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| Dr Oliver Hartwich | Executive Director | oliver.hartwich@nzinitiative.org.nz | ||||||||||||
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The speculation is a gift for newspaper columnists. But it misses the point. My colleague Benno deals with the implications of changing Auckland's intensifications settings below. I want to focus on the money. We can rezone every block in the country. We can pass laws in Wellington demanding more townhouses. None of it will matter enough if the underlying incentives remain broken. New Zealand has one of the most centralised tax systems in the developed world. Central government collects roughly 90 percent of all public revenue. Local government scrapes by on less than 10 percent, mostly from rates. And when new houses go up and new workers pay tax, councils see none of that growth dividend. GST on construction costs? It goes to Wellington. Income tax from workers? Wellington. Corporate tax from developers? Wellington again. The council that issued the consent gets the bill for roads, pipes and parks. It takes on the debt. It upsets ratepayers who fear their suburbs will change. Then it watches the tax revenue disappear into the Beehive. Is it any wonder mayors are hostile to growth? They are acting rationally within a system that punishes them for success. The answer is simple. Share the GST collected on new builds with the councils that consented them. Growth would become a windfall rather than a burden. Councils would compete to attract developers. They would be able to invest in infrastructure knowing a return was coming. The maddening thing is that the government knows this. The coalition agreement between National and ACT explicitly commits to “consider sharing a portion of GST collected on new residential builds with councils”. It is there in black and white. And yet here we are, more than two years into the term, still arguing about zoning maps while the fiscal solution gathers dust. What a waste. GST sharing goes to the heart of why housing is so expensive. It should have been the first item on the agenda, not an afterthought. The government can fiddle with density settings forever. But until it fixes the funding model, it is pushing on a string. May’s Budget will be the moment to act. It is time to stop fighting over where the density goes and start paying councils to let it happen. |
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| Dr Benno Blaschke | Research Fellow | benno.blaschke@nzinitiative.org.nz | ||||||||||||
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One policy adjustment will not break the economics of housing supply. But it will not help either. Density rules are a means, not an end. What matters is whether developers have abundant alternatives. If land can be brought to market easily, through both intensification and urban expansion, prices are disciplined. If not, scarcity persists. That is the core logic of competitive urban land markets. But logic depends on credibility. When a Prime Minister signals retreat, it is not only developers who notice. Public servants committed to the status quo are emboldened to continue resisting. Our recent three-part podcast series traces the reform arc from Bill English to Phil Twyford to Chris Bishop, focused on the need for competitive urban land markets. Twyford and Bishop joined us to tell the story. In Part 3, Minister Bishop made a striking observation. The divide on housing, he argued, is no longer primarily partisan, but generational. Many young New Zealanders experience housing as the defining constraint on their lives. Older cohorts may not perceive it as a priority. He is right. And that divide cuts across parties and officials. We often describe councils as captive to vocal incumbents, funding gaps and election cycles. But central government behaves in the same way. When reform becomes uncomfortable, discretion reasserts itself. Jacinda Ardern championed housing reform in her first term, then retreated. Now Luxon is pulling back too. Different party, similar pattern. Housing reform cannot rely on good ministers alone. Part 3 of our podcast explores how to break this pattern. The solution lies in shifting from discretion to rules. But how? Sharing GST, as Oliver suggests in the preceding column? We need enduring institutions, not policy that changes according to political whim. In the podcast, Bishop reaffirms his commitment to embed competitive urban land markets as an explicit goal of the planning system, written into law, as a first non-negotiable step. If the system holds, this week's wobble will fade into background noise. If it does not, the pattern will return again and again. The question is no longer whether competitive land markets are the right answer. It is whether we can embed that answer deeply enough that it survives its champions. You can listen to our latest podcast episode with Hon Chris Bishop here. For earlier episodes in our 'Housing Affordability' series, listen here for Part 1 and Part 2. |
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| Nick Clark | Senior Fellow | nick.clark@nzinitiative.org.nz | ||||||||||||
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Six hundred business leaders offered polite applause. Someone clapped at the mention of the India free trade deal, which seemed to startle the Prime Minister. Welcome to 2026. It is going to be a great year. The kids are almost back at school. This is New Zealand politics. KiwiSaver contributions. Road cones. Whether the election should be October or November. Elsewhere, things are, well, livelier. The American president is trying to buy Greenland. When Denmark declined to sell, he imposed tariffs on European allies and mused about letting NATO collapse – and then backed down. He blames the lack of a Nobel Peace Prize for his sour mood. China just ran its largest military exercises around Taiwan, simulating a full blockade. The military fired twenty-seven missiles and deployed ninety warships. Xi Jinping announced that reunification cannot be stopped. In Iran, thousands of protesters have been killed in anti-regime protests. Its internet went dark. In Ukraine, thousands of apartment buildings have no heating at minus nineteen degrees. The ‘special military operation’ has killed or wounded over 1.5 million soldiers, so far. Vladimir Putin has been invited to join Trump’s ‘Board of Peace’ for Gaza. Three weeks ago, American forces snatched Venezuela's president from Caracas. Economists at Davos warn that the operating system of the global order is being erased. Taiwan faces blockade. Greenland faces annexation. We face a spirited debate about parking minimums. Luxon, to his credit, acknowledged on Monday that the global rules-based system is "rupturing." He then outlined his three big priorities: KiwiSaver, NCEA and the Resource Management Act. The audience sat politely through all of it. Our campaign will treat cycleway colours as matters of profound national importance. Pollsters will detect movements within the margin of error and pronounce them seismic. Someone will revive the debate about bilingual signage. None of it will matter very much. And honestly, that is the point. Boring is underrated. It is the thing you miss only after it is gone. Tedium is the sound a functioning democracy makes. When politicians are dull, it usually means nobody is storming the parliament. The world is scary. New Zealand not quite so. Thank goodness for that. Let us hope it lasts. |
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