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CONTENTS

Introduction

Greymouth Floods – Getting development underway

Two types of local government – The Small and the Bad

The British local government shambles

And its influence in New Zealand and Australia

“Rot” Set in with forced amalgamation of
Christchurch councils 20 years ago

Political Failings following first earthquake

“Real” Confidence required

 

Christchurch Earthquake: Sound Political Leadership Required

Dear John,

“A SHAKY FUTURE” – THE PRESS FEATURE BY JOHN McCRONE – 26 FEBRUARY 2011

INTRODUCTION

Many thanks for your most helpful contribution with “A Shaky Future” feature in the Mainlander, The Press, Saturday 26 February 2011.

Since I embarked on these local government / housing issues mid 2004 (in getting the Annual Demographia Housing Surveys underway with my American colleague Wendell Cox of Demographia), there had been a reluctance by The Press to foster the necessary public conversation of these issues locally. Other media did however. mainly at the national level – led by Chris Hutching of the NBR, Alisdair Thompson at Scoop, Bernard Hickey of interest co nz, Anne Gibson of the NZ Herald and Virginia Larson of North & South in particular. There are a number of others as well.

Over the past few months, it needs to be noted, The Press coverage of these important local issues has been exemplary.

Until 4 September 2010, I had always viewed Christchurch as a “lost cause”. The thinking was - what the hell, it was less than one tenth of one percent of the coverage of 6 nations (with Hong Kong this year) Demographia International Housing Affordability Survey of about 440 million people. It was clear to me that the Christchurch City Council was simply going to get the “Ecan treatment” at some stage, once things got serious enough. Indeed the chat within the property / commercial community was that “Christchurch is next”. It had been shunned by competent development practitioners and property investment funds for years.

Within an interest co nz article earlier last year Houston, we have a (housing affordability) problem., in response to your The Press Feature “An Inner City Conundrum”, where you reported the views of a local architect, I outlined the massive structural distortions of the Christchurch residential sector.

In any event, as a commercial property development practitioner, I had got out of Christchurch in the early 1990’s, as it was obvious the Christchurch Council bureaucracy was going to get control, persistently degrading everything around it.

GREYMOUTH FLOODS – GETTING DEVELOPMENT UNDERWAY

Instead I spent 12 years leading the way in getting Greymouth back up on its feet, with new commercial / industrial developments, following the floods of 1988. It had “every property problem under the sun” with its location, ground conditions, poor quality infrastructure, heritage issues and Maori ground leases. But these issues could be “handled” because the community was generally supportive of growth. Importantly too, the Grey District Council is small, committed to growth and functions well.

I don’t recall seeing a queue of other developers or “urban experts” assisting. Indeed, the attitude was that it was all too difficult and that I “must be nuts” to have taken this challenge on! The reality was the critics didn’t have the development skills.

TWO TYPES OF LOCAL GOVERNMENT – THE SMALL AND THE BAD

There are two types of local government in this world – the small and the (bureaucratically) bad.

We discussed this last Monday, and I was rather surprised you were not aware of Parkinson's Law and do hope you read this closely and ponder it. One needs to fully understand the nature and characteristics of bureaucracies. In the private sector, as firms become increasingly aged and bureaucratized, competition wipes them out. It’s a different story in the public sector, where they can persist in growing for years, destroying everything around them, until they are finally dealt to (Ecan being an excellent local example).

THE BRITISH LOCAL GOVERNMENT SHAMBLES

It is well worth google news searching “Eric Pickles”, for the latest in how the current British Coalition Government, under the leadership of its Communities and Local Government Minister Eric Pickles (who understands the antics local government gets up to, having been involved with them earlier) is starting in to attempting to unwind the massive mess that is the local government sector in the UK. There is nothing I need to tell you about the “British situation”, as you have lived there.

This enlightening and indeed entertaining article from the UK Daily Mail, tells us about all we need to know - Public sector inertia at a council office where employees take six-month sickies | Mail Online.

As I explained to you, the Indians run these shows to suit themselves and those at the top of the pile simply administer it. Before long, the elected representatives learn to become the “bureaucratic cheerleaders”.

……AND ITS INFLUENCE IN NEW ZEALAND AND AUSTRALIA

But it needs to be understood that the British style local government, has been hugely influential here in New Zealand and Australia. The Canadians, in contrast, were more fortunate in not being influenced by the British in this regard – but influenced instead by the Americans.

Little wonder housing is 3 times household incomes in America and about 3.4 in Canada (according to the latest Demographia Survey) – in contrast to 6 times here in Christchurch.

There had been a huge flow both ways between UK urban planners and their counterparts in NZ and Australia since World War 11. We are still living with this influence today – some 20 years after the failed British style Town & Country Planning Act was repealed and replaced by the 1991 environmental effects based Resource Management Act. I referred to it soon after as a “methadone treatment to get planners off the planning addition”. The Parkers, Marryatts and Wells of this world are still addicted to it.

It reminds me of the words of an American academic some years following the fall of the Berlin Wall and the collapse of communism “The nightmare is over – but let the dream continue”.

The “true believers” of the failed old British style T&CP Act are still hanging in there. After 20 years our patience has run out.

Ms Wells comments at start of your article, were to me, a most amusing read. Those naughty developers not sharing the romantic visions of a former media employee with no hands on industry experience. Ms Wells needs to be reminded that her role is simply that of a referee, responsible for the administration of reasoned and reasonable environment standards. We, the players, need the Ms Wells of this world to focus on significantly upgrading their “referee skills”, so that industry players such as us, are able to upgrade our performance as well.

Indeed – if Ms Wells is so confident of her development skills, she should resign her position, become a developer herself and show us “mugs” how to do it. There are no barriers to entry.

“ROT” SET IN WITH FORCED AMALGAMATION OF CHRISTCHURCH COUNCILS 20 YEARS AGO

The “rot” set in to Christchurch at the time of the forced amalgamation back in 1989, when Christchurch City was amalgamated with Waimairi District Council, Paparua District Council, Riccarton Borough Council, Heathcote Borough Council, Christchurch Drainage Board and Christchurch Transport Board. Banks Peninsula was amalgamated against the wishes of the Christchurch people in 2005 – something current Christchurch Mayor Bob Parker (formally Banks Peninsula Mayor) was strongly committed to. Parker was the “bureaucrats promoter” of the failed Greater Christchurch Urban Development Strategy as well.

No wonder following 20 years of forced local government amalgamation, the gross annual median household income for Christchurch is $55,600, while that of “Aspirational Auckland” is $69,600 – 25% higher. I understand the eastern side of Christchurch has the lowest household income of any major metro of Australasia.

Christchurch should properly be a dynamic competitor to Auckland.

POLITICAL FAILINGS FOLLOWING FIRST EARTHQUAKE

Soon after the 4 September earthquake, I wrote an article Christchurch: A Bureaucratically Buggered City, outlining the systemic problems of the Christchurch City Council and Mr Parkers sorry involvement with earlier development issues.

Little wonder then, that following the 4 September earthquake, the entrenched bloated bureaucracy of the Christchurch City Council failed to respond adequately. Indeed, it was a menace, completely ignoring the Emergency legislation and the Order in Council, allowing those with damaged or destroyed property to get on and do what needed to be done and deal with building consent issues later. Instead it forced building owners through consenting processes, not allowing them to deal with what needed to be dealt with or stalling them unnecessarily. I had been told of a large number of “horror stories” on that front – which I’m sure is only a fraction of them.

The Christchurch Council failed to understand following this 4 September event, that its primary function was to restore confidence as quickly as possible.

“REAL” CONFIDENCE REQUIRED

Real meaningful confidence – not the “fluff stuff” Mayor Parker comes out with – no doubt well meant, but lacking in substance.. The reality is that the “bureaucratic culture” did not allow this to happen. Christchurch simply cannot afford a repeat of this “non performance” following the even more serious 22 February event. An event that caught the experts by surprise – like the first one.

My estimate is that Christchurch lost about 1% - possibly as much as 2% - of its population following the 4 September event (around 3,500 – 7.000 people approximately of the Christchurch population of about 376,000 people). This showed up with the residential rental stock, which didn’t have the pressure on it one would have expected, if the population had remained static. The Sunday Star Times reported recently that following the 4 September event, some 3,500 houses require replacement – about 1.6% of the total stock of about 220,000 residential units of the three local authority areas involved.

Following the 22 February earthquake event, confidence can only be restored from a foundation of sound political decision making at both the central and local government levels. As I see it, the focus needs to be on the following issues –

  1. COUNCIL REFORM REQUIRED: Dealing expeditiously with the systemic problems of the Christchurch City Council, in moving quickly to a “One City – Many Communities” approach. Thankfully there is a strong core majority of sound Councillors (as your article “A shaky future” explained). The current CEO needs to be replaced with someone having engineering training and a proven track record of project management. I am most impressed with the performance of Orions CEO Roger Sutton – a person I hold in the highest regard.

    There need to be about 8 Community Service Centres – Akaroa, Lyttleton and about 6 in the city, which again need to be led by people at the staff level with engineering training and a proven track record of project management.

    After all, local governments primary responsibilities are infrastructure and buildings.

    These Community Service Centres need to be supported by building and environment regulators with enabling attitudes and the capacity to solve problems. It does not appear many within the current centralized structure have these skills. Thee would need to be constant monitoring of the performances of these building and environmental officers, so that those lacking the required skills are replaced quickly.

    The Central Office should be a small one, fulfilling a coordinating role where required (and importantly not, when it’s not required), responsible also for the central area within the four avenues.

    The highest polling elected representative should be the local chair and city councilor. The mayor should be elected on a city wide basis.

  2. OPEN UP FRINGE LAND SUPPLY QUICKLY: Fringe land needs to be opened up quickly, particularly to the south and the west where better quality ground is. It is most interesting to see how Rolleston with its good ground, appears to have performed remarkably well following the 4 September event, being located just at the end of the ruptured (previously unknown) Darfield fault.

    According to Canterbury Quake Live, this 7.1 magnitude event released 648 kilotons of energy, while the closer and shallower 6.3 magnitude event of 22 February, released 42 kilotons of energy – 6.5% of the first one.

    The artificial fringe land scarcity values (where raw land values have been cranked up from their true rural values of say about $20,000 per hectare to a million dollars and more – likely back considerably from that now with the persistent downturn in construction) need to be done away with as quickly as possible, by sending a clear signal to the market, that these artificial scarcity values are a thing of the past. This will then provide the severely degraded residential production construction sector, the required confidence to start lifting its performance, so that over a realistic time frame of say 10 years, the pricing performance of the industry is back to international best practice levels.

    Currently, construction costs are in excess of twice what they should be per square metre, due to decades of degradation, caused by unnecessary political interference and poor quality regulation and administration. I covered this within the article “Houston: we have a housing affordability problem” ..

    It was a surprise to me following the 4 September event, how central government with its advisors went down the land remediation track, instead of focusing on the fringes to the south and west in particular where the good ground is, to get subdivision and new housing construction work underway as quickly as possible. My comments were reported soon after in the New Zealand Herald Earthquake highlights need to open city limits. Generally the existing housing to the west of the central city has stood up to the two major earthquake events remarkably well, while the east of the city, with significant pockets of poor quality ground, have not fared so well.

    Land remediation, particularly on any scale, requires considerable research and consideration. As has been learnt with this last major event, unfortunately, we cannot be sure about the possibility of further significant earthquake events. It would be more appropriate to think of significant land remediation in the future, following a lengthy and prudent period of no damaging seismic activity

    It is far better to get new, more affordable conventional housing stock rolling out as quickly as possible, on the good ground to the west and south of the city. This would allow the residential construction sector to mobilize as quickly as possible (not much has happened since the 4 September event because of the bureaucratic / regulatory roadblocks), “loosening up” the existing stock within the wider city, so that those who wished to do so, could sell their existing homes, allowing others with destroyed / damaged homes in the vicinity / suburb to relocate to them.

    Families with school age children in particular, would likely prefer to stay in their own areas. And others too, such as the elderly. It seems those with damaged / destroyed homes and the distress of the persistent aftershocks, are in no mood to be put through insurance / land remediation / new house construction hassles, that could go on for years and years.

    It is critically important this fringe new housing stock happens as quickly as possible, to restore confidence in a meaningful way, and arrest as much as possible, people leaving the city to live in other locations here in New Zealand, Australia and elsewhere.

  3. COMMERCIAL / INDUSTRIAL STOCK: Since the 4 September earthquake event, considerable older commercial stock has been demolished, but interestingly, significant vacancies have occurred as well, both in the central and suburban locations. It seems likely now, people will not be interested in returning to what they consider “suspect buildings” – those of older construction and above two levels. Going forward, Christchurch is going to be in development / construction terms a ‘low and light city”.

    There is no need whatsoever to build dense, costly, high and risky structures, as this city has (or should have) abundant good quality land supply.

    It is hugely important however, the cordoned central area is reduced as soon as possible by ensuring older destroyed / damaged stock is removed, allowing the construction of new low rise commercial and industrial stock, with adequate accessible ground level vehicle parking to replace it.

  4. CENTRAL GOVERNMENT – QUALITY LEADERSHIP REQUIRED: The greatest help central government can provide are quality decisions from the Earthquake Minister and the Minister for the Environment Hon Dr Nick Smith to (a) get a performance culture instilled in to the local government sector (b) appropriate mechanisms in place to ensure adequate supplies of fringe urban land and (c) appropriate infrastructure financing in place, along the lines of the United States Municipal Utility District structure.

    Central government to date has been dilatory in progressing these issues, and I roasted Nick Smith October last following the release 12 October of his rubbish “Competitive Cities” discussion papers. He and his Government have known for years exactly what needs to be done, as these issues have been discussed exhaustively since the time early in 2007, when the New Zealand Planning Institute came out “strongly supporting” the Annual Demographia Housing Surveys.

    I had covered this whole issue with a discussion paper early 2008 Getting performance urban planning in place – something I understood the National Party then in Opposition, in large measure supported. Soon after the 2008 election during March 2009, Prime Minister John Key in a Wall Street Journal article, made it clear his Government was going to deal with the structural issues that needed to be dealt with. All very well being clear with the Wall Street Journal Mr Key. Kiwis deserve clear messages and guidance as well.

I trust these few comments are of assistance John and look forward to The Press team continuing to play its critically important role in providing quality information and fostering constructive community discussion. This is essential in ensuring that we get from those we pay to serve us at the national and local levels, sound leadership and the quality decisions we deserve.

Best regards,
Hugh


Hugh Pavletich FDIA
Co author – Annual Demographia International Housing Affordability Survey
Former President – South Island Division, Property Council of New Zealand
Performance Urban Planning
Christchurch
New Zealand

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