Thursday, 18 June 2015

Productivity Commission pisses on property owners

So the Productivity Commission has thrown their hat in the ring to “solve” the housing affordability crisis.

Two things caught my eye in their recommendations. One was for more tinkering. The other was for confiscation.

Of the first, as Michael Reddel summarises at Croaking Cassandra, “there seems to be a too-ready sense that government is the source of on-going solutions, rather than the source of the underlying problems.”

These are people who appear never to have heard of the Law of Unintended Consequences.

The report doesn’t mainly focus on getting government (central and local) out of the way, but on finding smarter or better ways of the government being actively involved (eg “this means a greater degree of publicly-led development”).  Perhaps it shouldn’t be too surprising  –  after all, two of the three commissioners are former heads of government departments, and the Commission works on projects requested by government, in a process where ministers are advised by government department …

So the order of the day is more tinkering to fix previous meddling:

    • land-value rating
    • flexible zoning
    • land-supply targets
    • inventory public land holdings
    • planning rules related to existing infrastructure …

Yeah, I nodded off too as I read that soporific sophomoric dross. At least I did until I reached this phrase:

There is a place for a UDA [Urban Development Authority] to lead and coordinate residential development at scale in both greenfield and brownfield settings, working in partnership with private sector developers. Legislation would be required to establish and give powers (such as compulsory acquisition) to one or more UDCs in New Zealand

Did you spot it?

In the week that Magna Carta was commemorated – the legal foundation of the idea that a man’s home is his castle* – these meddling bastards propose confiscating people’s land to “coordinate residential development.”


Compulsory acquisition of somebody’s property if it doesn’t fit the planners’ plans.

The taking of private land by the state, to be given to developers who suck up to nanny.

Nothing about hammering a stake through the heart of the thing that has constrained what people can do on their own land: the RMA.

Nothing about fixing the disastrous planning rules that underpin the motivation of property owners to leave land undeveloped.

Instead: Legal theft.

Taking a hammer to the hampered housing market, with property owners being made to be the nut.

Another demonstration of the dictum that controls necessarily lead to further controls, and on ad infinitum.

As a commenter at Kiwiblog observes,

Not even the Chinese have compulsory acquisition of private land.

But it’s in “the public interest” you say!

At one level, the claim that “compulsory acquisition of property by the state can be justified if it is in the public interest” is circular.  What is “the public interest”?  The public interest might, for example, involve the protection of private property rights, including the right to hold property undisturbed. 
    This is another example of the Commission’s apparent reluctance to grapple with pervasive government failure and abuse of regulatory powers. 
abuses of eminent domain powers in the United States should be a salutary warning here…. 

And so they should be.  Among the worst of those abuses is presidential hopeful Donald Trump “persuading” Atlantic City bureaucrats to confiscate the home of elderly widow Vera Coking so he could construct a limousine parking lot for the customers of his Trump Plaza Casino and Hotel. (Google "Susette Kelo" for another horrible story, or get hold of Ilya Somin’s new book on the problems with eminent domain, The Grasping Hand: 'Kelo v. City of New London' and the Limits of Eminent Domain.)

As PJ O’Rourke observes, when legislation is introduced about what’s bought and sold, the first thing to be bought is the legislators--and those not politically connected are the first ones to suffer by it.

The Commission simply washes its hands of such thoughts.

   As if to water down the rather shocking nature of this proposal, the report suggests that powers don’t need to be exercised much, as they can provide leverage (in the same way a mugger with a baseball bat won’t need to hit me to get my money) and the chair is also quoted as suggesting the powers might only be to deal with “holdouts”.    
    But it just is not clear why such powers should be given to public agencies.  In [an unhampered market], housing is readily provided by the private sector.  Public agencies and political leaders got us into this mess, and why would we expect that new powers would not be abused?  
    Have powers of compulsion worked well in central Christchurch?  It hadn’t been my impression.

Has it been anyone’s?

But, I hear you cry, don’t worry: Bill English and John Key would put a stop to this!

"It would be a bit of a stretch to get to compulsorily acquisition, but the idea of better co-ordination of building houses, of getting water and roads in place is an attractive idea," English said [yesterday], adding he wouldn't rule out compulsory acquisition because the Commission had only issued a draft report that was open to submissions.

Oops, maybe not.

But surely John Key … oops, maybe not: point 2a of his first "four-point plan" to fix housing envisioned forcing land-owners to build on their undeveloped land or face confiscation.

Fact is: This is an idea the politicians and planners just keep coming back to.

They can’t help themselves.

So it might presage the worst violation of property rights ever in this country. It might show what happens once respect for property rights is dead. It might be against the stated principles of the party presently in power.

So for all those reasons and more, don’t bet against it.

* Famously commemorated in a superb film, the name of the Castle Coalition, and Lord Denning’s pithy observation in Southam v Smout [1964]:

The poorest man may in his cottage bid defiance to all the forces of the Crown.
It may be frail—its roof may shake—the wind may blow through it—the storm may enter—the rain may enter—but the King of England cannot enter—all his force dares not cross the threshold of the ruined tenement.” So be it—unless he has justification by law.


  • “The Productivity Commission has come up with the most appalling policy idea I have seen in I don't know how long, that is, the idea that there is a potential role for compulsory property acquisition in assembling large-enough land parcels for achieving proper economies of scale in construction of housing as a way of dealing with problems to do with the supply of land for homes.
    Fortunately not all of New Zealand is as crazy as the Commission…”
    Eminent domain – ANTI DISMAL
  • “But is compulsory property acquisition the only way of solving hold-out problems? And are hold-out problems even the binding constraint here? I have been a fan of option contracting as a way around hold-out problems…”
    Eminent domain – Eric Crampton, THE SAND PIT

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