A Very Expensive Road to Nowhere

In 2007 Hamilton City Council began public consultation on a new subdivision, known after the local farming family who owned large tracts of the land as the Peacocke Growth Cell. The process begins with a “structure plan” to show the general development zones and principal infrastructure.

My feedback at the time was about making affordable housing possible by reducing bureaucratic constraints. Helen Clark’s Labour government had hiked taxes, which had the unintended but predictable outcome of making property investment more attractive. Demand outstripped land supply, causing prices to rise.

As usual, my recommendations were ignored with no reason given.

The GFC cooled things for a while, but National left supply up to the market. Normally I would support that, but the market was far from free and efficient. Councils created massive distortions by limiting supply. The Peacocke growth cell is a classic example. 13 years after the consultation started, most of the land is far from ready for subdivision.

Eventually, National realised councils were the problem and introduced Special Housing Areas in 2016 to bypass council district plans. Labour took over in 2017 and promptly cancelled the SHAs solely because it was a National policy. Instead they came up with Kiwibuild. I wrote to Labour, pointing out why Kiwibuild would fail. The system could achieve a slight reduction in construction costs, but the real problem was the land cost, and the Kiwibuild system actually increased demand without addressing supply.

The failure of Kiwibuild led to the Resource Management Act review once Labour realised the problem. I wrote to the reviewers, pointing out that the real issue with the Act was the implementation, not the law. One aspect I mentioned was the use of National Policy Statements – a tool in the law that allows central government to override council district plans.

The review will take several more years to come up with a replacement act, but the government has suddenly come out with some National Policy Statement directives on affordable housing.

As a result, Hamilton City Council has just announced it is reviewing the Peacocke Structure Plan in order to include the ideas I put forward 13 years ago. Unfortunately, it has already committed $180 million from ratepayers and $110 million from taxpayers for infrastructure programs that may now be in the wrong place. Council has started the review by stating those programs are not up for discussion. This includes the road I wrote about two weeks ago through the Shaw’s Bird Park. The road is still in the design phase, so could be changed. The council has previously refused to consider changes because it is “the most efficient route” to an area that may, in the distant future, become a commercial centre.

This argument had some merit, in principle, as part of the original structure plan. It has no merit now, given the structure plan could change. Pushing ahead with it out of sheer obstinacy could leave Hamilton with a very expensive road to nowhere.