Phil Twyford and his surprising enthusiasm for the private sector
By Richard Harman (author)
There are two issues in Auckland; simple as that; housing and transport and Labour’s Phil Twyford is responsible for housing but has also been responsible for transport for much of the last Parliament.
His Te Atatu electorate in west Auckland grew up during the big group housing schemes during the late 50s and 60s after the north western motorway was constructed.
It's now a microcosm of what's wrong with Auckland.
The motorway is overloaded as are its own streets many of which are lined with road cones as work is carried out; even a modest 1960s wooden bungalow will now cost $900,000.
So it's appropriate that Twyford is "Mr Auckland" in Labour and while he has had his critics for his Chinese-sounding-names revelations about overseas investors, he remains a likely key element in any future Labour Government.
The surprising thing about Twyford’s approach to Auckland is how conventional and orthodox most of his solutions are and how big a role he sees for the private sector.
That’s probably because he recognises a simple political reality; the rest of New Zealand is unwilling to put money into Auckland.
“We have to make Auckland’s growth self-financing,” he told POLITIK
“We cannot ask people in Invercargill, Whanganui and Palmerston North to fund the marginal costs of Auckland’s growth.
“They just won’t do it.
“It would be unfair to, because they are sitting there saying we don’t have traffic problems, we’ve got plenty of affordable housing, we just need jobs.
“Don’t spend my taxes on facilitating more growth in Auckland.”
The political judgement has then forced Twyford into some creative solutions to pay for the big ticket transport and house building solutions he wants to see in Auckland.
His willingness to embrace non-traditional Labour ideas came with a joint Op-ed he wrote in late 2015 with NZ Initiative Director, Oliver Hartwich, criticising the way planning restrictions were forcing up the price of land in Auckland.
That was the kind of thing that ACT was saying.
“In our view, there are three issues to be addressed,” said Hartwich and Twyford.
“First, urban growth boundaries driving up section costs. Second, anti-density restrictions stopping affordable housing. Third, the expensive and inefficient way we fund infrastructure.”
Even Bill English said, "Twyford gets it" which along with the Chinese names probably hardly helped Twyford's status in the Labour caucus.
The solution that Twyford would apply to his first two issues --- urban growth boundaries and anti density restrictions – would be remarkably similar to that employed by the current Environment Minister, Nick Smith.
Twyford would use National Policy Standards under the Resource Management Act to achieve his goals.
But where he differs fundamentally with the current Government is why he wants to relax these restrictions and what he wants to build once he has.
“It’s about managing and harnessing Auckland’s growth which is what we have failed to do.
“The gridlock on the roads and the housing crisis are just manifestations of the failure to manage growth properly.
“We’re talking 10 or 15 urban development projects on the scale of Hobsonville but with much more affordable housing and we would supply the affordable housing from Kiwibuil and by working with non-profits and others.
“So there would be a mix of market housing, affordable and state and community housing.
"And under Labour, the ratios would be different because at the moment the Government is building hardly any affordable housing.
“They’re just replacing the state housing they are knocking over and essentially they are turning vast swathes of p[ubolicly owned land into privatised land.”
But here things get tricky.
Those ideas deal with the supply side of the equation, but Labour knows it must deal with demand if it is to restrain house price increases and make housing affordable for the kind of people who live in electorates like Twyford's Te Atatu.
It would extend the Brightline test out to five years and ban overseas speculators, ring fence tax losses om property investments --- but what Twyford is not so keen to talk about is what he Tax Working Group might recommend as far as a capital gains tax goes.
So the Tax Working Group would look at these issues.
“They would look at the big picture stuff, yes."
That’s shorthand for a capital gains tax, isn't it?
“There are a number of ways to skin a cat.”
However, on financing infrastructure, he is more explicitly about a tax – a regional fuel tax --- because it can be brought in quickly as a stop-gap while the city moves to motorway pricing.
Twyford believes that can happen faster than the Government is suggesting so the tax might not be in place for long.
But a regional fuel tax might not raise much money.
The Greater Auckland transport lobby group (who Twyford is close to) say that a 10 cents a litre charge would raise $150 million a year. Only a drop in the bucket alongside the $1.5 billion needed for the light rail to the airport proposal.
Twyford is also keen to promote an idea proposed by Infrastructure NZ, so-called “Value capture” from land which goes up in value alongside, for example, the light rail line in Labour’s Transport Policy.
But whether the targeted rates that would be imposed by the [roperties which increased in value because of the rail would raise big sums is questionable.
Research on the Gold Coast shows that properties along the 13km light rail there increased in value by only around 25% because of the rail.
Perhaps his big ticket item would be to package up projects and sell infrastructure bonds – probably to offshore investors --- to finance the work.
However, it's not the specifics of Twyford’s proposals that are as important as the fundamental philosophy behind them.
"The kinds of things that we are grappling with don’t require lots of public money to be spent,” he said.
“It’s about getting public agencies to behave differently to be an enabler of private sector investment.
“A lot of what we can do is create the conditions for private sector investment to come in around transport infrastructure and build great town centres and places for people to live.”