Urban planning: new approaches needed

Nicholas Green, Principal Advisor

One of the hottest topics over the past year has been the future of Auckland. How can New Zealand’s biggest city accommodate a rapidly growing population? Are we making enough room for businesses and factories? How do we make it easier to get across the city? How can Auckland achieve its goal of being a ‘liveable city’ that is also affordable for both current and new residents?

Planning is an essential part of making cities work – we need to ensure that there is enough roading, water pipes and public transport to service a growing population, and we need rules to make sure that developing one piece of land does not unfairly harm neighbours or the wider community.

But planning can also have a dark side. Everyone knows that the price of housing in many New Zealand cities – and especially Auckland – has risen dramatically over the past 15 years. Many younger New Zealanders question whether they will ever be able to afford their own home, and many older New Zealanders worry about their children and grandchildren facing housing insecurity. Although there are many reasons why house prices have grown, one key contributor is the planning system.

First of all, planning has massively increased the price of urban land by not zoning and servicing enough land for new housing – either within established areas or at the city fringes.  In Auckland, the average price of a hectare of land increased from around $1 million in 1996 to just under $5 million in 2014 – an increase of about 470%. Over the same period, the general cost of living grew by only 48%. Higher land prices encourage developers to build more expensive dwellings.

Planning also pushes up house prices by limiting how land can be used. Rules such as building height limits, minimum parking requirements, minimum lot sizes and apartment balcony requirements reduce the number of new dwellings that can be created in a city or add unnecessary costs. Some controls on land uses are important, but too many existing rules create more costs than benefits.

The planning system also means that some parts of the community benefit at the expense of others. Restrictions on the supply of new infrastructure and land often reflect opposition from existing homeowners and ratepayers, who don’t want their neighbourhoods disrupted, don’t want to pay the higher rate bills that may come with growth, and whose property values will remain high if there is not enough land or new dwellings. And many of the costs of local planning decisions – high housing costs, overcrowding – end up being carried by the whole community through pressures on the government’s welfare and health budgets.

Because planning can have such significant impacts on the wellbeing of New Zealanders, the Government recently asked the Productivity Commission to investigate how the urban planning system could be better designed. Rather than debating the details of current laws, such as the Resource Management Act or the Local Government Act, the Commission will ask “how would we design this, if we were starting from scratch?”

This is a large project, with many issues to be worked through, including:

  • Who should decide how land can be used? In New Zealand, most decisions are taken by local councils. But other countries take different approaches. In some European countries, city plans have to be approved by state or national governments. And in parts of the United States, some decisions about land use are left to property owners, through the use of covenants.
  • Are there better tools we can use to protect the environment, instead of traditional planning approaches like zoning and land use rules?
  • How can the planning system be designed to meet the Crown’s duties and obligations to Maori under the Treaty of Waitangi?
  • How can planning take account of new technologies? For example, most of the funding for public transport and roading currently comes from fuel excise taxes. The move to hybrids and electric cars will put that funding source under pressure. How should we meet our transport needs in the future?
  • How can the planning system keep a limit on congestion and pollution, while otherwise leaving people free to pursue their goals and dreams?

The Commission has published an issues paper and is calling for submissions by 9 March 2016. Over the coming months, the Commission will also be talking with people and organisations across the country to help find answers to these, and other, questions.

Urban planning, and the way we regulate our cities, affects the lives and livelihoods of most New Zealanders. It can support or limit our ability to start new businesses, find homes for our families, form communities and enjoy a good standard of living. The Commission is interested in hearing your views on how a future urban planning system should work.

This item was originally published in the National Business Review.