Phil Twyford Comes Out Swinging on Housing and Transport

Phil Twyford had not even been formally sworn in as Minister but that did not stop him from getting on with it and what were two seriously big announcements on Housing and Transport.

Transport – Light Rail to both the Northwest and Airport Confirmed 

Phil Twyford confirmed to the Herald that the new Government intends to build Light Rail from both the Wynyard Quarter to the Airport as well as the Northwest.

We are proceeding with the policy we campaigned on, that is to building light rail from the CBD to the airport, and to West Auckland, starting immediately

….

One of my first actions as minister will be to have officials advise on how quickly we can start, and how soon we can get it [light rail to the airport] built. I would expect Queen St to Mt Roskill within four years as a minimum. If we can do it faster we will.

While Southwestern Light Rail to the Airport was confirmed as part of the Confidence and Supply Agreement with the Green Party it is great to hear that the Government is also still behind funding Northwest Light Rail which will have a transformational effect to the Northwest. With travel times from Westgate to the City Centre potentially around 28 minutes compared to the 1hr30min+ it can be at current it will be a massive step change in capacity carrying the equivalent of 3 motorway lanes worth of capacity each way, as well as placemaking benefits freeing Albert Street up from dozens of buses.

The article mentions that the alignment would use Great North Road. However, I think it will be more likely that it will follow SH16 the whole way to the City for reasons we will discuss in a more detailed post on Northwest Light Rail in the coming days.

The Government also intends to introduce a Regional Fuel Tax allowing Auckland Council to raise revenue to help fund their share of the Auckland Transport Alignment Project.

Twyford and Prime Minister-designate Jacinda Ardern have also confirmed the Government will change the law to allow Auckland Council to introduce a regional petrol tax, likely to be set at 10c a litre. Ardern told Morning Report yesterday that the regional petrol tax was not in her 100-day plan, but later in the day Twyford said “it won’t be too long after that.

A Regional Fuel Tax as proposed, while having Pros/Cons, will be great for the following reasons

1. One of the major issues currently is most of the benefits of growth tax revenue wise accrue to the Government but upfront infrastructure costs to Councils this creates a mismatch of incentives slowing down infrastructure and not allowing New Zealand to fully take advantage of growth. This is explained well in this excellent article by Economist Shamubeel Eaqub.
2. Aucklanders recognise they need to chip in to help fund the funding gap but don’t want to do this via further rates rises.
3. It is straightforward and quick to implement, while Smarter Pricing will likely be necessary doing this right will take some time, the regional fuel tax allows the funding gap to addressed in the interim.
4. Auckland Council will be able to set the rate meaning this is real decentralisation of funding.
5. It shows the regions that Auckland is willing to help pay which is vital from an optics point of view. It also pushes any political cost from implementing it to the council, not the government.

The NZH assumed, however, the regional fuel tax would be used to pay for Light Rail which technically isn’t entirely accurate as a good portion of the funding will come from the cancelling of the East West Link project.

I also hope this will be extended to other Councils as well as Auckland allowing other regions to help fund CFN’s, cycleways or even roads of their own.

The last interesting item mentioned in the article is a renegotiation of the Auckland Transport Alignment Project

He said one of the Government’s first steps would be to sit down with the council and renegotiate a joint government-council 10-year transport plan, known as the Auckland Transport Alignment Project (ATAP).

I think this is an excellent idea. ATAP made some significant process and for the most part is a really good report, however, there, of course, was elements which clearly had previous Governments ideology added in. Such as the preference for greenfields over brownfields in the objectives, the focus on vehicle congestion instead of whole of network movement and efficiency, its stance on rail especially Light Rail, or desire for road building such as the third harbour crossing or East West Link. It would also be prudent to update the land use modelling to reflect KiwiBuild allowing the transport plan to link in well with the proposed development.

Long story short ATAP needs some tweaks but doesn’t need to be thrown out completely.

In another article today with Newshub Phil Twyford also reiterated the Governments commitment to Regional Rapid Rail.

He’s also keen on regular passenger rail between Auckland and Hamilton.

“We made a commitment during the campaign for regional rail in the golden triangle. It’s crazy we’re not opening up development opportunities in the Waikato and Bay of Plenty.”

Mr Twyford says a plan for that should be underway in the next few weeks.

Housing – KiwiBuild – $2b for 100,000 Houses over Ten Years

The other big announcement was made yesterday with Phil Twyford showing more details for a big part of their solution to what was one of the defining issues of this election – The housing crisis.

The Government intends to build 100,000 houses over ten years at an average of 10,000 a year with around 50% being in Auckland. It will start smaller than 10,000 at first but scale up over the period to reach the 100,000.

The Government has a three-stage approach

First, by stepping into already-under way schemes like Hobsonville Point and securing a large number of planned new residences there;
Second by buying off-the-plan units in planned developments like new high-rise Auckland CBD apartment blocks;
Third by creating its own development sites and bringing in group house builders, particularly on Crown-owned land.

There are some seriously good proposals in this announcement

1. De-risking Development: The Government will purchase around 30-40% of apartments and terraced houses that meet the KiwiBuild criteria. One of the big issues at current is developments falling through due to financing this will help address this issue and give access to first home buyers affordable apartments and terraced housing.
2. Correct Housing Type: Another big issue is that due to high land prices it has led to big houses being built by developers which are unaffordable driving up average prices. The Government can build/invest in smaller housing types such as apartments and terraced housing aimed at a different market as Government is less concerned with margins/risk. This allows new affordable housing to be built even though average prices may still be high. A good article by Stephen Davis goes into a little more detail if interested.
3. Building at Scale: By building at scale huge efficiencies can be gained compared to our current small bespoke housing model through increased productivity and better supply chains.
4. A Consistent Pipeline: By having a long-term continuous pipeline of work creating more certainty and confidence one of the major issues in the construction sector can be addressed. By smoothing out the boom-bust nature of the sector instead of at current where the sector is apprehensive about increasing too much in capacity due to the risk and laying off lots skilled workers during every bust we will have a situation in which the sector is confident about continuously expanding capacity. Young people, as well as those retaining, will also be moving willing to enter the sector as more job security and the supply of workers will stay more even continuously gaining experience. No need to scale up again after every bust.
5. Prefabrication: By increased use of prefabrication productivity can be massively increased, cost of builds reduced all without reducing quality.
6. A New Urban Development Company: This entity would link land use, KiwiBuild, infrastructure such as transport and leverage Government land/assets.

We’re looking at creating an urban development company for the whole zone, an investment of billions of dollars. It will have a massive effect on the development potential alongside the lines and stations. This is how Cross Rail has been done in London. They used an urban development company to optimise opportunities around the stations to get apartments and retail,” he said, also citing the Gold Coast’s G:Link.

All in all some really good smart policy.

Phil Twyford has set some ambitious goals and he is come out fast swinging. But after years of status quo, inaction, denial of problems and unambitious targets maybe that is excatly what this country needs.

*Updated to include Regional Rapid Rail mention in Newshub

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