Taskforce reveals way forward for Auckland

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Targeted “value capture” rates look likely to be on the cards for Auckland property owners if the recommendations of the Mayoral Taskforce on Housing’s report are implemented.

Monday, June 12th 2017, 4:10PM 1 Comment

by Miriam Bell

The report, which was released today, suggests a raft of major changes across three key areas in a bid to address Auckland’s severe housing shortage.

The three key areas revolve around removing impediments which stop the construction sector developing at scale – and through dips not just boom periods; unlocking land with appropriate zoning and infrastructure; and enabling more efficiency and innovation in consenting.

When broken down further, there are 33 recommendations across those three key areas – some of which have the potential to be controversial.

Mayor Phil Goff, who set up the Taskforce earlier this year, said the first issue identified by the report is that unless greater continuity and certainty in building work can be provided the industry will not scale up sufficiently.

That would mean Auckland would continue to build fewer houses than needed and, to this end, the Taskforce recommends a deliberate policy to build through the economic dips, he said.

“In a small country like New Zealand, central government has in the past played a key role in this and today still needs to. But the report also recommends ways to tackle skills shortages that create constraints and cost pressures.”

These include scaling up joint venture building programmes on publicly-owned land; introducing a “badging” system to boost skills in the construction industry; and increasing the preference for skilled construction workers in the work visa system.

However, it is the second key area that has recommendations likely to create opposition.

Infrastructure development funding is widely acknowledged as a major problem and the report emphasises the constraints created by this. 

Goff said the Unitary Plan has freed up land by zoning it for development - but in order for the necessary development to take place roading, water and community facilities need to be provided.

While the Government’s Housing Infrastructure Fund has to play a part in this, the report recommends the broadening of revenue sources for Council.

This could include road pricing and devolution of funds from central government but the report also promotes the potential to use other sources of funding.

One such source of funding, which is now being looked into, is targeted rates on those realising windfall profits from rezoning and new infrastructure so they contribute to the cost of that infrastructure, Goff said.

“If you get a property value uplift from new infrastructure it makes sense that some of that uplift would then go towards the funding of that infrastructure.

“The principle behind that is strong but we need to find the way to properly implement it. And we are keen to work with the government on that.”

He added that work on the concept has not progressed far enough to speculate on any sort of numbers.

Another infrastructure funding idea put forward in the report is to move from using the capital value of properties to using their land value in rating systems.

 While this would incentivise people to develop empty land, the Taskforce recognised it would also be a challenge to change the ratings base and there would be both winners and losers.

Recommendations in the third key area focus on more effective consenting and risk management to facilitate housing being built quicker.

One recommendation is the introduction of a warranty and insurance scheme to give assurance to consumers and to allow the Council to be more supportive of innovation in building methods.

The report also calls for the Council’s trial Consenting Made Easy process to be fully implemented and for the Building Code and other legislation like the Unit Titles Act to be updated.

Additionally, the Taskforce points out the advantages of innovation, like prefabrication, to improve the speed and quality of construction and lowering costs.

Goff said that Auckland has a shortfall of around 30 to 40 thousand dwellings and needs to have about 14 thousand built each year to keep up with demand. But last year, 10,000 consents were issued and just over 7,000 dwellings were built.

As a result of this supply shortfall, Auckland has become unaffordable for first home buyers and renters – but it is not just Auckland’s problem, Goff said.

“Unless we address these problems, housing shortage and unaffordability in Auckland will not only continue to cause serious social pressures, but will also hold back Auckland’s and New Zealand’s economic growth.”

The Taskforce, which included developers, builders, bankers, economists, architects and central and local government officials, has pointed a way forward to better tackle the problems in the report, he said. “It deserves the close attention of central and local government.”

Read more:

Making a difference for housing supply 

Fund infrastructure differently – ASB 

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