Government plans to force councils to free up land for affordable housing developments are unrealistic and naive, Tauranga Mayor Stuart Crosby says.
Local authorities have been given an ultimatum to help increase the supply of affordable housing.
Do you think that Government plans to force councils to free up land for affordable housing developments are unrealistic?
Finance Minister Bill English said councils needed to free up enough land to allow the construction of more affordable homes or the Government would force them to do it through legislation.
However, Mr Crosby said the inquiry which had informed Mr English's proposals - conducted by the Productivity Commission - was largely an "academic exercise".
"In my view it failed to take into account the reality of the situation," he said.
"It's naive to suggest that simply by increasing land supply it will fix the problem."
He said limited land supply was only an element of the overall problem. Who would pay for the provision of affordable housing infrastructure was another issue.
Mr Crosby said a large part of his council's debt had been incurred by providing infrastructure for housing developments.
"On the one hand we have the Government accusing councils of having too much debt and now they come out and say we should provide more infrastructure to support housing. They need to get in touch with the reality of the real costs."
Even if the council did free up land for housing developments, it would still be up to commercial developers to keep the costs down so that the housing would be affordable, Mr Crosby said.
Developers often put covenants on new sub-divisions that created higher-cost housing conditions, he said.
"The only way is for someone to intervene and create an artificial affordable market because the commercial sector in this city will not do it."
However, Mr English's proposals have been welcomed by former Tauranga MP Bob Clarkson who said his plan to provide 1000 affordable homes for $280,000 each was "shot down" by the council.
"Because it's outside the urban limits they find it too difficult.
"Here's a guy bloody trying to help the place and all I get is friggin' bureaucrats."
Mr Clarkson said the local housing market was "terrible" for first home buyers.
"Young people don't have a dog's show in hell.
"When you weigh the wages up versus the cost of a house, it's just out of kilter."
The lack of available land was driving up house prices, Mr Clarkson said.
Tauranga City Council needed to make more land available from outside the urban limit for affordable housing.
He said it was hard because "greedy property developers" had no incentive to build affordable properties, and the council restricted those who tried to.
Mr Crosby said Mr Clarkson had not provided the council with adequate details of how he would achieve his development plans.
"He has made these constant comments but he has never come to this council with a business case of how to achieve it."
"What he hasn't told us, and the real issue of affordable housing, is how it can be sustained over several generations."
Mr Clarkson said during a recent meeting with the Treasury's chief economic advisor at Mr English's office, he was told his plan to mass-produce cheap housing was "exactly what New Zealand wants".
Central government needed to make sure a proposed six-month time limit for councils to process building consents for medium-sized building projects was enforced, he said.
Anything that cut the red-tape was a good thing, Mr Clarkson said.
Increasing the supply of land for building was one of the key Government responses to the Productivity Commission's inquiry into home affordability.
The package also included significant changes to the Resource Management Act to streamline consenting processes.
Mr English said soaring house prices had helped fuel household debt and contributed to damaging imbalances in the economy.
"Those factors make it vital that housing becomes more affordable. In addition, projections suggest that many more homes will be required in coming years than are being built."
Local authorities could exert considerable influence on the market with planning and consent decisions, he said.
But Mr English warned there would be no quick fixes to the problem.
The package highlighted the need to increase the supply of land both inside cities and on their fringes which is available for building new homes, Mr English said.
"Many of the changes that will make a difference lie with councils and the Government expects them to share the commitment to improving housing affordability."
The Government proposes introducing a six-month time limit on councils processing consents for medium-size projects.
Environment Minister Amy Adams said the limit would avoid "unnecessary costs and long, drawn-out processes for all parties".
The Government was also considering a proposal to allow consents for "large regional projects" to be referred directly to the Environment Court, Ms Adams said - bypassing councils' consenting roles.
At present, that ability is only available for projects of national significance.
Local Government New Zealand president Lawrence Yule said central and local government shared concerns about housing affordability.
He did not expect any significant backlash from councils and mayors against the Government's proposals. But local government was wary following the leaky building saga of attempts to speed up the consenting process.
"I think we need to be very careful about streamlining those processes too much."