Productivity Commission goes back to first principles on urban planning

The Productivity Commission said today it had taken a “first principles” approach to planning in its investigation of urban planning and what it might be. The commission issued its final report, Better urban planning, this morning.

The commission said: “This inquiry should not constitute a critique of previous or ongoing reforms to the systems or legislation which make up the urban planning system. Rather, it is intended to take a ‘first principles’ approach to the urban planning system.”

Its final report stretches to 498 pages and I haven’t read the whole document yet. Below are some of its key points and none of the recommendations. I’ll get into further detail over the next week.

The current planning system – the commission’s diagnosis:

  • Planning legislation lacks clarity & focus, and is prone to overreach
  • Too little direction & guidance from central government
  • Prioritisation is difficult
  • The system lacks responsiveness
  • Protection of Maori interests is inconsistent

What changes are needed?

  • New mechanisms & models to overcome supply failure
  • More responsive infrastructure provision
  • Better planning & better quality plans through spatial planning & reviews by independent hearings panels
  • More representative, less rigid consultation
  • Wider recognition and protection of Maori interests
  • Stronger & different capabilities & culture within councils & central government

At the end of that list of changes, the commission report says: “Central government will also need to substantially improve its understanding of urban planning and knowledge of, and engagement with, the local government sector. It will be under a strong obligation to exercise effective regulatory stewardship of the planning system.”

Central government role

Under the first heading on necessary changes, New mechanisms & models to overcome supply failure, the report says: “A clearer statute and clearer direction & expectations from central government will push councils in high growth cities to do more to meet the demand for development capacity.

“The recently published national policy statement on urban development capacity is a step in the right direction. But these councils will need more help to meet the challenge of their rapidly growing populations. That help should start with:

  • clear legislative purposes & objectives for the natural & built environments
  • principles to guide plan-making, planning processes & decision-making, and
  • systematic, independent & timely reviews of plans.

“In line with these objectives, principles & the reviews, plans should:

  • have clearer & broader “development envelopes” within which low-risk & mixed development is either permitted or is only subject to minimal controls
  • only apply rules that offer a clear net benefit, where the link to externalities is clear and where alternative approaches are not feasible
  • put greater reliance on pricing & market-based tools rather than rules
  • constrain attempts to force the creation of economic, social or environmental benefits through restrictive rules (eg, planning policies that attempt to promote density in the expectation that this will necessarily lead to higher productivity)
  • recognise inherent limits exist to what land-use planning can achieve, and give greater room & respect to the decisions of individuals & firms
  • have broader zones that allow more uses
  • make less use of subjective & vague aesthetic rules & policies, and
  • depend more on local evidence to support land use rules, instead of relying on heuristics generated from overseas studies (eg, assumptions that higher density urban areas necessarily result in their residents behaving more sustainably).”

To complement these improvements, the report says a future planning system should:

  • employ price-trigger mechanisms that credibly guarantee that councils will permit enough development capacity to meet demand at reasonable prices
  • deploy, where appropriate, urban development authorities to assemble & develop inner-city land at a scale sufficient to meet business, residential & mobility needs
  • enable councils to auction development rights as a way to achieve increased, but not excessive, inner-city density, and
  • create competitive urban land markets that open opportunities for the private sector to invest in out-of-sequence community developments. These can sidestep land bankers’ stranglehold on land supply and avoid additional burdens on councils for infrastructure.

5 critical goals

Productivity Commission chair Murray Sherwin wrote in his foreword to the final report: “As the inquiry progressed, it became clear that to make the greatest contribution to wellbeing, the planning system needs to deliver on 5 critical goals:

“First, it has to be flexible & responsive to changing needs, preferences, technology & information.

“Second, it has to provide sufficient development capacity to meet demand. The harmful effect of spiralling house prices is indicative of a serious imbalance between supply & demand.

“Third, planning systems need to allow mobility of residents & goods to & through our cities in order to get to jobs & other activities.

“Fourth, the system has to be able to fit land-use activities within well defined environmental limits.

“And lastly, the planning system needs to recognise & actively protect Maori interests in the built & natural environments arising from the Treaty of Waitangi.”

Mr Sherwin said the current system was failing to deliver on these goals:

“We can see that the system is under stress in failing not only to cope with the challenges of high growth cities, but also to protect important parts of New Zealand’s natural environment. These failures point to weaknesses in the design & operation of New Zealand’s planning system. Few of the many participants in the inquiry were happy with the current system, and many were strongly critical, believing the Resource Management Act had not worked out as intended, or needed a substantial overhaul.

“We set out what a future planning framework should look like. While some aspects of the proposed new planning architecture will be recognisable, much of it will not. We have taken the ‘blue skies’ mandate from Government seriously and offer fundamental & far-reaching recommendations for a future land-use planning & resource management system.

“We believe that following these recommendations will provide substantial benefits. Getting a planning & resource management system that is fit for purpose has the potential to deliver access to affordable housing & well paying jobs, in vibrant, dynamic & liveable cities and in a country where the natural environment is cherished & protected.”

Mr Sherwin said he and commission members Professor Sally Davenport & Dr Graham Scott oversaw the preparation of this report.

Professor Davenport is professor of management at Victoria University of Wellington’s school of management. Dr Scott is executive chair of Southern Cross Advisers Ltd, which specialises in advising on public sector reform globally. He is also a consulting director in the Sapere Research Group.

Links:
Productivity Commission, 29 March 2017: Better urban planning, final report
Productivity Commission, 19 August 2016:
What would a high-performing planning system look like?
Urban planning: What’s broken and how to fix it
Better urban planning, draft report

Related stories today:
Start with a figure you don’t know, then plan accordingly….
Productivity Commission goes back to first principles on urban planning

Earlier stories, 22 August 2016, on draft report:
Productivity Commission urban planning report blunt, measured & perceptive
Commission sees government change as essential for urban planning
Commission says everything English wanted on planning

Earlier story:
11 December 2015: Planning system is next Productivity Commission target

Attribution: Productivity Commission.

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