Auckland Council “Loot Sharing” Plan Slammed

A property developer has spoken out against Auckland Council’s plan to tax increases in the value of land from rezoning or redevelopment. The council’s proposal for “shared land value uplift,” buried in an addendum to the mammoth Auckland unitary plan, is a tool the council is considering for “enabling affordable neighbourhoods,” the document says.

“A number of countries provide scope for local councils to obtain part of the land value uplift from landowners when land is rezoned for more intensive use for example, rezoning from rural to urban land use or rezoning from a low to a higher density).” The revenue generated could be used to develop affordable housing or to fund infrastructure and amenities, the document says.

But Auckland-based property developer “Tim Manning says taxing land value increases would make development more expensive and drive it out of the city to other regions. The proposal ignores that getting land rezoned can be an expensive process, including holding costs such as interest payments if there is debt, he says. “You have really got to work at this; you need to hire planners and planning barristers, do traffic reports and impact assessment reports to show this land is better off residential than commercial or rural.”

The real problems are the small number of large developers, the lack of land available for residential subdivision and the tight supply of funding, Mr Tim Manning says.

Councillor Cameron Brewer says there would be “enormous contestability and difficulty” in accurately calculating a property’s new value after rezoning has taken place.


May 06 2013 | Tim Manning | No Comments »

Tim Manning Views on Council Accused of Capital Gains Bid by Stealth

Auckland Council is eyeing taking another slice out of rising property values and may seek a change in the law to do so.

The council is calling the proposal “shared land value uplift” but its critics are blasting it as a thinly disguised capital gains tax.

And if Auckland proceeds with the plan, it could open the door for other councils to follow and broaden their revenue bases.

The proposal is contained within an addendum to the council’s draft Auckland Unitary Plan, which is likely to result in zoning changes that would allow higher-density housing in many parts of the city and possibly also extend the city’s urban limits.

Properties that have their zoning changed from low density to high density housing, or rural properties on the city’s fringes that are rezoned as urban, allowing housing or commercial development, would almost certainly benefit from a significant increase in value.

“At the moment in New Zealand, any increase in land value resulting from the rezoning decision remains with the landowner,” the council’s draft plan states.

But under its “shared land value uplift” proposal, the council would be able to take a slice of those capital gains. It outlines several possible ways the council could obtain money from owners or developers whose properties were rezoned.

These could involve the council negotiating with developers on a case-by-case base over the size of a fee they would pay, or introducing a uniform across-the- board levy.

Alternatively the council could estimate the likely profit a development would produce and how much of that was due to zoning changes, and then negotiate with the developer to retain a portion of the profit.

The council could also directly acquire land that was to be rezoned, and on-sell it to developers at a profit once rezoning had taken place.

Possible uses of the money raised could include spending on infrastructure projects or providing affordable housing.

However, Property Council NZ chief executive Connal Townsend sees it as a tax grab.

“This is a capital gains tax,” he said. “One needs to be very cautious about arguments that this would have benefits for housing affordability. I don’t buy that for a minute.

“I think this has been dressed up in housing affordability arguments without any real analysis. I think really what it is, is an attempt by the council to tap into another revenue stream. It’s a capital gains tax and I expect it would be very inefficient.”

Townsend believes that instead of making housing more affordable, it will ultimately make it more expensive, because it would add an extra cost to each development.

Property developer Tim Manning also said the proposal would push up housing costs.

Manning’s company, Norwich Property, has built around 2000 homes throughout the country, many of them the types of higher- density developments such as terraced housing and apartment blocks which the Auckland Council is trying to encourage.

“It’s another layer of costs and those costs have to be worn by someone and eventually it’s the end purchaser,” he said.

“They [the council] think turning a bit of farmland into a residential development is easy. But you’ve got to get umpteen dozen reports, you’ve got to consult neighbours and often pay them money.”

Often developers had to hold land for five or six years and pay interest costs and other expenses, sometimes millions of dollars, with no certainty, he said.

“You could get to the end and the Environment Court says no, and then it’s goodbye. You are left with a bit of land that’s worth half as much as you’ve already spent.

“So if you can get it over the line you’ve got to be rewarded for that because it’s so bloody hard to do. For such a high risk there has to be an upside for the developer. Otherwise why would they do it?”

Auckland Council’s manager of financial policy, Andrew Duncan, said the council was still preparing a financial assessment of the proposal, to help decide whether to proceed.

“I think the council would want to think about how such a mechanism would affect the housing market and land market and developers and what sort of revenue might be involved. And then, if it wanted to think about it further, it would want to think about how it [the money raised] could be used,” he said.

However, before the policy could be put into in to effect the Local Government Act would need to be changed and if that happens, it would allow other councils to adopt similar policies, potentially opening the door to a capital gains cash grab throughout the country.

Townsend believes the current Government is unlikely to support the necessary law change. “We know this Government has no appetite for a capital gains tax.”


May 01 2013 | Tim Manning | No Comments »

Power Price Data Shows Hypocrisy of Labours Claims

Labour and the Greens launch their electricity policy later today, and if the drought had not already broken the deluge of crocodile tears from opposition MPs would have done the job.

Expect to hear much about high power prices and their impact on the less well off when Labour leader David Shearer and Green co-leader Russel Norman announce their power prices policies.

The difficulty they face is the largest sustained household price increases for a generation or more happened between the end of 2001 and the end of 2008.

To get some comparison, look at the graph, compiled from Statistics New Zealand data.

In the 11 years to the final quarter of 2001, household electricity prices rose 47%. That was still above the compound rate of inflation over that time (21.2%) — but nothing like what was to follow.

In the seven years between the final quarter of 2001 and the final quarter of 2008, household power prices rose 63.5%. Over the same period, the compound rate of inflation rose 21.0%.

The reason for picking the final quarter of 2001 is because this marked a turning point in electricity prices — for households, as well as for businesses.

High in Labour and Green party demonology on electricity is the reforms of National’s late 1990s Energy Minister Max Bradford.

These chopped the old Electricity Corporation into four companies, split the industry between lines companies, generators, and retailers, and sold off Contact Energy.

Bitterly attacked

The changes were bitterly attacked, and when the government changed in 1999 Labour Energy Minister Pete Hodgson promised a more “active management” of the portfolio, with lower power prices.

There was an inquiry into the sector in 2000, with much consultation and much talk about “long-term thinking”.

As can be seen from the graph, this is not quite what happened. After a period of quiescence, households started to be hit with much higher power prices. Commercial electricity rates turned upwards as Well.

Taking place as they did three years after the Max Bradford reforms took effect, and two years after a change of government, it is a little difficult to see how these were much to do with decisions made in 1998.

To be fair, there were demand factors pushing up prices -the biggest being the high rate of conversions of former sheep and beef farms to dairying. Milking sheds, operating six or more hours a day, use quite a bit of electricity.

But the biggest factor was an aggressive dividends policy from 2002-07 dividends from the main electricity Companies averaged, in total, slightly less than $500 million a year.

So todays talkfest from the opposition parties is going to be so much hypocritical handwringing about the effect of higher power prices on the poor.

Lt would not be so nauseating if Labour had not been prepared to gouge those same poor with historically high power prices so as to fund the large, Statist empires in Wellington.

That though does not let the current government off the hook. Household power prices are still rising above the rate of inflation. Yesterday’s Consumer price index showed benign inflation of 0.9% but power prices up 5.2%.

It is not a one-off: household power prices are still rising above the rate of inflation. Since the end of 2008 they are up 15.6% when compound inflation is up 9.2%.

But it is still nothing like the power price gouge which took place between 2002-08.

Source: The National Business Review

April 19 2013 | Tim Manning | No Comments »

Capital Gains Taxes: Myths, Misconceptions and Lies

The country is going through another bout of bumper sticker economics over a capital gains tax.
With the Auckland property market performing its well-known impression of a runaway circus elephant whose keepers have shoved a cocktail of speed and hallucinogens into the feed — and with the New Zealand dollar also having one of its periodic bouts of hyperkineticism the calls have gone out again for such a tax.
The latest push seems to have been fuelled by Labour leader David Shearer’s claim on television that a capital gains tax would cause people to put more money into businesses.
As an example of muddled economic thinking, it takes some beating and it is worth quoting Mr Shearer in full:
“What I’m saying is that what we need to do is to grow the economy in a way that it’s not growing at the moment, and we’ll be talking about Tiwai Point in a little while … one of the big problems about— no, no, let me finish — one of the biggest problems about that is that the exchange rate is so low that we are seeing many of our businesses actually going out of business because they are not being able to succeed.
“We’re not putting our money in the profitable sector; it’s going into the property market because we don’t have a capital gains tax that will help us direct money into those areas.
“And if you are wanting to raise money, then at least put money into businesses — invest in businesses through the incentives of capital gains, and that brings, obviously, money into the government as well.”
Leave aside for the minute that Mr Shearer is under the strange misapprehension New Zealand’s exchange rate is on the low side. Even though it attracted quite a bit of negative comment, that part is not the most important part of his comment.
The more important parts are the claim that New Zealand is not putting money into its profitable sector, and that a capital gains tax would mean the country would start doing so.
None of those claims are true.
First, capital investment in New Zealand has held up remarkably well, despite some tough economic times.
Furthermore, residential investment has actually fallen.
Not what you’ve heard?
Then take a look at the figures from the most recent GDP figures, released last month.
Overall business investment rose 5.4% last year, dominated by 7.6% rise in investment in plant machinery and equipment.
And residential investment is now only14.4% of total capital investment in New Zealand in 2007 it was 20.4% of total capital investment.
In other words, a major shift in investment is happening. The notion that New Zealand firms are being starved of investment because of the absence of a capital gains tax simply is not true.
Not all capital gains taxes are alike
The second point is there is no reason to think the kind of capital gains tax being pushed by Labour and the Greens would do what they say it would do.

It would, first, apply to businesses, which are not Current subject to capital gains tax It is difficult to see how this is supposed to help such investment.

Second, it would not apply to two-thirds of the residential property market, because it exempts owner occupied housing. This is important, because opposition politicians are inclined to talk as if everyone who advocates a capital gains tax is advocating the same kind of CGT they are pushing.

True, Treasury, the OECD and the IMF have all talked of New Zealand having a Capital gains tax.

But not for the same reasons – and certainly not in the same form as what is being pushed at present.

There is no reason to think a Capital gains tax would stop any future property bubble: it certainly did not in Australia or the United States.

The reason Treasury, the OECD and the IMF all talk of New Zealand having a Capital gains tax is to broaden the tax base and to cover off an area of income not currently taxed.

Crucially, the idea is emphatically not to increase overall taxation: it is to allow tax reductions in other areas.
That is the last thing Labour or the Greens have in mind. In fact, they plan to increase, rather than decrease, income taxes, with the return of a 39% top tax rate imposed by the last Labour government.
In short, the policy is a tax grab under the guise of a concern about the current property bubble in Auckland.
It is the worst kind of bumper-sticker analysis to accept this claim at face value.
It is borne out neither by what is happening in the economy at present, nor by how such a tax would actually work.

Source: The National Business Review

April 19 2013 | Tim Manning | No Comments »

House Sales at Six-year High, Prices Rise to New Record

The number of New Zealand house sales rose to a six-year high last month and prices touched a new record as Auckland continued to drive up the national average.

Some 8128 houses were sold in March, up 23 percent from February and 11 percent from the same month a year earlier, according to the Real Estate Institute.

The national median price rose an annual 8.1 percent to $400,000, the first time it has broken the $400,000 mark.

About 90 percent of the increase in the median price has come from Auckland and Canterbury over the past year, meaning those markets – which account for just over half of all sales – are over-represented.

“There’s a real danger that the Auckland housing market is mistaken for the New Zealand housing market, and that regulatory decisions will be made on the assumption that conditions in Auckland and Canterbury are replicated across the rest of the country,” chief executive Helen O’Sullivan says in a statement.

“Across the rest of the country while activity is picking up, price gains are far more modest.”

The figures come after Finance Minister Bill English today flagged housing as a risk to New Zealand’s economy in a pre-Budget speech, saying it could drive up interest rates if the current level of property price inflation persists.

Quotable Value figures earlier this week showed property values continued to grow in March, albeit at a slower pace.

Auckland’s median sale price rose 5 percent to $565,000 from February, while Canterbury/Westland’s increased 1.1 percent to $359,000.

ASB economist Jane Turner says “improved household confidence and low interest rates are factors underpinning a lift in housing demand”, with Auckland underpinning growth.

Housing demand has steadily increased over the past year and a lack of listings in Auckland and Christchurch means “the true level of demand may be higher than the level of sales turnover suggests”.

The REINZ stratified housing price index, which smooths out peaks and troughs, rose 2.4 percent from February, and was up an annual 8.6 percent.

Auckland’s stratified housing price index jumped 16 percent on an annual basis.

The number of days to sell fell to 31 days in March from 39 in February.

Source : The National Business Review

April 17 2013 | Tim Manning | No Comments »

Interest Rates Staying Low

Bond yields have fallen around the world over the past week driven lower by weak jobs data in the United States and Bank of Japan extraordinary policy easing. In the United States the March jobs report was much weaker than expected with employment ahead only 88,000 rather than the near 200,000 expected and February’s rise of 268,000. The unemployment rate actually managed a decline to 7.6% from 7.7% but that was because people left the workforce. The participation rate is now the lowest since 1979 showing just how despondent people are about finding a job. Had the rate sat at the long term average of 65% the current unemployment rate would be 10%.

The weak data mean that the Federal Reserve is not close to easing off in its money printing exercise and that weight of money argument is a factor which limited the decline in the US share market following the jobs news and saw bond yields fall.

But yields have also been pressed lower by the larger than expected money printing programme announced last week by the Bank of Japan. There are expectations that investors will seek better yielding assets outside of Japan and hence falls in bond yields around the planet – including our own.

Domestically we have seen NZ wholesale interest rates edge down during the week as detailed in the table below. Given the continuing easy policy stances offshore, the effects of the drought on the immediate speed of growth in the NZ economy, March’s weak debit and credit card data, and the extra upward pressure on the NZD due to events overseas, there is little prospect of NZ monetary policy tightening for a year or so.

This means borrowers can look forward to a continuing low interest rate environment which as history tells us is both a negative and a positive. For conservative investors it is a negative which as each month goes by will see more and more people look for higher yielding assets than bank term deposits. This is what happened in 1992 when inflation and interest rates plunged and old folk started throwing their money at finance companies. This time around that option is not so easy (yet) but the search is underway and some will be taking their money into residential and commercial property investment.

As I have noted here a number of times in recent years, it is up to those of us with a bit above average nous to say to our elderly friends and relatives that if they chase yield then they are taking on higher risk and should things go wrong their ability to recover is going to be very low. They should sit down, take a breath and simply admit that one of the ways in which NZ is hit by the ongoing effects of the global financial crisis is that conservative investors in little old New Zealand and in fact all around the planet, get penalised through low returns. Accept it and go back to watching ducks and TVs.

But what about borrowers? Isn’t this ongoing low rate environment great for them? Not as great as you might think. Young people freshly leveraging themselves into a dwelling are going to start thinking that these low rates are the norm. They will take on too much debt, fail to maximise principal repayments in the early years of their loans, and get badly caught out when our central bank eventually has to respond to inflationary pressures over 2015 – 17.

The Reserve Bank knows that this cycle it has time on its side – it can sit back waiting to see how things go knowing that because hardly anyone is borrowing at 3 – 5 year fixed rates the impact of a cash rate change will be very quick. That quickness will come not just through most borrowers sitting floating and being hit straight away by official cash rate rises, but young people being surprised that rates can go up and getting eventually terrified by people like myself warning of how high floating rates have gone in the past.

Source: Tony Alexander | Economic Commentaries

April 17 2013 | Tim Manning | No Comments »

BNZ-REINZ Residential Market Survey

Mission Statement

To help Kiwi businesspeople and householders make informed financial decisions by discussing the economy in a language they can understand.

Market Very Strong

All of the eight key measures we use to gauge strength in the residential real estate market edged slightly lower in April. However almost exactly the same thing happened in last year’s April survey and the trend in all measures remains upward – apart from requests for appraisals which are below average, and perhaps interest from first home buyers which has settled at a high level though is no longer rising.

Overall the survey results show that the residential property market is strongly in favour of sellers and showing no sustained signs of easing off.

Is the number of people going through Open Homes increasing or decreasing?

Interest average

A net 18% of responding agents this month reported that they are seeing more people going through Open Homes. A quick look at the graph below shows that this result is comfortably in line with the historic average and therefore does not suggest any particular change in buyer interest at the moment.

Click on the below link for BNZ-REINZ Residential Market Survey details.

Source: Tony Alexander | Economic Commentaries

April 17 2013 | Tim Manning | No Comments »

Singapore Wins Hands Down When It Comes to Being a Good Place to Live

All up, for me Singapore wins hands down when it comes to being a good place to live while working as an expat servicing the Asian region. But choice of location will very much be a function of what your target markets are. If China then you will find Hong Kong the better location. If the ASEAN nations then it would be Singapore. Of course I say that without having yet visited any other members of ASEAN — which clearly is something I shall need to do over the next couple of years, perhaps starting with something after a trip to Japan I have coming up in early-November.

What was the best bit for me? The Jurong Bird Park. I deliberately held off visiting it a second time to have something solid to look forward to down the track.

A reporter called me up and when I said I was in Singapore he asked ‘Which city?”


Drought pushes out even further the timing of rate rises in New Zealand, so staying floating looks good,   though keep an eye out for discounted long ­term fixed rates.

I recall writing in this section many months ago that for this year I’d probably not have much to say with regard to interest rates because a rate rise would be well down the track and there would be lots of uncertain factors staying the hand of our central bank. The very last thing which they will want to do is repeat the 2010-11 experience where they raised the cash rate from 2.5% to 3% then had to cut it back down again because the data were bad from late-2010. The February 22 earthquake gave them a handy reason for reversing the earlier two tightenings.

Looking ahead now they see an economy who’s growth outlook is deteriorating due to the effects of the drought so far and the extra effects to come the longer it lasts. They see an exchange rate which is already high and know that once they start raising rates it will go even higher.

Yet they also know that with so many skilled people having left the country over the past five years, low training having been undertaken by businesses, and suppressed pressure building up for wage rises from people who’ve been asked to share their company’s pain the past five years, inflationary pressures from the labour market will eventually be a problem. Plus the housing market is rising firmly and building costs are going to head in only one direction — same as electricity prices, and Sky charges, and insurance premiums, and local authority rates, plus food due to the drought effect.

The RB will be extremely reluctant to risk relying much on unconventional monetary policy changes (in the NZ context) because if they over-estimate the impact of maximum loan to value ratios for instance they’ll have to later on play catch-up with the official cash rate and send the NZD through the roof.

What it all adds up to even before we start trying to factor in the many uncertainties overseas, is that they will not be touching the cash rate for quite time. That applies even taking into account this morning’s far stronger than expected GDP number showing our economy grew by 1.5% during the December quarter and not the 0.8% commonly expected. The NZ economy managed 2.5% growth last year after growing by 1.4% during 2011 and 1.8% during 2010. Our economy is now 8% bigger than in the depths of the recession in 2009 and almost 4% up from the late-2007 peak.

With regard to rate movements this week — nothing happened to suggest a break up or down in rates from trading ranges in place for many months now.

Source: Tony Alexander, BNZ Chief Economist

March 29 2013 | Tim Manning | No Comments »

Offshore Buying of NZ Property is Only Going to Grow and a National Debate on Rules Regarding Foreign Purchases Would Seem Useful

HOUSING MARKET UPDATE: Offshore buying of NZ property is only going to grow and a national debate on rules regarding foreign purchases would seem useful.

I have received a good number of emails from people who have either read my survey of real estate agents or saw it reported in the newspaper. Almost all expressed incredulity at the low proportion of sales reported as going to Chinese people. One person advised looking at property registers to see all the Asian names owning houses in certain streets. One suspects they are unaware that New Zealand has an Asian population of near half a million people and that some people with Asian names have had their families here for generations.

Mainly people gave the same anecdotes about Chinese buying at auctions. But again they gave no indication that they had ability to detect whether that person already lived here, intended living here, or was buying with no intention of occupying the house. Mainly however, I don’t think many of the people emailing me had knowledge of areas outside prime school zones and traditional destinations for migrants such as the North Shore.

In that regard some greater granularity in another survey would be useful. But I don’t plan repeating it every month – maybe every three months is all that is necessary.

Those interested in the foreign buying topic may be interested in this.

This url will take you to a pdf copy of the annual report issued by the National Association of Realtors in the United States called “Profile of International Home Buying Activity 2012″ It covers the year to March 2012. The NAR survey found that 8.9% of US house sales were to people offshore or only recently migrated to the United States, measured by dollar value. Some 4.4% of sales were to foreigners not planning to shift to the United States.

My survey with the RE1NZ found that 9% of NZ dwelling sales are to people offshore, and some 42% plan coming back. Adding in half the 44% who responded ‘Don’t Know” we get 64% of people offshore buying NZ houses planning to move here – or 36% planning to stay away. Then if we take 36% of 9% we end up with about 3.2% of NZ dwelling sales being to people offshore not planning to shift to New Zealand. This is lower than the US figure of 4.4%. But the US data is by value whereas the responses from NZ real estate agents are likely to have been on the basis of property numbers. Given that the average purchase by a foreigner in the United States is for $400,000 compared with $212,000 for US-based buyers, it looks like our proportion of sales to people staying offshore is in the vicinity of the US proportion.

If we look at where the NAR survey shows that foreign buyers are coming from we get this – remembering that our survey found that 18% of sales offshore were to people in the UK (foreigners and expats), 15% to people in China, and 14% to people in Australia. In the United States 24% come from Canada, 11% from China, and 8% from Mexico. Therefore courtesy substantially of buying by their northern neighbours, the proportion of property sales to Chinese in the United States is lower than in New Zealand. But the key point to note is that our 15% is not vastly different from their 11% of sales to Chinese.

Note that there are just over 1 million realtors in the United States so the NAR survey response of 1,745 is a response rate of about 0.17%. Our response of 355 out of just over 10.000 is a response rate of about 3.5%.

If I Were A Borrower What Would I Do?

Stay floating but look to fix half of my debt at a rate of three years or beyond if someone offers a very discounted rate. Same comment as for the past few months. Plus, for your guide I struggle as yet to see a serious chance of fixed rates suddenly shooting up though this is likely to happen at some stage. A heavy influence will be US monetary policy including money printing operations.


In Europe the news is all about the 0.5% of the Euro-Zone GDP accounted for by Cyprus rocking financial markets with fears of bank runs and capital flight from heavily indebted countries because of the proposed but now ditched levy on Cyprus bank deposits. In Italy there is no government in place. In Spain there is a political scandal. In Greece there is continuing failure to implement reforms agreed as part of previous bailouts.

Basically, much as there was excitement about some strong import data for Germany last week along with good German employment data, the story for Europe remains one of the debt crisis rumbling on for many years. This means a weak macro-environment facing NZ businesses (but it pays to remember it is the niches which matter there and everywhere else).

In the United States continue to come out in reasonable shape, though the Fed. Have just cut their growth forecasts slightly? Their money printing operations show no sign of being curtailed this year.

Source: Tony Alexander, BNZ Chief Economist

March 29 2013 | Tim Manning | No Comments »

Dark Forces at Work in Auckland Plan

The unitary plan, which gives effect to the non-statutory Auckland Plan, is akin to a laundry-type list of goals and “feel good” aspirations. The government has every right to feel that the Auckland Council is being less than honest with the people of Auckland. Mayor Len Brown has been forced to admit that he got things terribly wrong when he claimed last month that there are 15,000 sections within the Auckland urban footprint on which housing construction can begin “right now” Last October he put the number at 18,500.

It is clear that both Mr Brown and his deputy Penny Hulse, are unhappy with the governments reaction to the draft Auckland Unitary Plan released last week. Mr Brown does rely on officials to give timely and accurate advice. But while a number of councillors and knowledge-able property developers questioned the figures provided to the mayor, he accepted the advice he was given without question because it suited his ideological perspective. According to the mayor and his deputy there are “dark forces” within the government trying to discredit their directives on where and how AncIdanders should live? By all accounts Ms Hulse has told Housing Minister Nick Smith that he doesn’t understand the council’s proposal. Mr. Brown has written to Prime Minister John Key asking him to change his position that the plan should go through a rigorous submission process before it becomes operative. Against the background of the appalling discrepancy between the initial figures and the reality of available housing land, the government has rightfully asked what else in the plan is based on myth and driven by leftist ideology

I can tell the government that the unitary plan, which gives effect to the non-statutory Auckland Plan, is akin to a laundry-type list of goals and “feel good” aspirations. The Auckland Plan is required by legislation to be evidence-based to support the council’s decision making. It is at this point at which the plan becomes unglued. There is no evidence that Auckland can accommodate the 280,000 additional dwell-ings required. There is no evidence presented that some further peripheral extension to the metropolitan urban limit (MUL) will have a detrimental effect on rural agriculture or horticultural production. There is, however, evidence available that a more compact city leads to greater traffic congestion. The third annual INRIX National Traffic Scorecard showed that the world’s most congested cities are high density European centres such as Milan, Brussels, Paris and London. Despite having sophisticated public transport systems these cities have per-formed poorly compared to low density cities. In fact, 21 of the top 25 most congested cities are in Europe. These cities all have higher population densities than Auckland and suffer massive traffic congestion.

The cost of congestion in Auckland is estimated to be $1 billion a year. This cost will only increase with more urban crowding. Ms Hulse made much of promoting the draft unitary plan as a positive for children. She held up her grandson and declared: “We are building a city for him.” She should read a study, Achieving a Healthy Home Environment, by Flinders University Adelaide. It contains data that shows high-density living and the lack of a backyard is not conducive to children living a fit and healthy lifestyle. A consultant paediatrician, Dr Nicola Spurier, who headed the study, reported that South Australian children with big backyards were less likely to be overweight and inactive than those with small courtyards. It seems to me the “dark forces” in this debate reside in Auckland rather than in Wellington.

Source: National Business Review

March 29 2013 | Tim Manning | No Comments »

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