Housing and Local Government

Housing is expensive in New Zealand because we do not build enough of it, and we do not build enough of it because the places where houses would go cannot afford the pipes, roads and networks that new suburbs need.

This is why the Initiative treats housing and local government as one subject rather than two. Growth hands a council debt for a treatment plant, a decade of construction complaints and a class of aggrieved existing residents, while central government collects the tax revenue that growth generates. A council that says no to all that is responding sensibly to the incentives it faces, and blaming councils for the arithmetic is like blaming the driver for the road.

The other half of the problem is power. Political decision-making in New Zealand is among the most centralised in the developed world, and the standard response to weak council performance is to make councils bigger. That mistakes the diagnosis. A council does not perform badly because it is small. It performs badly because it controls a narrow range of functions, raises little of its own revenue and spends much of what it has on obligations written in Wellington. Amalgamate two councils in that position and the result is one larger council with the same problem and a longer drive to the meeting.

At the same time the decisions worth voting on are drifting away from anyone a voter can remove. Functions migrate to appointed boards, council-controlled organisations and regional entities. Turnout falls, because less is at stake. Falling turnout is then produced as the reason to move more decisions further from the ballot box. Each step in that sequence is defensible on its own and the destination is a local democracy with very little left to decide.

The Initiative argues for changing the arithmetic and the balance of power together, through financing tools that let infrastructure be paid for by those who benefit over the life of the asset, revenue-sharing that gives councils a stake in the growth they accommodate, planning rules that permit building both outward and upward and devolution of real functions along with the revenue to fund them, so that councils can differ from one another and voters can see the difference.

Fewer and bigger is not better. A council with genuine powers, genuine revenue and voters who can see what it does with both will build the houses, and nothing else has.