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Armstrong and Small on Nick Smith’s RMA reforms

Written By: - Date published: 9:05 am, January 24th, 2015 - 26 comments
Categories: journalism, local government, Media, national, newspapers, Politics, same old national - Tags:

Senior political journalists John Armstrong in the Herald and Vern Small in Stuff have both chosen to pan Nick Smith’s proposed RMA changes announced this week. Both of them criticise Smith’s use of dodgy numbers to justify the reforms. And interestingly both of them refer to his past use of dodgy numbers to ram through changes to the Accident Compensation Corporation.

They could have been referring to a Standard Post written by Eddie when three years ago he presciently said about Smith:

Part of Nick Smith’s problem is that he doesn’t understand how to build public support for change before trying to implement it. Instead, he pulls out some dodgy numbers and tries to trick the public. This backfired in the debacle over ACC levy changes when he provoked one of the first big protests against the National government.

If you want to get more of the detail have a read through past Standard posts about Nick Smith and the ACC.  The collection provides comprehensive analysis and a recording of the history of the matter.  Essentially there was no crisis.  There was a change in ACC’s numbers because investment values had softened and there was also a change in accountancy standards which changed the value of anticipated future liabilities.  But the claim that Labour had mismanaged ACC was and still is an utter lie.

Both Armstrong and Small have identified Smith’s tactic.  Armstrong said:

The tone and strength of [Smith’s] language in his savaging of the RMA this week prompted immediate concern in the environmental lobby that he was trying to manufacture a crisis where there wasn’t one – just as he did at ACC in 2009 – in order to implement ideologically based changes.

The fear was that Smith was using the same blueprint in order to throttle the environmental principles in the RMA to the advantage of big business.

And Small said:

It is the same tactic he used as ACC Minister when National first took office in 2008, when he used a downturn in the state insurer’s investments to talk up a major crisis in its books – in that case to lambast the outgoing Labour government’s financial management.It hit the political mark then.

But today the no-fault insurer is in fine shape (Smith will no doubt claim more than his share of the credit) and the main embarrassment for the Government is not being able to lower the premiums as fast as ACC would like – in part because they have been used to protect Budget surplus forecasts.

Fast forward to his speech in Nelson on Tuesday, and it is again likely his high-octane rhetoric has overstated the problem.

They both also refer to the Motu Report and its troubling methodology and conclusions.  Armstrong commented:

How convenient, then, that research on the impact of the RMA on apartment construction and the building of new dwellings conducted by Motu Research, a private sector-based firm which undertakes economic analysis on behalf of clients, should suddenly surface and appear to make the connection which Smith has had so much trouble finding.

Smith seized on Motu Research estimates that the RMA has added $30,000 in extra cost to each new apartment and at least $15,000 for each section. It is notable that Smith restrained himself and chose to quote these figures which are at the lower end of the estimates and thus more credible.

In his speech on Wednesday night unveiling the broad details of his overhaul of the RMA, Smith also noted Motu Research had suggested that the RMA had reduced “development capacity” by 22 per cent, thereby cutting housing supply in Auckland by some 40,000 homes while adding $30 billion in cost to developments.

Those latter figures appear startling. But those 40,000 homes would have only been built in the absence of planning controls such as height restrictions on apartment blocks or minimum floor areas.

Bar Act, however, no one in politics is arguing there should be no restrictions on what you can or cannot build.

There are other question marks hanging over Motu Research’s findings, the most pertinent one being that they are in large measure based on a survey of Auckland property developers – hardly a neutral audience. The report’s authors – who include former Reserve Bank chief economist Arthur Grimes – are totally upfront about that. They caution that their report is not a cost-benefit analysis of the pros and cons of planning rules.

And Small states:

Exhibit one is the Motu report, prepared for Treasury, that Smith used to vamp up the costs imposed by regulation and the RMA. No blame to Motu.

They did what they were asked to do and were upfront about the methodology. But when you look at the approach it raises a slew of issues. Firstly, it was not a cost-benefit analysis of the RMA and planning laws.

As Motu said: “Rather it documents the costs of the rules and regulations – as perceived by developers – to provide a basis for benefits to be compared.”

So the various figures the report threw up – $30,000 extra on the cost of an apartment, $15,000 for a house and 40,000 fewer homes in a decade than would otherwise have been the case – are well shy of a full and balanced picture.

For a start they are the impressions of a limited number of developers – akin to asking poachers how much food has been kept off the family table by the pesky gamekeepers. Secondly they do not weigh the countervailing benefits to the environment, social outcomes or even such concrete things as where expenditure by developers offsets local body rates.

Thirdly, though this is not totally clear, it appears the extra costs are those imposed by all planning and RMA-type rules.

Achieving that level of savings – if you believe them in the first place – would presumably require all the regulations and RMA rules in Smith’s pile of documents to be torched.

They both address the unreliability of the figures offered by Smith and analysed by Rob Salmond in this post.  Even if the figures are true and Smith can deliver all of the identified savings the reforms will provide but temporary relief against Auckland’s out of control housing inflation.

National is clearly buying a fight with these changes.  The prevailing logic seems to be that removing all planning controls will solve our housing crisis and halt run away housing inflation.  This may be so but I fear that the consequence will be that Auckland will look like the picture below.  And I am pretty sure most kiwis would rather not live there.

slum

 

Update:  As pointed out in comments Fran O’Sullivan has a go too, calling Smith’s argument that the RMA caused the housing crisis “barking”.

That’s because Smith’s 40,000 figure conveniently lines up with the identified shortage of 39,000 new homes in the city.

But it is barking to imply that all those 40,000 houses would have been built during that past decade if the RMA requirements hadn’t resulted in additional costs.

The housing environment is much more complex than that and Smith knows it.

26 comments on “Armstrong and Small on Nick Smith’s RMA reforms”

  1. vto 1

    Two comments;

    1. Nick Smith is once again a bare-faced liar. Liar liar liar

    2. This is a smokescreen for the really problematic developments (non-housing) that National’s supporters want to do………. you know, like building a road thu Fiordland, building more dams, taking more rivers, all that sort of thing…….

    Of these things there is no doubt

    • Bearded Git 1.1

      @vto
      Lakeside subdivisions within Outstanding Natural Landscape.

      You can say goodbye to the wonderful relatively undeveloped view towards the mountains and lake from Wanaka if the mooted reforms to sections 6 and 7 get through.

  2. NZJester 2

    Panning Nick Smith’s proposed RMA changes with logic is just so easy to do.
    What is he going to do next, get prisoners to help design new security methods to be used in prisons to help stop them from escaping?
    That is what it feel like he has done with the RMA by getting developers to suggest the changes needed to it.
    He has let the developers offer numbers with no proof as to their validity to get him to change things to make life better for them.
    ( I mean screw the environment, it is not like we need a healthy environment to live and making money is all that matters. [heavy sarcasm]) Oh wait yes we do need a healthy environment to live.

    • vto 2.1

      Agreed he really has made a fool of himself. As you aptly point out, what will he do next…..

      redesign prisons based on prisoner interviews…

      change speeding laws based on Ferrari-owner interviews…

      review fishing quota based on fishermen interviews ….

      what
      a
      fool

      a
      lying
      fool

    • Murray Rawshark 2.2

      “What is he going to do next, get prisoners to help design new security methods to be used in prisons to help stop them from escaping?”

      Or letting out of control squirrel agencies design the laws around surveillance. Par for the course with the FJK regime.

  3. Tracey 3

    How brave the fourth estate is when it isnt John Key leading the announcement.

    One of our newer commenters made a great analysis of National’s tactic of manufacturing a crisis and then having the solution. Was it Truth will out??

    edit: Truth Will Out here

    Nick Smith’s RMA reforms – low cost housing in Epsom?

  4. Foreign waka 4

    Oh do we need a Mr Lange right now, he would have mad a feast out of this. All the fallacies, logistic misconceptions, deceit and above all betrayal of the NZ public would be laid out for everyone to see. But alas, highly educated puppets whose only critical thinking is about the color of the Moet rose’ more so then the wider public good is all that is on offer. The rest is running scared, don’t rock the boot and she’ll be right is the catch cry. There was not long ago an article asking why so many people don’t vote. To do so, one needs to feel represented.

  5. Matthew Hooton 5

    You missed Fran O’Sullivan calling parts of his speech “barking [mad]”.

  6. The Real Matthew 6

    There is an amazing amount of comment on this given there is next to no detail.

    The horses are bolting far too early on this one.

    • 1. Nick Smith has described the changes as “dramatic”
      2. The outline of the changes includes “Greater weight to property rights” and “Speed up plan-making”
      3. National are already lying about the reasons they’re making these changes
      4. Anyone with half a clue about NZ politics and the attitudes of the National Party knows exactly where this is going.

      More than enough detail to comment on.

    • tracey 6.2

      Do you not believe the ten points he outlined?

  7. Peter H 7

    Someone should tell Nick Smith, Cut The Crap

  8. Stickler 8

    The report from the Motu group on which Smith’s argument is based was written by Arthur Grimes and Ian Mitchell.

    Grimes is an economist and former banker. He is on the staff of Motu, but its staff list has no mention of Mitchell.

    Would this be the Ian Mitchell concerned?https://www.property.org.nz/Person?Action=Profile&Person_id=86

    That might explain why only property developers were asked for their opinion. Not a lot of environmental expertise there, would you say?

  9. Janet 9

    Even Fran O’Sullivan dissed Nick Smith in the Herald.

  10. Jan Rivers 10

    One of the interesting things about Nick Smith’s annual speech to the Nelson Rotary Club is that it didn’t appear on the Nick Smith’s website in his role as MP, the website of Rotary NZ or in the future events part of the National Party or the Beehive website. All of this gives the impression to me that the event is tightly stage managed.

    Nick Smith has on many occasions (there have been 20 to date) used his speech to signal draconian and unsignalled changes in the area of his portfolio. Initially in his role as local government minister before he was stood down and now in his role as environment and building and housing minister the focus of the attacks appears to have been unnannounced changes to the other secotr of government – local government.

    Sometimes, as in this case it would appear, council spokespeople are scrambling to find something positive (or at least not ‘UNHELPFUL’ to say that will not sour the relationship with the Minister.

    What kind of democracy do we have where Ministers have free range to behave as if their portfolios are a war-zone to attack their sector and what quality of legislation, sense of community and place can we expect when the environment is being tailored for developers, rather than balancing the interests of the homeless, existing home owners, house builders and developers and the community at large.

  11. Rodel 11

    But they still refer to his ‘b***sh*t’ as ‘ high-octane rhetoric.’

    Lots of people if they could be bothered reading the articles would read ‘ high-octane rhetoric’ as something dimly positive….Something like ‘oratory’ or ‘eloquence’.

    Calling a spade a spade is what we need in journalists.

  12. Murray Rawshark 12

    I don’t think we’d ever see anything in Auckland like the slums in the picture, micky. They are generally owner built on public land. The good people of Epsom and Remuera would put a stop to that and they would be demolished. We’d be more likely to see the less wealthy sleeping in parks, or tent cities, or maybe filling the private prisons that NAct loves so much.

    With the reaction to Nick Smith, I’m wondering whether this was hoped for. The rosy faced one makes the outrageous announcement, everyone gets up in arms, then FJK comes back, winds it back by 30% and Bob’s yer uncle. The Godkey continues to be worshipped.

    • Sacha 12.1

      He has a talent for making real boss Joyce look sensible.

    • Tracey 12.2

      glen innes has come close at times… but once the old quarry got built out in non affordable housing, ready made decile 10 school… the GI state houses were ways an endangered species.

  13. hoom 13

    Don’t forget Smith used the same MO for ECAN sacking too.

    For some reason people I know were saying over xmas they thought he is a good guy & was going to help save the RMA from a gutting.
    I was like ‘WTF, he’s been put there specifically to gut the RMA’.

    He is their hatchetman who puts out some stupid extreme argument with manufactured crisis as an excuse.
    If he gets away with it then ‘yay for us’ eg ECAN.
    But when he doesn’t, after the public outcry Key pushes a slightly less extreme but still outrageously far right if seen independently ‘middle ground’ & tada ‘moderate Key’ saves the day.

    • sir pat 13.1

      very true and after all these years with STILL no elections for ECAN…..so how good are these appointed people if the need to have them is still there?….pure political ideaology….NZ is in trouble

  14. Tracey 14

    SST carries an article today featuring property council and developers bemoaning the changes to aucklands unitary plan following submissions. upset by height to boundary and other stuff.

  15. Tracey 15

    hickey endorses nick smiths rma plan. says he supports it to improve housing affordability and supply. he then provides examples but doesnt connect them to more affordable homes in auckland.

    comments are also interesting for complaints which dont on the face of it impact affordability

    http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11391408

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