National's Auckland problem -- a tale of two cities

More houses or not more houses, that is the question that's starting to create real tension inside the National Party as one of the government's key economic policies comes under pressure from its own

Internal tension. It's not something National has had to worry about much during the Key years. But that makes the Auckland Council's u-turn on its plans for housing intensification all the more fascinating; because it pits the National Party against some of its core voters.

The Auckland Council this past week bailed out of plans that had been rushed through since late last year, to scale up the intensifications for the city. Critics of the council's latest plan say it was handled with next to no consultation, and it's hard to say otherwise. But they also insist that the 2013 plan the council now reverts to by default leaves plenty of scope for more intense housing, and that's harder to buy.

The council's own figures project that the city will need 280,000 more houses by 2040 and the 2013 plan delivers just 80,000. Hence the panicked rush late last year to add these "out of scope" plans.

Whether the 2013 plan delivers 80,000 or more, it's hard to see how it will deliver anything less than significantly fewer houses than needed (even if you think the population modelling that leads to the 280,000 houses is flawed). It's just not enough houses.

That seemed to be at the heart of the complaints by Generation Zero and others, that this protest and the council's subsequent back down is shutting young Aucklanders out of the property market. That many of the protesters responded to the concerns expressed by those representing young Aucklanders with mocking shouts of "poor you" was a disgrace. It was a 21st century version of 'let them eat cake'.

I don't know enough to know whether the 2013 plan can be upscaled sufficiently to add enough houses or whether it'll now simply be up to the Independent Hearings Panel to come up with strong recommendations that push the council to do more. But Finance Minister Bill English is clearly banking on the panel to pull his party out of a property pickle.

Because what's clear is that the council u-turn means fewer houses, and for that the government cannot stand. Rapidly increasing Auckland housing supply is central to its economic plans, and therefore its political fortunes.

English has made it clear before that without lots more houses, we'll see higher interest rates, slower growth and, of course, ever higher house prices. This morning on The Nation, he warned of a "price spiral" if Auckland doesn't act.

"We’ve just made it pretty clear that we’d expect the plan will deliver enough room for the houses that are needed in Auckland. Because if it doesn’t, we’ll end up going back into a price spiral, and we’ve talked about the risks of that for the last couple of years... if the plan is seen not to deliver the supply that’s required, you’re likely to see upward pressure on the prices. Now, by historical standards, Auckland house prices are already pretty high"

That would be disastrous for New Zealand. And National. So why isn't English kicking into those trying to slow down the intensification? Housing Minister Nick Smith has in the past talked enthusiastically about "staring down" the NIMBYs. So why is English playing it cute, saying this is "a legitimate community discussion" when the implications are, by his own prognosis, dire?

It's because those eastern suburb protesters (Smith's NIMBYs) are loyal National Party voters. Indeed, one of the key figures in the revolt is Orakei local board chair Desley Simpson, the wife of National Party chair Peter Goodfellow.

So, in bald terms, leading Nats are working hard against one of National's key economic policies. It's what you might call... awkward.

English today pretended not to know who was leading the charge against what they see as excessive intensification and the risk of bad urban design. But that's nonsense. He's simply trying to get to avoid civil war. If this was a Labour councillor, Sue Bradford or just about anyone else leading this charge, it would 'NIMBY this' and 'economic sabotage that'.

Despite his commitment to maximise housing growth in Auckland, he wouldn't even back Phil Goff's proposal to sell Remuera golf course for more houses(it's worth "scrutiny", Goff says). That's a real cat amongst the pigeons suggestion by Goff and his advisers, trying to rupture  what's left of the right-wing consensus in Auckland. English again pretended to know nothing about it, even though economist Shamubeel Eaqub spent much of last year banging the drum for the idea.

Instead, English suggested -- against everything else National says about the urgency of more houses in Auckland -- that the wealthy eastern suburbs could get a free pass.

“The government has made it clear. It needs to see a plan ultimately that enables enough houses. And if that means more in the south and the west out on the edge of the city, well, that’s where they’ll go”.
Which suggests that the rich, white people of Orakei could win the political battle, forcing more intensification on the poorer and browner south and west of the city. what's more, growth could be more "out" on the city's edge than "up" in the city's central suburbs.

But the cost of infrastructure that would require would have to be a real concern to... the Finance Minister. In other words, English needs to be careful what he wishes for.

Already National is starting to get tangled. English and co will hope that the hearings panel come along and push the Council in the right direction without having to get their hands dirty. But their own members will still fight that, so it's hard to see how some sort of serious internal tension can be avoided.

It could be one of the greatest tests yet for Key's famous discipline.