In making an ambitious pitch for the future of New Zealand cities, Chris Bishop has teed himself up for his first test: the Wellington District Plan.
Housing minister Chris Bishop just laid out the most unabashedly urbanist vision for New Zealand we’ve ever seen from a cabinet minister. In a speech to the Wellington chamber of commerce on Tuesday, Bishop labelled the housing crisis “state neglect on an industrial scale” that has “shattered the Kiwi dream”, and pitched a future of New Zealand as a primarily urban country. “Bigger cities are better cities,” he said.
The balance of political power throughout most of New Zealand’s history rested in the provinces. We’ve never been an urban country. This speech marked a clear shift. It recognised that our next great economic leap won’t come from milk or wool, it will come from cities, by making Wellington and Christchurch the size of Auckland, and Auckland the size of Sydney.
Phil Twyford, housing minister in Jacinda Ardern’s Labour government until he was replaced by Megan Woods in June 2019, had similar urbanist ideas, but never sold them quite as well. Bishop is a better communicator, and his National Party affiliations help him win over the business and property owners that were always sceptical of Twyford. Perhaps more importantly, this speech signalled that two successive governments see urban growth at the centre of this country’s future, although they are using different tools to support it.
Last week, I wrote about the Old Town and the New City, two amorphous political factions that divide Wellington, broadly defined as people who want the capital to stay a medium-sized town vs those who want it to become a dense urban centre on a global scale. Bishop made it clear which camp he belongs to: “I’d say to people in the so-called Old Town, many of their kids live in the New City, and they want to be able to buy a home. And I suspect many of the people in the Old Town want to keep their kids in New Zealand, not in Sydney or New York.”
“Our housing market is practically standing at the departure lounge at Auckland Airport and big neon writing is telling them to just get on the plane and… telling them not to bother coming home,” he said.
Bishop made his case for housing reform based on three arguments: First, larger cities are more powerful economic engines. He pointed to one study showing that doubling a city’s population increases the per-capita productivity by 15%. Second, more housing supply would reduce the $5-billion-a-year cost of government housing subsidies. Third, a moral case, that a housing system that results in thousands of people living in cars and massive intergenerational inequity is simply wrong.
A new cabinet paper, released in conjunction with the speech, is full of similarly ambitious rhetoric. “Housing affordability is arguably the single most pressing economic, social and cultural problem facing this government,” he wrote. “My goal is to flood urban housing markets for Tier 1 and 2 councils with land for development.”
Twyford’s plan for growing cities was to remove council’s abilities to block housing. That’s the function of the NPS-UD (National Policy Statement on Urban Development) and the MDRS (Medium-Density Residential Standards), forcing councils to zone for growth. Bishop is taking a slightly lighter approach; he’s focused on shifting the incentives to make councils see new housing as a benefit rather than a burden, by offering financial bonuses if councils allow more housing, and introducing new infrastructure funding tools.
There are, however, big questions about whether it’ll work. The financial incentives treat councillors like business executives, not elected representatives. In reality, councillors’ strongest motivator isn’t keeping the council in the black, it’s getting re-elected, which often means bending to the will of anti-housing residents’ associations.
The MDRS will continue to be a thorn in the side of this government’s housing policy. National has walked back its support of the bipartisan “three townhouses of three storeys” bill, and replaced it with a counter-offer to make the MDRS optional for councils as long as they provide for 30 years of housing growth.
That’s going to be a tough policy to enforce, especially against councils who really don’t want to allow new housing. Population growth projections are notoriously hard to project and easy to manipulate. The Wellington District Plan, for example, is based on projected growth of 50,000-80,000 people in the next 30 years. The independent hearings panel has shown it considers that figure to be a maximum, not a minimum, and suggested zoning for any extra housing is unnecessary – and may even have negative outcomes.
The problem is, that growth prediction is extremely conservative. Wellington city has added 53,000 people since 1996, despite strict restrictions on new housing. Over the same period, Auckland added 623,000 new residents (although that figure covers the entire super city, while Wellington’s only covers the Wellington City Council area). If Wellington truly wanted to embrace Bishop’s idea that bigger cities are better cities, it could plan for hundreds of thousands of new residents and embark on an active campaign for growth, promoting the city to property developers, businesses and immigrants.
The Wellington District Plan will be Bishop’s first chance to prove himself on housing. He announced he would be the final decision maker on the plan, responsible for deciding between the independent hearings panel recommendations and any council amendments. He’s made it clear he isn’t happy with some of the panel’s reports. “The idea that zoning and land supply does not affect housing affordability is, frankly, nuts,” he said in his speech today, a targeted dig at the panel, who sided with an economist who made that exact argument. Responding to a question from the crowd, he referenced a study showing rents had dropped in real terms after upzoning in Auckland. It was one of several studies that were presented to and dismissed by the panel because “the authors of those studies were not before us and we could not therefore discuss with them or the relevance of their findings to current conditions in Wellington City”.
After Geordie Rogers’ byelection win, Wellington City Council now has a (presumably) safe majority of votes in favour of upzoning. It can push far more permissive zoning, with taller height limits, smaller character areas, and thousands more homes. Bishop will be expected to back that up by approving the changes. One interesting part to watch: if the council recognises the Johnsonville train as “mass rapid transit” it will automatically trigger upzoning in the National Party strongholds of Khandallah and Crofton Downs, a move that is deeply unpopular among its residents’ associations. If it comes to it, is Bishop bold enough to hold the line?