Chief Economist: How the Productivity Commission gets it right

Auckland Council Chief Economist Chris Parker explains how the Productivity Commission gets it right.

Last Updated : 23 Oct 2015
Aucklanders need to buy in to Productivity Commission

The Productivity Commission released its final report on the Using land for housing inquiry on 21 October 2015. The report is a highly valuable resource to help Auckland Council and the government hit our new housing affordability target of ‘5 by 2030’. (This target is the ratio of the median house price to median household income, which ideally wouldn’t exceed three, but is currently near 10.)

The timing of the Commission’s report could not have been better. A week earlier, the Auckland Development Committee directed staff to report back to them on the preferred ways forward to hit the ‘5 by 2030’ target.

The Commission’s report is a very good complement to my recent report Housing supply, choice and affordability; Trends, economic drivers, and possible policy interventions, released in late September.

The Commission drills into two of the main jobs of any council: land use planning, and infrastructure provision. The Commission focuses not only on how councils can improve, but on how central government can change legislation and assist councils to perform better.

Some of the report’s recommendations will take a little while to adapt and adopt, mainly because some of these issues need to be worked through in partnership between the community, and local and central government.

The importance of housing density  

For instance, the Commission’s recommends (5.11) that councils such as Auckland’s refrain from introducing any limits on housing density (i.e. the number of homes per area of land). It also recommends that councils review existing limits with a view to lifting them.

Aucklanders generally, and local communities specifically, would need to buy into that with both their heads (i.e. ‘that it makes sense’) and their hearts (i.e. ‘that it feels right’) before serious traction can be had in these areas. To help this, the council, and my unit in particular, will strive to keep informing the public about the economics and trade-offs of critical Auckland issues.

There is a prospect that the Commission will have the opportunity to build even further on this inquiry and its previous Housing affordability inquiry. Early signals from the government are that the Commission will be next tasked to review the three main pieces of legislation that relate to making land available for urban development (the Resource Management Act, the Local Government Act, and the Land Transport Management Act). Having a high-class, independent, cross-sector review of that complex policy web would be more than welcomed.

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