Government's urban development intentions laudable, but funding is still a problem

There's a lot to like about the government's National Policy Statement on Urban Development, released yesterday. Its intentions to allow cities to grow up around city centres and transport connections take advantage of the efficiencies you can get from more compact growth. And the desire to create "high and medium density communities with good urban design and open spaces" while avoiding all the downsides of sprawl at urban margins is right on the money as far as I'm concerned.

This is exactly what we should be promoting in Porirua as the city grows. But, there are funding problems we need to deal with now.

It correctly identifies that the current planning failures include urban land markets not enabling developments to keep up with growth and ensure land is affordable (and the price of land is the killer for housing affordability), and poorly integrated transport systems that don't reduce our dependency on travelling by car. Its objectives are good, "...ways to make our urban markets perform better by making room for growth, making sure growth pays for itself, investing in transport to drive more efficient and liveable urban forms, and ensuring healthy and active travel is more attractive." These are all good from an environmental, social and fiscal point of view.

Everybody seems to be on the same page about more intensive urban development. The proposals are totally in line with PCC's Growth Strategy on more compact development around transport hubs and in greenfields developments. It also suggests doing away with the restrictions on car parks in intensively developed areas, which I suggested in a recent blog — insisting on two off-road car parks for new houses larger than 75m² is a disincentive to more compact housing.

I like that the proposed NPS extends its coverage to include the amenity, environmental and cultural aspects of development and "quality urban environments." This can give the existing community and council better opportunities to plan for future change, and get away from the current bias towards the status quo, which represents the interests of current residents to the detriment of future residents, who don't have a voice until after development has happened (by which time, it's often too late or too hard to change).

I haven't had time to analyse this NPS in detail and compare it to PCC's 30-year Growth Strategy, but it seems to be along the same lines. However, the Growth Strategy was prepared under the 2016 National Policy Statement on Urban Development Capacity, which this new NPS replaces and adds to. Cities like Porirua would be required to prepare new Future Development Strategies (FDS) under the NPS. These have to set minimum bottom lines for residential development capacity and enable intensification — both of which the PCC Growth Strategy does. I hope this does not mean PCC has to prepare a whole new growth Strategy/Future Development Strategy — that would be a real waste of time, effort and money to have to redo all the work developing it last year.

However, it looks like councils would have to prepare a new FDS every three years that look out over the medium to long term. Sounds like the current Long Term Plan process, which is very time consuming — more cost for councils!

Infrastructure funding is still a problem

However, there's still a gaping hole in this, which is paying for new infrastructure. Councils are having to pick up the tab for a lot of this, despite getting development contributions to reduce the impact on current residents. PCC's new Development Contributions Policy (approved by Council yesterday) is an attempt to get developers to pick up more of the cost of this. That's only fair — they should pay the marginal cost of adding each new house to the existing networks (even if they just pass it onto the buyers).

But that doesn't cover all the cost to the existing community. This is a huge problem for all growth councils, and the government isn't doing enough to help. Successive governments have encourage immigration because it boosts economic growth and provides skills New Zealand hasn't been able to provide locally. I generally support that. Central government benefits through the increased income taxes and GST it receives, but councils have to pick up most of the bill for infrastructure. The government pays for some, such as transport, but as the Auckland, Wellington City and Greater Wellington Regional Councils know, getting money from the government to fund new transport capacity is hard work.

This growth, which Porirua is now facing, needs better funding from the government. The only way to do this is through a major overhaul of how local government is funded. Central government isn't keen on doing that because it doesn't want to share the tax booty from population growth, and existing ratepayers don't want to pay because they don't see why they should when many of the benefits of growth go to central government. Bernard Hickey discusses this on Newsroom.

Without major reform of local government funding, we're just fiddling at the edges, and these good ideas will not be as effective as we need them to be. We need central government to come to the party, and local politicians to face up to the size of the problem and realise that we can't fix the problems by ourselves (which will lead to failure if we attempt it), or just shift the costs onto the next generation (which is completely unfair).

With Porirua's population expected to grow by 50 percent in the next 25–30 years from developments already well into the planning phases, we need to tackle this now.