Thursday, May 21, 2015

A lot of devils in those details

3News had a scoop tonight, with a slip-up revealing a major Budget initiative to open up government land in Auckland for affordable housing. At first glance, its superficially attractive: the government has the land, private developers have the capital, stick the two together with an easy credit arrangement and houses get built. But the devil is in the details, and the more you think about it, the more devils appear. And some of them have very sharp pitchforks.

Firstly, there's the land they're targeting:

Dr Smith is talking about land owned by universities, schools, tertiary institutions, health boards, defence, Housing New Zealand, the New Zealand Transport Agency and Department of Conservation reserves.
In the case of central government agencies, that's no problem - the Minister can simply direct them to hand over the land, and its done. But the Minister has no power to direct universities, and DoC reserves require an Act of Parliament to declassify. As for schools, the Minister can simply declare land no longer required for educational purposes, but then it must be disposed of under the Public Works Act.

Which brings us to the second problem: much of that land will have been acquired for public purposes under the Public Works Act, and the moment it is no longer required for the purpose for which it was acquired, must immediately be returned to its former owners. In the case of Auckland, some of those former owners will be Maori. The idea of the government taking land off iwi for a public purpose, then changing their mind and using it to feed Auckland's greedy property developers, where it will be subdivided, sold for private profit, and forever alienated from the Treaty claims process? That's just not going to fly. It'd be Paraparaumu Airport all over again.

(In retrospect, many of these issues also applied to Labour's "KiwiBuild" policy...)

Which brings us to the next problem: corruption. When the government is alienating public land, there's a suspicion that they're a) selling it to their mates; and b) selling it cheap. This has been the case in all previous privatizations, and there's no reason to suspect the corrupt, business-oriented National government will suddenly change its behaviour. They didn't over SOEs, and they're unlikely to now. The provision to let developers build first and pay later raises also raises all sorts of questions about who benefits from value increases - and base don this government's past performance, its unlikely to be the government.

And that's without even getting into the question of how they will ensure that the houses are in fact affordable rather than just more (higher-profit) palazzos for the rich, how they will ensure they are brought by first-home buyers rather than foreigners or greedy Boomer speculators looking for a new rental property, and whether they'll actually build enough of them to burst the bubble (which will make a lot of Auckland voters very unhappy as their paper wealth disappears) rather than helping their mates ride it (KiwiBuild at least seemed to get this end of things right, with the government doing the development and sale, and reaping the rewards, and properties being built specifically as first homes).

But maybe we'll be lucky. Maybe National will choose the land carefully, not pillage any reserves or sell school playgrounds and sports fields, deprive universities of their long-term expansion space for a short-term kick in the polls. Maybe they'll also avoid using land which was compulsorily acquired, or just outright stolen, and avoid creating further injustices to Maori by alienating their land. Maybe the sale process, unlike every other privatization programme in New Zealand history, won't be a wealth transfer to the government's mates. And maybe they'll actually build enough houses to burst the bubble, rather than feeding it to the benefit of those same mates. But base don their past performance, I doubt it.

Correction: Only national DoC reserves require an Act of Parliament to declassify - normal ones don't. However, declassification will still be subject to judicial review, and that could pose a significant barrier and significant delays (as it did to the Palmerston North City Council's decision to reclassify a reserve to allow the construction of a wind farm within it).