Smith Nick: Housing Accords and Special Housing Areas Bill — First ReadingText is incorporated into the Bound VolumeSmith Nick: Housing Accords and Special Housing Areas Bill — First Reading[Sitting date: 16 May 2013. Volume:690;Page:10053. Text is incorporated into the Bound Volume.]Hon Dr NICK SMITH (Minister of Housing): I moveThat the Housing Accords and Special Housing Areas Bill be now read a first time. I nominate the Social Services Committee to consider the bill. At the appropriate time I intend to move that the Housing Accords and Special Housing Areas Bill be reported to the House by 26 July 2013 and that the committee have the authority to meet at any time while the House is sitting except during oral questions during any evening on a day on which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 188 and 191(1)(b) and (c).This bill is a core part of the Government’s work to improve housing affordability. It confronts the reality that homeownership rates have been in decline for a quarter of a century; that house prices have soared unsustainably over the past decade; and that far too many families’ housing whether they buy or rent is unaffordable. There is no silver bullet for this huge issue. It will not be solved with gimmicks or slogans but with substantive sound policies that address the real issues that are driving up house costs for New Zealanders. We have founded our housing work on the comprehensive report produced last year by the Productivity Commission.We are particularly focused on the issue of land supply being addressed in this bill. We have got work under way on infrastructure costs announced in February in respect of the review on development contributions. We have got work on materials costs under way with the inquiry that we announced at the weekend. We are making changes to get compliance costs down. We are investing heavily in skills in this Budget to improve the productivity of the residential construction sector.It also has to be acknowledged that interest rates play a huge role in housing affordability and homeownership trends. Anybody who looks at the homeownership issue post World War II will see that it is very simple—homeownership goes up when interests rates are low and it goes down when interest rates are high. I am very proud to be part of a Government with an exemplary record on interest rates—the lowest since I was in nappies in the mid-1960s. We are determined to keep them as low as possible for as long as possible. That highlights the broad reason that we need this bill. We all know that house prices are going silly—up 12 percent in Auckland in the last year. When that happened in the last decade the Government did nothing. The Reserve Bank wound up interest rates up went the Kiwi dollar and there was permanent damage to the NewZealand economy. This bill is about avoiding a repeat of that negative economic cycle. The message from the Reserve Bank from the IMF from the OECD and from the Productivity Commission is that we must confront and address these land and housing supply issues.Some people are refusing to accept the link between rigid land supply policies and high house prices. I challenge them to look at the evidence. We have seen the availability of sections in Auckland plummet over the past 10 years and the price of a section has increased over the last 5 years from $100000 to $325000. The study by the Motu Economic and Public Policy Research Trust showed that raw undeveloped land in Auckland inside the metropolitan urban limit is 10 times the value of land outside the metropolitan urban limit. We are currently building only 4000 homes per year in Auckland when we need 13000 per year to keep up with population growth.This bill is a circuit-breaker to get some pace and some momentum in addressing housing supply. It recognises that councils control a very important lever with their land supply and housing development policies. It makes provision for accords with local authorities where there are affordability issues. It requires the Government to work with councils in good faith to secure such agreements like those we have achieved with Auckland but also to enable intervention if we are unable to make progress.The essential mechanism in this bill is the creation of special housing areas. These will be both greenfield and brownfield areas that are suitable for residential development where infrastructure is available or can be built and where there is demand for new housing. Within these areas qualifying developments will be able to be approved by way of a streamlined process. There is a special limited notification process for only those affected. Council panels will be required to make a decision within 6 months on greenfield developments and within 3 months on brownfield developments. That compares with the current situation where it takes up to and sometimes more than 3 years.In the Auckland context this bill enables the council to get some real progress in implementing its Unitary Plan in areas that are the least contentious. This is a 30-year plan for 400000 homes. It enables a robust process for hearings on controversial projects like high-rise apartments but enables us to get on and build the first 10 percent of houses in that plan. It is a balanced agreement and I wish to especially acknowledge Mayor Len Brown for his pragmatism and support in coming to this accord. It is an ambitious agreement and sets out a plan to consent 9000 homes in the first year 13000 homes in the second year and 17000 homes in the third year. That will have us consenting three times as many homes over the next 3 years as have been consented over the last 3 years. I have been encouraged by the response to the accord. Already a developer has come forward and has said that it will enable him to bring forward 1000 sections next year that he otherwise would not have brought forward. ANZ National Bank economist Cameron Bagrie said that the accord “hit all the right notes”. The Employers and Manufacturers Association chief executive has described it as “infinite common sense”. He says that it will unlock the logjams to getting houses built and that it is so refreshing to see Auckland Council and central government finding common ground on this difficult issue.The accord is good news for households it is good news for Auckland and it is good news for New Zealand. Enabling the development of 39000 new homes will take the heat out of the Auckland housing market. It is going to give some hope to families looking for a home whether they want to rent or buy. The $20 billion build is going to create thousands of jobs. And the relief for the rest of New Zealand is that this increased housing supply in Auckland will take pressure off an early rise in interest rates and upward pressure on the Kiwi dollar. I would also note that the accord specifically makesprovision for more affordable housing. We have shown how to do that with the Hobsonville development where we have required 20 percent of new homes to be in the affordable range and targeted to first home buyers. I was advised by the Hobsonville development company that it is not getting 20 percent; it is getting 27 percent of houses sold in that range. A similar approach is required here where consideration must be given to providing lower-cost new homes when approving qualifying developments. This legislation gives us the tools to implement that accord. This is an interim measure. My colleague Amy Adams is progressing a comprehensive plan of Resource Management Act reforms that will be legislated in time and then with planned changes will be able to assist with the long-term challenge of housing affordability.I cannot help but conclude this debate by challenging the Opposition on a few points. First it has had more positions on the Auckland Council than the Kama Sutra. It has rallied against the formation of the Auckland Council and in the next breath it has rallied to the council’s support and demanded that the Government not intervene on housing issues. Now it opposes the accord that we have successfully negotiated with the council. Secondly it has consistently opposed any measures through Resource Management Act reform or in this bill to free up new land. I have a simple question for the Opposition: how can it promise Aucklanders tens of thousands of homes at $300000 each when the average section price in Auckland right now is $325000? The idea that the only way to build more affordable homes is for the Government to build them is an idea that it must have got from the same North Korean economics school that it got its electricity policy from. If it truly believes this nonsense why stop nationalisation at the housing and the power sectors? Let us have cheaper food by the Government taking over all the supermarkets or cheaper cars by having the Government buy them all for us! My greatest worry for homeowners is what the Labour-Greens policies will do for interest rates. Sound economic management and a comprehensive approach to housing affordability in all those areas is the best way that we can make homes more affordable for New Zealanders. That is what this Government is about and I call on the House to support this sensible bill.