19 May 2015

No budgetary surprises for Auckland?

11:52 pm on 19 May 2015

Housing and Transport are at the top of Auckland's big-ticket issues, but few rabbits are expected to be pulled out of the hat in this year's Budget.

Sky Tower. Auckland CBD

Auckland's Sky Tower Photo: RNZ / Diego Opatowski

The Government has just played its biggest housing card: unveiling moves to tax capital gains on investment properties re-sold within two years, and more closely monitoring foreign investors.

Finance Minister Bill English has signalled further announcements on the government's own contribution to increasing the supply of housing in Auckland.

The only thing that most in the housing debate agree on is that building more homes is the only way out of Auckland's current shortage, and the consequent double-digit rate of price rises.

Mr English has said the government is lifting efforts to redevelop its own Auckland land holdings. This is likely to focus on work already underway inside Housing New Zealand, and while important, is modest in the wider context of the city's needs.

Bill English holding the 2015 Budget in Petone, Lower Hutt.

Bill English holding the 2015 Budget in Petone, Lower Hutt. Photo: RNZ / Alexander Robertson

Housing New Zealand is Auckland's biggest residential player, owning 6 percent of the city's housing land, and 38,000 homes. Much of its portfolio is ageing, low-density housing, ripe for redevelopment.

Housing New Zealand's rule of thumb is to try, through development, to create three new homes for each one it replaces. Its own rental numbers would remain static, with the extras being for other community housing providers, or affordable homes for sale.

The corporation hopes during the next year to add 80 new social rentals from within the 25 sites it owns that are inside the fast-track Special Housing Areas, created under the Government's Housing Accord.

That is not the full extent of its plans, but the Government's contribution will remain limited. Housing New Zealand data shows it built only 41 new homes in Auckland last year, and 36 the year before.

This year, the figure is up to 177, but it is unclear whether that reflects the effect of homes demolished in redevelopment.

Auckland is only two-thirds of the way towards achieving its goal of an annual build of 13,000 new homes, the figure at which the current shortage should stop getting worse.

Supply is the only 'silver bullet' but the challenge remains daunting. 13,000 new builds a year is the long-run average required. Consents have risen to an annual rate of nearly 8,000.

The government's own National Construction Pipeline forecasts new builds to peak at above 11,000 in 2016 - 2017.

Investment in transport is Auckland's other big issue, but, as it is an area shaped by long-term funding plans and well-signalled strategies, it seems unlikely to produce any surprises. Certainly none have been sought by the Auckland Council.

Auckland City Council meeting. Mayor Len Brown

Auckland mayor Len Brown in a City Council meeting. Photo: RNZ / Diego Opatowski

Auckland mayor Len Brown and Minister of Transport Simon Bridges have, since the start of the year, been talking of the need to agree an "accord" of projects to be jointly-funded by the Government and Council.

That is less likely to involve significant new funding than simply an agreement on the priorities.

The Auckland-based Employers and Manufacturers Association said it was time for the Government to deal with the big picture in Auckland.

"Some real solid policy change. The supply side of housing, for all the tinkering really has made no difference at all.

"We've had more tinkering now with the Capital Gains Tax which isn't a Capital Gains Tax," said the EMA's chief executive Kim Campbell.

"It also spills over into transport, and yet another report, and yet another discussion, when everyone who moves 100 metres knows this is something that needs attention."

Auckland's biggest challenge is growth, as it is projected to be home to up to 1,000,000 more residents in 30 years time. It is a challenge bigger than can be met on any single Budget Day.

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