The Labour-National deal to zone almost all suburbs to have three three-storey houses per section is upon us. It will probably be voted through Parliament this week. It’s the kind of rushed legislation and bad policy that holds New Zealand back, and Free Press covers it here this week.

First, housing is New Zealand’s single biggest policy problem. The real costs are not the sky-high prices, they’re more human. People living in motels. A generation who think the system is rigged against them. The risk that, if prices fall, it’s a long way down and they’ll take people’s security with them.

Second, it’s a supply problem, and mainly a problem with infrastructure. Sure, council red tape holds things up, but it’s more of a symptom. The reason councils don’t like saying yes is that people building things in their territory costs them. When someone builds a house, most of the taxes go to the Beehive, most of the costs fall on the local council. It’s a wonder councils let people build things at all (they’re forced to by law).

Yep, housing supply is a big problem. A practically uninhabited country is tragically short of places to live, and its mostly Government policy to blame. As Milton Friedman once said, if the Government was put in charge of the Sahara, within five years there’d be a shortage of sand. But a big problem doesn’t mean any solution is a good idea.

National’s bright line test was supposed to fix housing, so were Special Housing Areas (remember them)? Labour’s Kiwibuild was supposed to build 100,000 houses, their last big idea was to tax landlords more to somehow help their tenants save for homes. Labour and National have both messed up housing for decades. 

Lately, though, they’ve combined to show that, together, they can mess it up beyond all recognition. The Resource Management (Enabling Housing Supply) Bill basically says that residential areas will all have the Medium Density Residential Standard (MDRS).

The MDRS means every residential section in the five largest cities (and any other areas that David Parker decides), will be zoned for three three-storey homes. They can be one metre from your boundary, and there are no urban design standards applicable. As a neighbour, you have no say whatsoever.

All of this might be a great idea if it was going to solve the shortage of housing. The problem, as one submitter after another has told the Select Committee in Parliament, is not a shortage of zoned land. There is lots of land zoned for houses to be built. The Auckland Unitary Plan, for example, allowed about a million extra homes to be built, with an estimated 430,000 commercially viable.

The problem is all the other things that must happen. Mainly, infrastructure, pipes, transport, libraries, and schools cost money too. We know the Government knows there’s an infrastructure problem because it’s busy blowing up Three Waters (another story).

Trying to solve the shortage of infrastructure by zoning more land is like trying to solve a fuel shortage by buying more cars. Zoning changes will not increase the overall number of houses built, that’s decided by other limits like infrastructure. They will, however, ensure that some get built where they will seriously annoy more people.

The whole initiative is unbelievably bad, but it gives both Labour and National cover. They can now say they’ve done something big about housing. It won’t work, but none of their housing policies do, that’s why we have some of the least affordable housing in the world.

A couple of further problems. Labour and National both complain about rushed legislation when the other does it, but not when they are doing it together. This law was developed in secret without any consultation. Now it’s being rushed through Parliament in six weeks before Christmas under cover of COVID. Rushed law making, no matter the law, is one of the worst trends in parliament this year.

Free Press believes in freedom more than anything, but we know freedom won’t spread if it’s unpopular. Labour and National are trying to sell this policy as ‘cutting red tape.’ 

Maybe it is, but it’s going to leave one group annoyed at what’s going up next door, and another annoyed they didn’t get a house out of it. If the net result is to annoy people without solving the housing problem, it will make freedom harder, not easier, to sell in the future.

ACT has made many proposals to Labour and National on this law. We suggested extending the Select Committee time. They refused. We suggested adding infrastructure finding to the bill. They refused. We suggested using a much more moderate zone with design standards instead of the MDRS. They refused. 

Our letter to Labour and National from when the policy was announced can be found here. 

Design by Ayson Guron, Philippines