more effective if they do.
A discussion document released in February by MBIE, explored the idea of having UDAs having recourse to the Public Works Act as a last resort, after a period of good faith negotiations.
Stephen Selwood, chief executive of sector group Infrastructure NZ, says few agencies use the Public Works Act except Transpower or the New Zealand Transport Agency. and he believes National ‘‘will always be more reluctant ideologically to impose on private property rights’’.
Nevertheless, it is an effective means of tackling holdouts and deliberate landbankers.
One land acquisition issue is who gets the extra value created when the land is released, either through rezoning or through shifting the urban boundary, as Labour wants in Auckland.
‘‘UDAs could work two ways,’’ Selwood says.
‘‘One is they could partner with existing land owners in the development of land, so it becomes a shared equity kind of development. That means the existing landowners would not be forced to sell, but would realise some of the benefits of the housing development.
‘‘The alternative is the UDA could acquire the land, either at market rates or a negotiated price, to enable the development to proceed. And of course, the public sector gets the full value uplift opportunity.’’
On other aspects of urban planning, National is quite clear. It would revisit the Resource Management Act (the muchmaligned RMA), this time with a view to creating a single piece of legislation for cities, that brings in parts of the transport and local government acts.
Selwood says currently, land is released by councils independently of roading or infrastructure, and it’s just not working. All political parties accept the system is not working well, but Labour is ‘‘still quite strongly wedded’’ to the RMA.
Another National policy is the ’’National Infrastructure Commission,’’ which would woo more ’’PPPs’’ (public private partnerships) for new schools, hospitals and roading.
Selwood says Labour is not opposed to PPPs but prefers them for roading and transport, ruling them out for infrastructure like schools, prisons and hospitals.
To accompany the NIC, National has already set up an entity called Crown Infrastructure Partners, which has been seeded with $600 million to ‘‘de-risk’’ land development for developers. It has already promised $1 billion in infrastructure loans to councils worried about debt.
Labour favours ’’infrastructure bonds,’’ government-run bonds repaid with targeted rates.
On UDAs, Labour’s housing spokesman Phil Twyford, says the two parties are probably very similar, supporting the use of the Public Works Act only in exceptional circumstances.
‘‘When you’ve got say, one landowner who is holding out against a major development and gaming the system in order to pocket a massive windfall gain at the expense of the public purse.’’
New Zealanders tolerated having land acquired for roading projects, but ‘‘there is no history of us using the Public Works Act to acquire land from people and then use it to redevelop into private housing’’.
‘‘We do not anticipate using it to acquire the land for housing, because there are so many other ways to do it.’’
For the record, Twyford says the land that Labour hopes to use to roll out its target of 100,000 houses, is in a mixture of hands.
It would use Crown land (for example, the work done at Hobsonville airfield), and redevelop state housing land, replacing it with state, affordable and market-priced housing.
But it also anticipates working with private landowners and councils to rejuvenate brownfield land (like New Lynn).
Developers could also offer up some of their subdivisions to Labour’s Kiwibuild programme. The Government would buy the houses and on-sell them, helping to reduce the developers’ risk.
‘‘Both parties have good ideas,’’ Selwood says. ‘‘But even if you added them together, it’s insufficient to tackle the problem we face.’’
‘‘We’ve got to lift our vision.’’
Both parties have good ideas. But even if you added them together, it's insufficient to tackle the problem. Stephen Selwood, chief executive, Infrastructure NZ
A wave of infrastructure is about to hit New Zealand and both parties are weighing how to manage it.