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| Nick Clark | Senior Fellow | nick.clark@nzinitiative.org.nz | ||||||||||||
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Two recent consultations illustrate this starkly. A ‘rates target model’ would impose a centrally administered cap on rates. The cap would be based on a formula derived from national GDP growth and a productivity assumption plucked out of thin air. A ‘simplifying local government’ proposal would abolish elected regional councillors and replace them with Combined Territories Boards, comprising mayors appointed to regional governance on top of their existing responsibilities. Boards will also develop regional reorganisation proposals for Ministerial approval. Both initiatives attempt to address real problems. Rates increases have exploded. Some councils have pursued extravagant projects while neglecting pipes and roads. Regional councils have accumulated functions without a clear purpose, creating duplication and blurring accountability. But diagnosis should drive prescription, and here the Government's logic falters. Rates capping attacks revenue without addressing spending. A cap does not distinguish between spending on communications advisers and spending on repairs to stormwater systems. In New South Wales and Victoria, infrastructure backlogs have mounted. Councils expend energy applying for variations rather than running tighter ships. Meanwhile, the big global rating agencies have warned that rates capping will hit council credit ratings, making borrowing costlier. ‘Simplifying local government’ makes a similar error. The problem with regional councils is not that they have elected members. It is that nobody has clearly defined what regional government is for. Abolishing elected councillors would not resolve that confusion. It would simply remove one accountability mechanism and hand more power to council bureaucrats. The implicit assumption that fewer and bigger councils are better is also deeply flawed. What both problems require is stronger, not weaker, local democratic accountability, such as binding referendums on major spending decisions and making it easier for ratepayers to compare their council's performance against others. Subsidiarity – decision making at as local a level as practicable – would be another. Encourage governance structures that match the problem – flood boards, pest boards, catchment authorities – rather than ones drawn for administrative convenience. The Government says it wants to keep local voice where it matters most. Rates capping and ministerial approval of structures is an odd way to show it. Nick Clark's submissions were lodged in February, Simplifying Local Government and Consultation on a rates target model for New Zealand. |
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| Alain Bertaud | Guest Contributor | insights@nzinitiative.org.nz | ||||||||||||
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When planners impose rigid design visions without understanding these forces, they produce unintended consequences: housing shortages, long commutes and inefficient land use. Cities’ economies rest on their labour markets – the daily matching of workers to jobs. The evolving commuting patterns generated by this matching contribute to spontaneous order. It is grassroots-generated, emerging at the neighbourhood level. City managers must periodically impose a top-down order, linking neighbourhoods with roads, pipes and transit networks. Separating private lots from streets and open space is one of planners’ most important tasks. This should be done clearly and well in advance of development, so that buyers and sellers of land know exactly what they are getting, and what they may be liable for. New York and Barcelona both laid out their public grids early, then let private development fill in the gaps. Planners should track spontaneous order quarterly rather than relying on data collected for ten-year master plans. Land prices, housing costs, rents, living density, and household incomes should all be continuously monitored. When these signals blink red – when housing costs rise too far beyond what people earn – local government should reform its management of land, transport and infrastructure. Planners must also be honest about the limits of their knowledge. Future migration rates, household sizes and construction costs are not controlled by governments. Yet these forces shape future demand for land and transport. Based on educated guesses, planners should estimate where jobs and housing will concentrate. But they should never turn projections into regulations that arbitrarily constrain land use. This is where most zoning goes wrong. Rules that dictate minimum lot sizes, maximum building heights, or how much floor space a site may contain, lock in decisions years in advance. They inevitably produce shortages of affordable housing. Cities from Auckland to San Francisco demonstrate this with painful clarity. Planners should instead focus on what they can genuinely control and design well: streets, parks and public spaces. That is where planning adds real value. The rest should be left to the people who build, inhabit and enliven our cities. They understand their needs better than any master plan ever could. Join Alain Bertaud for his public lecture, Making Cities Work, at Victoria University from 5:00pm on 18 March 2026. |
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| Dr Eric Crampton | Chief Economist | eric.crampton@nzinitiative.org.nz | ||||||||||||
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If you think about it, your life insurer is a bookie betting that you’re not going to die this year. If he wins, you pay him. If you win, he pays your estate. (I play that game to lose.) Because it was like gambling, insurance was illegal in Western countries until just a few centuries ago. Insurance is a bet, but bets can be insurance too. I would love to bet on whether Wellington gets a giant earthquake. Not because I’m a gambler or because I want an earthquake – far from it. I just trust bookies more than I trust EQC to pay out if it happens. We’re lucky that insurance was legalised. It’s useful. But it might not be a coincidence. When commerce needed insurance, lawyers found a way to make it sound less like gambling. If we focus on what things actually do, parts of the stock market are also gambling. Futures markets let you make bets on what the price of something will be next year. That bet is also insurance against the price moving against you. Every insurance contract can be expressed as a bet, and every bet, as a contract on a futuresmarket. Drawing regulatory lines is then fraught. New Zealand used to have a beautiful little prediction market called iPredict. The Financial Markets Authority (FMA) regulated it as a futures exchange. It was not considered gambling. The Securities Commission said iPredict’s contracts met the definition of futures contracts. In 2015, a National-led government strangled it with red tape. I still miss it. Last week, the Department of Internal Affairs (DIA) told overseas prediction markets Kalshi and Polymarket not to let Kiwis trade with them. According to Newsroom, DIA now thinks prediction markets violate New Zealand’s gambling laws. National-led coalitions stopping me from trading on prediction markets has become too predictable. Kalshi is regulated by America’s Commodity Futures Trading Commission, the CFTC. Larger markets have finally figured out that prediction markets are really useful. In 2025, Kalshi saw almost $24 billion in trading volume. Last week, Kalshi announced a partnership helping institutional investors price and manage risk. Fund managers will likely start building new products incorporating prediction contracts. Whether Kiwis will ever be allowed to trade them may depend on whether the FMA has a boxing match with DIA. I’d like to bet on that fight. Sadly, continued regulatory incoherence seems the safest bet. |
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