We are generally supportive of the new government’s direction when it comes to transport, how could we not when many of their key initiatives originally came from us? Furthermore, we’re also supportive of many of their housing initiatives, especially the need to accelerate the delivery of affordable housing in Auckland and looking to build around rapid transit.
One area we don’t support the government’s direction on though is their intention to remove Auckland’s Rural Urban Boundary (RUB). Last month I explained why this is a stupid idea, concluding the following:
I’ve noticed that many of those who advocated against the MUL in the past don’t seem to have understood the key differences between what that was and the new RUB. I wonder if Twyford has fallen into this trap too, so it makes me wonder whether this is a policy designed to fix a pre Unitary Plan problem where the urban growth limits truly did prevent pretty much any outwards expansion of Auckland. However, the Rural Urban Boundary actually now does a very different job. It’s much more about providing certainty than about actually restricting growth. Undermining this certainty, through getting rid of the RUB, is actually likely to slow growth down and make it much more expensive.
That makes it a pretty dumb idea.
It’s not yet clear how the government intends to pursue this policy, whether through legislative change to the RMA banning such a policy, or through encouraging Auckland Council to change the Unitary Plan voluntarily. In any case, a big risk of removing the RUB is that the government and the council end up subsidising inefficient and environmentally destructive growth patterns. Things that will undermine huge other parts of the government’s policy agenda.
So, how might we go about removing the RUB while avoiding massive subsidies to inefficient and environmentally destructive growth patterns?
The key to answering this question is ensuring that any sprawl truly “pays its way”.
As I discussed recently, when looking at a paper by the Council’s Chief Economist, there are ways in which financial tools could be used to much more fairly allocate the cost of growth. This paper highlighted the huge cost of providing sprawl with infrastructure, around $150,000 per dwelling just for trunk transport, water and social infrastructure. Add on to that the further costs of building local roads and providing services like schools, hospitals and police stations. Importantly, the paper highlighted that the main beneficiaries of this investment are landowners – through higher value of their property:
The paper points out that current financial policies used by the Council are terrible at reflecting the true cost of growth. For example:
- Development contributions are set way too low, covering less than $40,000 of the $150,000 average cost of serving these areas with infrastructure.
- Development contributions are way too standardised, leading to perverse outcomes where areas cheaper and more efficient to serve with infrastructure end up subsidising costlier locations.
- Recovering the cost of infrastructure through development contributions incentivises landbanking, because the value uplift occurs when the infrastructure is put in place but the development contribution is only paid when housing actually gets built.
Thankfully change is coming to these crazy policies. In the 2017/18 Annual Plan there was a major shift in the Council’s financial policy to enable targeted rates to be applied to cover the cost of infrastructure to serve developing areas. Targeted rates completely change the landscape for incentives by actively encouraging development and, hopefully, can be far more nuanced to truly reflect the cost of infrastructure to support growth.
If the government wants to ensure that removing the RUB doesn’t result in terrible outcomes that undermine their efforts to focus transport investment on public transport, to tackle climate change and to protect important environmental areas, then they need to insist on aggressive changes to the Council’s financial policies to fix the problems above. This doesn’t solve all the problems with removing the RUB (especially around providing certainty to major infrastructure projects about where and when growth will happen), but it will go a long way to avoiding mass subsidised sprawl.