Who knew that fixing something that works would become New Zealand’s signature planning move?
In 1988, New Zealand boasted 453 special purpose governance entities. These obscure bodies – Harbour Boards, Electric Power Boards, Land Drainage Boards, among others – committed the unforgivable sin of actually delivering infrastructure. People could vote to tax themselves for specific projects, use that revenue to pay off debt taken on for the project, and build what they needed. Naturally, this had to stop.
The Officials Coordinating Committee sprang into action. Treasury and Department of Internal Affairs officials diagnosed the problem with surgical precision: communities were “formally organising collective action” without proper permission. Worse still, people “kept using” these entities because they were “relatively easy to establish” and “effective.” The horror.
Officials acknowledged that these governance vehicles were “critical to infrastructure supply” and “key to the historical supply of New Zealand’s infrastructure.” Armed with this damning evidence of success, they reached the only logical conclusion: abolish everything.
The committee’s reasoning was flawless. They saw “no coherent pattern” among diverse local solutions and worried about “confusion in the public mind about accountability.” Heaven forbid that communities should solve problems differently. Much better to have one confused system than hundreds of effective ones.
The 1989 local government reforms delivered spectacular results. We traded 453 working special purpose entities for dysfunction. Infrastructure delivery slowed, along with permission to build housing. Housing affordability collapsed. Citizens lost their ‘right to organise’ and communities their capacity to act.
Today’s housing crisis flows from this masterstroke. Without special purpose entities to deliver infrastructure, development capacity remains artificially constrained. Councils face impossible trade-offs between growth and ratepayer resistance. The ‘threat of entry’ into land markets disappeared, to the benefit of owners whose zoned land became artificially scarce.
Minister Bishop’s housing reforms signal potential for new targeted finance mechanisms while recognising councils need better incentives – though it appears nobody has whispered that communities who actually benefit might be the answer.
Will government officials connect the dots? Or will we get another decade of head scratching wondering why councils lack enthusiasm for projects that financially burden incumbents who do not directly benefit?
Perhaps some intrepid policy advisor will eventually stumble across New Zealand’s pre-1989 history in a dusty Treasury basement. “Minister,” they’ll breathlessly announce, “we’ve discovered this revolutionary concept called ‘letting people solve their own problems.’ Apparently, it worked for over a century before we banned it.”