New Zealand heads to the polls on 7 November. The outgoing government’s major legislative achievement has been to replace the country’s planning legislation, the Resource Management Act 1991, with a new Planning Act, signed into law on 30 September.
The new Act creates a new goal for the planning system:
to enable competitive urban land markets by making land available to create abundant development opportunities for residential and business use.
What is a competitive urban land market?
What does this phrase mean?
Can land pricing ever be meaningfully competitive?
How would we know this when we see it?
Today’s post is Part I of a four-part series examining this novel concept.
Part I examines NZ’s new legislation and how the idea of competitive urban land markets (CULM) has been defined, explained and promoted by its local champions.
In Part II, we explain the CULM hypothesis in our own words, putting forward the strongest case we can for the economic claims made by its proponents.
In Part III, we explain why the logic behind CULM fails as economic theory, and why the policy goal is incoherent.
In Part IV, we show how the empirical metrics put forward to assess the competitiveness of land markets fail to do that.
Read on to understand how this idea made it into law and how those involved define it.
First, a bit more on the politics.
A new umpire
To support the new legislative goal, the Planning Act provides for what the NZ government describes as an “independent economic umpire” for competitive land markets, housed within the relevant ministry.
The powers and functions of this “Urban Land Market Officer” include figuring out what a CULM looks like in practice (“maintain[ing] an assessment framework to be used in making determinations”) before then making one of the following determinations for each jurisdiction:
(a) the urban land market is competitive:
(b) the urban land market is not competitive:
(c) there is insufficient evidence to determine whether the urban land market is competitive or not.
This officer has inquisitorial powers: they can compel local councils to provide information, and they can publish a statement of “the acts or omissions that contributed to the land market not being competitive”. A finding of competitive heresy creates a legal duty for the council to address the matter “in a timely manner”. Parliamentary debate makes it clear that a failure to repent risks seeing ministerial powers deployed.
This remarkable new legislative architecture rests on the basic premise that competitive urban land market is a coherent concept, capable of being applied in law.
Despite it now being a legislated goal for the planning system, the Act is silent on what this means. A draft ministerial regulation goes little further. The Interpretation section of the Act defines terms like land, space, structure, built environment, and historic heritage but not competitive, urban land market, or abundant.
Right now these words mean just what the Urban Land Markets Officer chooses them to mean. Until receiving a determination from this new officer, councils are flying blind on what to pursue and how to pursue it.1
Perhaps in anticipation of messy legal cases and wilfully independent courts, the new law also states that: