Afternoon roundup

The end-of-week closing of the browser tabs

• Seeing like a Bank. Superb explanation of bank IT systems, tradeoffs between customer fees and customer experience, how helpdesks actually work, and problems in cobbled-together systems. It explains a lot more than banks. 
• Interesting piece on price dispersion in generic pharmaceuticals. One snip: "Regulations around pharmacy ownership in Australia and New Zealand make them more difficult to compare." Indeed. 
• If you think the social discount rate should be very low, you should support reductions in transfers to the elderly. Forthcoming in Econometrica. 
• The Rocket Lab launch failure a while back comes down to an electrical arc in a power supply under partial vacuum; they're enclosing and pressurising the power supply system. 
• Wellington Council selling its shares in the airport to have less exposure to quake risk seems sensible. 
• Low attendance at school, Covid is given as one reason. Meanwhile, schools still aren't properly ventilated, nobody uses masks, and the government bans boosters for those under 16. Kinda crazy. Government requires scaffolding for jobs where a ladder would be perfectly safe, with company directors liable for risks. But government bears no liability for unsafe schools and prohibitions on full youth vaccination. 
• "What's so scary about Bryce Wilkinson?" The caption under a smiling picture of Bryce. What indeed! Bryce is lovely. 
• An 88 megawatt solar farm blocked in the Mackenzie Basin. There's uncertainty about how some native plants might change because of shading and sheltering from the panels on a sheep paddock. NZ officials do not want net zero. They want a return to the Pleistocene. 
• Turns out that there's a summer camp for training left-wing activists in NZ. Wonder whether the reporting on a pro-liberty version would be as friendly.

Afternoon roundup

Oh the tabs. 

• Chris Quin is CE of Foodstuffs North Island. His chat with Morning Report on what they've been doing to get groceries through to Hawke's Bay, including helicopters....
• The nastiness is intrinsic to Dahl's work. Erasing it is a mistake. I still think that when rights-holders abandon the original works by making them unavailable, those works should enter the public domain. Especially if the author is already dead. 
• Looks like business-as-usual continues on at least one front. Government is set to impose a pile of compliance regulations on incorporated societies and there just isn't time to let them look at the regulations before they take effect. Government, despite the change at the top, is still trying to do too many things at the same time and risks making serious messes. 
• Dileepa Fonseca also points to government capacity constraints. "...Wellington's workforce is already overwhelmed coping with the central government's demands at the moment..."
• Yeah, it'd be great if it were easier to import and use plasterboard in rebuilding from a cyclone. 
• Headline says it all about building anything: "New Far North council dog pound balloons from $200,000 to $2.4m and can house fewer dogs."
• Look, if they were really serious about it, they'd have made it some kind of Commandment.
• University of Canterbury's Covid response was risible. 
• Effective Altruism in the classroom!
• Genetically modified trees that are sterile and so no wilding problem. But GE regs mean they can't be planted. 
• Bryce Wilkinson on some of the problems in the RMA replacement bills
• The perils of trying to curtail hazily defined 'disinformation'
• The Future of Long COVID
• We don't need laws against scapling. And if a platform like Viagogo can't reliably make sure it isn't selling fake tickets, people won't use it. 

Afternoon roundup

The afternoon's worthies on the closing of a week's worth of browser tabs:

• Hamish Rutherford explains why, despite Keith Ng's insistence that any mildly clever move in a Google Search that gets you something that somebody didn't want you to see is indeed a hack, the inappropriate use of the term kinda matters. Keith now recommends we use the term cyberbadtouch instead of hack - I like it. 


• Environmental monitoring and reporting at a few of our Councils could stand improvement.


• Is there any good reason that the RMA makes it hard to put up new wind farms? When oh When will have a fit-for-purpose RMA?


• The Irish Central Bank's recruitment process for its next Governor cost €70,236. I wonder whether their headhunter talked to any senior economists around town.


• Great piece from Damien Grant at NBR on the coming regulation of the insolvency industry. I'd be using it in my Public Choice class were I still in that world. A snippet:

  ...the Ministry of Economic Development proposed, in 2010, a simple bill allowing the Ministry to ban those who were acting dishonestly from being liquidators.
  
  The industry body at the time, known as INSOL, sought a far more intrusive regulatory model. It has succeeded.
  
  Parliament has adopted a ‘co-regulatory’ regime, where the coercive power of the state is delegated to approved industry bodies who will issue licences to those who want to be insolvency practitioners.
  
  This is a terrible result. In a field with 50 active firms dominated by a handful of large players, the industry will set its own guidelines, decide who can and cannot practice and will investigate complaints against themselves.

• Tom Chivers has a very nice piece reminding everyone of the risks of replacing GDP with dodgy metrics.


• I completely fail to understand a public health establishment that spends all its time campaigning to ban anything with sugar in it while it seems there's zero consequence for ignoring doctor's quarantine advice and flying from Auckland to Christchurch, round-trip, while infectious with the measles. Could the New Zealand airlines at least ban this clown from their flights in future?

Coming to the nuisance

I simply don't understand the mentality that leads people to move next door to music venues then push Council to shut them down. Even more baffling is why we have developed institutional arrangements that give every jerk a veto right.

Just read it and weep.

The Barrytown Hall - a popular venue for New Zealand music for at least 40 years - has been shut down after a noise complaint from a neighbour.

The rural village hall is well known on the New Zealand and international music circuit as an alternative live music venue.

Hall committee chairman Roger Ewer said because of one complaint the committee was now having to jump through hoops to resume staging live performances.

It has already cancelled gigs through until at least August, including the latest Arts on Tour offerings, which incurred a $1000 financial penalty for cancellation.

"It's ridiculous. One person can do this. We've got one person able to complain to stuff things up," Mr Ewer said today.

"It is very frustrating when I've been involved in these types of things since 1972 and there's never been a problem."

When the hall began to host live music the surrounding environment was totally rural.

He said the noise complainant was a relatively recent arrival in Barrytown, living in one of the former railway houses that were shifted from Otira to a site opposite the hall about 18 years ago.

This is what you get when you abandon common law coming to the nuisance principles in favour of a stupid Resource Management Act.

It gets worse.

The hall committee had considered a legal challenge but decided instead to work with the council.

"They seem to be quite responsive about helping us through it. We've gone along with their requests rather than fighting it legally, which we could have done."

They had been working on the basis of "existing use rights".

"It's interesting. It's turned out that they can impose a residential noise limit on us after 9 o'clock at night, which is ridiculously low."

Mr Ewer said the hall had now applied to adjust the decibel level in its consent.

Two affected residents opposite the hall had assented to the hall's application.

Another two households had declined and the hall also had to get sign off from absentee property owners.

"It's really stuffed things up and is losing us a lot of money."

Folks who put houses next to an existing music hall, or who move into them, should not have standing to complain about noisy music.

If we're moving towards increased intensification in urban areas, we likely need to get existing neighbours' use rights written down in the LIMs for the surrounding area - both so that buyers have no way of pretending that they didn't know that they were moving next to a bar or music venue, and to diminish their standing to complain about things that predated their move.

HT: Darian Woods, who notes that he had a great time performing there in 2008. Pity the fool who complains about hearing this from next door.

Stonefields

I know you're supposed to hate the game and not the players, but the people living at Stonefield sure make it hard.

Anne Gibson reports that Auckland Council's knocked back developers' plans to add three apartment blocks and 11 terrace houses at Stonefields.

Matt Maingay, who leads neighbourhood action organisation Stonefields Lobby Group, welcomed the council's decision.

..."We support what Todd Property have achieved, but people need to make sure developers don't overstep this balance, that design doesn't completely ignore its surrounding, and that compromise can be beneficial to everyone. The benefit of Auckland growing at such a late stage is that we have the chance to avoid other cities' mistakes.

"If it hadn't been for a unified, concerned, and proud community, Aucklanders would have lost a little bit of themselves," Maingay said.

It struck Aaron Schiff as odd:

@EricCrampton the thing that struck me about this is, Stonefields is a new development but already residents are NIMBYing.

— Aaron Schiff (@aschiff) March 29, 2017

And Conan (surely not his real name) reminded us about this from last year:

@aschiff @EricCrampton is this the same amazing group that got the flying fox removed as kids having fun were making too much noise?

— Conan Gorbey (@arnie03) March 29, 2017

He's right:

A flying fox in a children's adventure playground has been temporarily disabled after noise complaints from residents.

An Auckland Council sign at Playtime Park, next to the Stonefields estate at the base of Mt Wellington, explains that tests carried out showed that noise generated by flying fox users "exceed levels permitted in the residential area".

According to the sign, the council was looking at options - including relocating the flying fox - and the community would be advised on the next steps soon.

Orakei local board member Kit Parkinson confirmed the flying fox had been disabled, but said he would know more about what had happened after a meeting today.

In November, the Herald reported that residents had complained about noise and kids' "squealing" coming from the flying fox at the playground, which opened in September, as well as large sand areas used to create a landing zone beneath the equipment.

I really really hope that the government moves on the Productivity Commission's recommendations around better urban planning.

Update: Does anybody know whether the original consents had apartments/terraced housing in them on this timeframe, or whether this was a new request?

Amazing that anything gets built

The Three Kings saga helps illustrate why landowners might become land bankers, and why Auckland housing has been such a mess.

I'd noted it in my piece in June at The Spinoff:

Just look at the mess in Auckland where a developer wanting to build housing for 1500 households in an old gravel pit at Three Kings, turning much of it into parks and open spaces, has bought almost a decade’s worth of objections and processes and hearings. How can anybody build anything to scale under those conditions? In the middle of a housing crisis, with daily news stories about the number of children having to live in cars with their parents because there are not enough houses to go round, NIMBY activists block new construction. 

Every time a NIMBY cries, an angel has to sleep in a car, or in a garage.

The NBR reported last week that the mess continues:

Fletcher Residential’s controversial $1.2 billion Three Kings quarry development may have to be substantially redesigned after an interim decision from the Environment Court.

The court has heard an appeal from the South Epsom Planning Group and Three Kings United Group over Auckland Council’s plan change allowing Fletcher to rezone 15.1ha of the former quarry and Auckland Council and the Crown to swap 6.5ha of reserve land with Fletcher Residential for the development.

The court has laid out 13 issues – from land contouring, protection of volcanic features, building form, sports fields, view shafts and connectivity – in the development that South Epsom Planning Group, Three Kings United, the council and other parties need to comment on before a final decision on the appeal is made. Fletcher Residential is excluded.

The court says it became clear after looking at the evidence and witness statements before the hearing the real issue was not whether Fletcher Residential’s development should go ahead but rather what form it should be.

They've been in community consultations since 2008. Eight years.

The moustache-twirling developer is a hackneyed theatre set piece. Here's Circa Theatre's version from 2014, when a horrible horrible developer proposed buying Granny's cottage to put up some townhouses.

And from their promotional materials:

I’m having a blast in this production as Sir Roger Bounder, the evil property developer with no heart and a lust for profit. Nothing can touch Sir Roger for devilish good looks and a mind like a steel trap. He’s obviously the main role that everyone will admire – or else! It’s always great fun to be booed!

We reminded the kids after the show that building houses lets people not be homeless. Would that the theatre could get its darned villains right. Hint: when you're in a housing shortage, the ones trying to build housing probably aren't your villains.

Consenting and rocket science

Looks like Christchurch has lost its shot at a space-port.

Rocket Lab is moving its proposed launch facility from Birdlings Flat out to the Mahia Peninsula. They've cited slow Christchurch resource consenting as one of the reasons.

Auckland-based Rocket Lab said its decision was partly due to the time it was taking to get the necessary resource consent from Christchurch City Council.
When the company announced the Canterbury site, it said it was also considering moving its rocket manufacturing operation to Christchurch - creating up to 200 jobs.
It has now decided on a location on the Mahia Peninsula, for which it already has the necessary consents, as the site where it aims to launch rockets from 2017.

Does that make getting a consent harder than rocket science?*

As of June, they had over 30 launches booked.  

Beck said preparations were under way to submit resource consent applications to Christchurch City Council for the launch site.

The proposal has attracted concern about the potential impact on the environment from the Green Party.

Spokeswoman for conservation, Eugenie Sage said the Kaitorete Spit was a nationally significant ecosystem and natural landscape feature containing habitat for threatened lizards, rare invertebrates and threatened plants such as Muehlenbechia astonii .

"The launch activities potentially disturb wildlife."

Sage said local residents were concerned about the potential impact of a launch on access to conservation reserves and other public land during the launches.

Applications for three consents from Rocket Lab were lodged with Environment Canterbury on June 15.

I'd started getting worried when I'd seen these kinds of conditions a few months ago:

Rocket Lab was restricted to four test firings, lasting no more than 30 seconds and, when operational, would have to provide 10 days' notice before launches. It would be restricted to 12 launches a year.

They'd want to give plenty of notice due to the exclusion zone they'd have to run around a launch site. But 12 launches a year? And wouldn't they need a few options around any potential launch in case of weather issues?

I'm rather glad that if Christchurch couldn't see fit to give them clearance for lift-off, others could.

What does it say about Councils' incentives to get their consenting offices straightened out if they can manage to chase away a potential space port?

 * Jason Krupp takes credit for this quip.

RMA, OIA, OMG

Ok, so the Resource Management Act isn't supposed to have anything to do with blocking competition, and the Overseas Investment Act is only stopping bad stuff, right?

Somebody explain this mess in Glenorchy then.

If I'm reading the story correctly:

• Americans resident in Glenorchy bought a general store and campground;
• They got resource consent for some landscaping, have filed a resource consent for other rejuvenation, and ran a landswap with Council to get a right-of-way to the facility;
• The Glenorchy Community Association withdrew support for it all when its Secretary, who runs a business in competition with the proposed campground, got mad about the process, and this somehow matters for Glenorchy Council;
• Now they're having to get retrospective consent from the Overseas Investment Office because somehow it's a matter of national strategic importance whether an American owns a campground in Glenorchy;
• They're now running the whole thing through a notified consent process because everybody got mad; campground competitors will then get their chance to claim that it'll hurt the town's amenity value or be bad for traffic.

Does this sound like something that should happen in the Outside of the Asylum?

Costs, benefits, and apartments

Yes, the Motu report on the costs of Auckland's urban planning regulations does not include a measure of the benefits. In some cases this will not matter much; in others, it might.

Andrew Geddis focuses on building height limits which impose about $18-32k per apartment and chides me for ignoring the benefits of those for the potentially otherwise shaded. But look at the main cost categories in the list. Floor-to-ceiling height limits impose $21-$36k per apartment. There is absolutely no offsetting benefit of floor-to-ceiling height limits that is not fully incorporated into the price of the apartment. Sure, the eventual residents will get some value out of the higher ceilings, but there will be plenty of buyers who'd have wanted to save money and to have a lower ceiling. The costs have to be in excess of the benefits for these things. There is no external benefit that comes into play.

And same for balcony area regs that tally $40-$70k per apartment. The only people benefited by these regs are the ones buying the apartments. In the absence of this regulation, they could either buy an apartment with no or small balcony, and save $40-$70k, or one with a big balcony and pay the extra. Some people will be made no worse off due to the reg, as they'd have bought a big balcony anyway; others are being forced to buy a Mercedes when they really wanted a Toyota.

These were two of the biggest per-apartment cost items, and there is no way that benefits can possibly exceed costs unless we think people buying apartments systematically err on the side of buying ones that are shorter than they really want and with less balcony than they really want.

In all these cases, the ideal measure would be a net cost one that said "Ok, so we forced you to buy a Mercedes instead of a Toyota and so you're going to be paying a pile more in mortgage interest than you otherwise wanted, and it's going to cost you more in fuel too. But let's think about how much more fun you'll have driving that Mercedes and count that against the extra price we forced you to pay. And let's think too about how much nicer the place looks when we don't have a bunch of Toyotas driving around."

And sure, you can get some non-crazy benefits from things like viewshafts that wind up putting in height limits. But prior to the Motu report, planners were operating in absolute ignorance of the costs these things imposed. Nobody had any clue; the Auckland stories I've heard suggested that they then didn't put much weight on that there could be any cost. Now they can at least look at the existing viewshafts, tally up the costs they impose, and start thinking about whether it's really worth tens or hundreds of millions of dollars to maintain particular views from particular places.

Geddis is right on this though:

Because irrespective of its source, the value conferred on a property by restrictive planning rules is perceived by the home owner as being "theirs", which then creates the problem for RMA reform that Rob Salmond outlines here:

Per unit apartment costs in high-demand areas line (sic) Parnell would certainly be lower if the developer could build 30 or 40 stories of apartments there, right. And the homeowners of Parnell hate the RMA and its requirements for consent before making a greenhouse, right? But I'm willing to bet the homeowners of Parnell aren't at all in favour of having their tomatoes' sun blocked by a series of large apartment blocks. Dilemma, dilemma.

Which actually is a part of a wider dilemma. Because everyone wants "affordable housing", so long as it doesn't cause the current value of their home to go down. Which, in a housing market that in Auckland is looking more and more like a bubble, poses a real problem for policies that are aimed at increasing housing affordability. 

There is a way around this. Upzone EVERYTHING, make everything tall be subject to notified consent, but restrict standing for objection to directly affected neighbours. And, make it easy for developers to buy options from neighbours saying "Ok, I don't know whether I want to put an apartment building here. I'm paying you $1000 now for the following deal: if I build it, I pay you $50k compensation and you don't object; if I don't, you keep the $1000."

If standing for objection is limited to those directly shaded and incurring real effects rather than made-up stuff, this can work.

RMA changes and council incentives

Me in The Initiative's weekly newsletter:

If councils are determined to commit absurdities, they’re going to do it regardless of fixes to the RMA. After whatever legislative tweaks are enacted, and new Environment Court rulings come through, it will take councils a little while to figure out how to restart the micromanagement that pushes up costs and helps make New Zealand the seventh least affordable place to live in the world.

Councils don’t care about the effects of their planning rules on the macroeconomy, what it does to Reserve Bank policy, or whether it utterly ruins the economy. For them, that’s all under a great big Somebody Else’s Problem shield of invisibility. Councils’ problem is making sure that councillors get re-elected. That means not hiking property taxes too much (and so loading costs onto new developments) and making sure that the short term interests of current voters, and of the loudest voters, are prioritised over the interests of those who might be in town after the next election, if development were allowed. Dumb rules that hike costs could be the desired outcome, not an unintended consequence.

This basic calculus will not change much until councils’ incentives are fixed.

Read the whole thing, or, better yet, subscribe to Insights!

Auckland SimCity

Some reports make you want to find a city planner and beat it with a heavy muddy stick.

Arthur Grimes and Ian Mitchell's latest MOTU report is the latest. They demonstrate just how badly Auckland Council has wrecked housing affordability. Stupid "it was a good idea at the time" rules compound on one another to make it impossible for developers to innovate in providing affordable housing.

Read the whole thing. But Table Two has the main effects.

Every one of these things would have seemed like a good idea to somebody at the time, but nobody stopped to think about the cost.

• Height limits appeal to NIMBYs, maintain viewsheds (the notion that there's infinite value in being able to see some mountain in Auckland from some point on the Harbour Bridge), and appeal to idiotic planners who reckon nobody would want to live that high up anyway.*
• Floor to ceiling height limits appeal to planners who think that it's not fair that poor people's apartments would have low ceilings; they ignore that tenants could otherwise choose between higher ceilings and higher rents and lower ceilings and lower rents. Some people prefer the cash in hand; planners imagine this stuff's costless.
• Minimum balcony area regs appeal to planners' sense of aesthetics; they ignore the cost and cannot imagine that others might prefer the cash.
• Delay is costless to planners, who imagine the costs of a poor (ie, not what they like) design to be huge because buildings last a long time. 

Grimes writes:

In some cases, developers felt that they may even face additional challenges gaining planning consent if their proposal includes innovative solutions that are not typically included in other developments. Specifically, developers considered that being innovative in order to reduce cost heightens the risk and uncertainty when trying to obtain a consent, both in terms of the time required to work through the consenting process and the ultimate outcome in terms of the number of dwellings. Developers commented that urban designers do not like small uniform dwellings which are easy to produce and which reduce costs.

He also specifically cites Grey Lynn people as part of the problem around NIMBY activism.

While I broadly support Nick Smith's look at how the RMA might be fixed so it stops enabling this kind of Council ridiculousness, I doubt it goes far enough. Underpinning all of this is that Councils have zero current incentive not to behave this way. The RMA was never intended to enable this kind of mess; planners used it to set rigid district plans and to fob off blame for lengthy processes. If Councils instead had better incentives, so that growth were in their interest instead of just NIMBY-appeasement, we'd have better outcomes. 

New Zealand is the 7th least affordable place in the world to live. Bad urban planning takes a good chunk of the blame.

Update: See also:

• RMA Changes and Council Incentives
• Costs, Benefits, and apartments

* I'm not exaggerating. That was one of the reasons behind Christchurch CBD height limits. Never mind that it's developers' money on the line if they're the ones wrong about what customers might want. 

Gareth's strawman

Fun week.

I posted over at Interest.co.nz about how reducing regulatory barriers to densification and to expansion in the suburbs could reduce housing costs and consequently improve child poverty outcomes, at least some of which are due to high housing costs.

Gareth Morgan posts over at Gareth's World about how I'm kinda evil for being so pro-sprawl and wanting sprawl everywhere and not wanting densification and how free-marketers are hypocrites for only wanting new development not next to them and how the infrastructure costs of sprawl should be borne by developers, and so on.

I posted comment there as follows.

Hi Gareth,

It's a shame you didn't get in touch to ask me about some of this stuff. I'm not sure why you began by assuming some strawman version of my argument, but I'll hit on it here.

First off, I'm more than happy for things to include Epsom. David Seymour and I have had a few disagreements about this. You might even read the parable I had up at Offsetting today as being directly relevant. This one. Is this the kind of thing that an out-only guy would write?

Secondly, why would you think I wouldn't support that new developments bear the infrastructure cost? I've long been a fan of Municipal Utility Districts for such purpose: these load all of the infrastructure costs onto the folks moving into new developments, using a fairly efficient financing structure.

Third, I'm totally a fan of congestion charging. Do that at the same time so that any sprawl congestion costs are internalised.

Finally, I've over and over again posted at Offsetting on how we need to get rid of regulatory impediments to densification. Heck, I've even come up with some political economy solutions to try to buy out the NIMBYs to stop the blocking of densification. Why are you assuming that I only want growth on the fringes? Auckland's done a fair bit already to open up on the fringes, though they could do a lot more. But the big gains would be overturning the avenues for NIMBY blocking of intensification. I even said it in the piece you seem to hate: we need UP AND OUT. Lemmie check...ah yes. There it is. "When land supply, both expansion at the city fringes and land zoned for increased density, is constrained by regulation, the price of zoned land rises." I specifically put that in in case people might misread me as making some argument for sprawl-only. I'm not making that argument. I don't know why you think I'm making that argument.

I agree with you that there are tons of right-wingers who want only development away from them, and that they'd come out of the woodwork were substantial proper reform suggested. I'm not one of those people. I'm one of the ones trying to figure out how we make housing more affordable given the set of political constraints.

I kinda think we're on the same side here. I don't know why you're painting this caricature.

Dunno what Gareth's deal is.

Meanwhile, David Seymour isn't a fan of my post wondering about how we get to consider neighbourhood character to be a property right.

@bernardchickey @EricCrampton reductio as absurdum
— David Seymour (@dbseymour) October 2, 2014

I agree with David on a lot of stuff. Not so much on this one.

After Housing Costs...

I suggest, in this week's NZ Initiative column at interest.co.nz, that addressing housing affordability could be part of John Key's recently announced policy focus on child poverty. When housing costs take up over forty or fifty percent of many poor households' incomes, what's left for other needs?

A teaser:

When land supply, both expansion at the city fringes and land zoned for increased density, is constrained by regulation, the price of zoned land rises. When sections cost hundreds of thousands of dollars, developers earn margin by building houses for the top end of the market. A developer would be throwing money away by putting lower cost houses on expensive land when plenty of high income households are willing to pay a higher premium. Regulatory constraints disproportionally reduce the supply of affordable housing.

RMA reform, then, is an important part of addressing our real problems with child poverty. It is hardly a silver-bullet, but unless housing is fixed, other solutions simply do not work as well. If there are fewer houses than there are households, enhancing income transfers or accommodation supplements results in households competing more strenuously for existing rental properties, bidding prices up. Landlords may like it, but it doesn’t do as much to help the poor as we might like.

All data cited comes from this MSD report.

Haunted lands

Never buy the property next door to the cemetery. You'll be haunted. Not by ghosts, but by objections to any future re-development plan.

The resting place of legendary All Blacks coach Sir Fred Allen has been defended by the Environment Court, which has cancelled plans for factories next to a park-like Auckland cemetery.

Since early 2012, the unbeaten 1960s coach has been buried beside his wife, Norma, at Auckland Memorial Park in Silverdale.

He was a member of the trust for the perpetual maintenance of the 17ha park cemetery, whose managers appealed against an Auckland Council decision to rezone adjoining land for industrial buildings.

"Fred would have reacted badly to such a terrible proposal," said Alan Sayers, a friend for 65 years and fellow resident of Whangaparaoa Peninsula. "He thought it was a beautiful piece of land, gently rising, all-day sun, a lagoon and the trees being planted.

"A walk beside a lake is named in his honour. It would be such a shame if alongside this private, peaceful place there would be factories."

Any guesses what this will do to the number of objections raised for any planned new cemeteries?

I can understand zoning and externality worries about effects on those who still frequent the cemetery. I also think we should pay some heed to the wishes of the dead, at least to the extent that they paid for certain things to be done prior to their death. It would be a breach of contract for the Memorial Garden to pave over his grave. But I'm pretty sure that Allen didn't purchase an easement over all the neighbouring properties when he bought his plot.

HT: John, who will remain semi-anonymous, because he also told me that while Allen was a "damn good coach in the 1960s", he wasn't ever a great All Black. He also tells me that the ruling suggests "no one could build within 100 miles of Colin Meads' resting place." I am completely agnostic as to the relative merits of historic, current, or future All Blacks.

Still life

Cheryl Bernstein points out the ironies in the Environment Court's decision on the Cass landscape.

She writes:

In making his decision not to allow irrigation at Cass, the Environment Commissioner, Robert Nixon, noted that the proposal would not serve to change the actual landscape painted by Rita Angus. But he agreed that the painting had "powerful symbolism", and that the proposed land-use associated with irrigation could have a significant adverse visual impact on views from State Highway 73, around the area of the painting. Nixon cited the high landscape values of the area -- variously shared, historic and recognised "significant natural science, aesthetic, and Tangata Whenua landscape values" -- and declined the application to industrialise the landscape.

Art history 1: industrial irrigators 0, you might think. A rare decision. But it might equally be recognised that there is something of an irony to this. One of Angus's purposes in painting the burned-off vistas at Cass was, like many of the more progressive artists of her generation, to depict the effects of modernity and economic progress on the landscape. Speed, transportation, telecommunications, industry: all are present in Angus's modernist depiction of Cass. Her inclusion of telegraph poles and railway tracks reveals a landscape in the process of being altered -- made modern -- by its inhabitants.

... In citing Angus's painting as a factor in the decision not to allow industrial-scale irrigation in the Cass landscape, there is clearly a gentle irony in a work of art concerned with the effects of modernity stalling contemporary economic "progress".

It is too easy to veto others' uses of their own property; too many want to turn the country into a still life.

Maybe there was more merit to @LaraJeffery's tongue-in-cheek policy proposal than I thought when I first saw it.*

* Lara's tweet at the Australian Libertarian Society's conference this weekend came after discussion of Seasteading, a policy proposal that Australia encourage its elderly to retire at lower cost in the Philippines, discussion of drug legalisation, and frequent rambling interjections by grouchy older attendees. Her proposal consequently managed to touch all the bases.

Legal Bleg

RdU (the student radio station here) are going to interview me on Monday morning about the recent decision by Meridian to abandon seeking resource consent for a dam on the Mokihinui river. By way of preparation, I thought I would glance through the Resource Management Act. The thing that struck me was that nowhere in the legislation could I find any implicit statement of what the objective function should be when determining the outcome in a judicial process. Indeed, I could find no mention at all of benefits against which environmental costs should be weighed.

If this is the case, how does the consent process make determinations in cases where the environmental costs of the proposed activity are very small, but the benefits are even smaller; or correspondingly, what if the environmental costs are humongous, but the benefits are two times humongous?

But I am no lawyer trained in where to look for things in legislation, and the RMA is very large. Can anyone help me by pointing to where, if anywhere, benefits are mentioned in the RMA, and where, if anywhere, some attempt is made to set criteria for assessing trade-offs?

In praise of liability

Christchurch City Council helped ensure that a dozen people died last February. Ann Brower, who lectures at Lincoln, narrowly missed being one of them; she was the only survivor when an old dangerous building fell on top of the bus she was in. She catalogues the failures that led to her very close brush with death.

Regulatory failure at its most murderous made Colombo St run red that day. Responsibility falls at the feet of the building owners, Parliament, and most of all the Christchurch City Council.

In the Building Act 2004, Parliament encouraged and enabled, but failed to require, councils to enforce a minimum safety standard for known "earthquake prone" buildings.

Christchurch City Council chose a "passive" policy, of no strengthening requirements. Parliament failed to require, the council failed to enforce, and the owners failed to reinforce - in 1982, in 1991, in 2005, after September 2010, and after December 2010. For 30 years, the owners and the council did nothing.

On Day 1 of the hearing, the building owners blamed the council, for delaying demolition with the consent process. Council solicitors blamed the Resource Management Act, for requiring consents, and said they had no discretion in the matter.

Council's hands were tied, they said.

Yet, on September 14, 2010, a unanimous Parliament untied council's hands when it passed the Canterbury Earthquake Response and Recovery Act 2010. It gave the Crown power to amend or repeal any law, in the interest of public safety and earthquake recovery. Then they issued an order in council that expanded the situations in which council could demolish without consent. City council had the power.

...

The evidence, five centimetres thick, makes it searingly obvious that everyone knew what would happen. It was predicted but not prevented. It's not a case of trying, but failing, to protect public safety. Everyone failed to try, likely because neither council nor the owner bore the risk of deaths and injuries.

ACC bore the risks. I bear the scars. And 12 died. Under ACC, the government absorbs all liability, no matter who is at fault. So to the owners, safeguarding the building was all cost and no benefit. Since council failed to enforce building standards, why repair? Absorbing all liability creates a moral hazard. That's economist-speak for unwittingly encouraging risk by cheaply insuring against it. This rewards irresponsible behaviour by failing to penalise it.

The regulatory framework in place on February 22 forced taxpayers to subsidise risks that should have been borne by building owners and their insurers. Subsidies render unaffordably risky activities affordable, like repeatedly failing to reinforce an unreinforced brick building less than 200 kilometres from the Alpine Fault.

Without the taxpayers' subsidy of the risk through the no-fault ACC Act, many of the unreinforced masonry buildings would have been too expensive to insure, and the 12 who travel with me might still be alive. If there are to be subsidies, it is better to subsidise safety with public funding for earthquake strengthening than to subsidise risk.

I wonder to what extent other nested bits of regulations caused problems. I've often heard rumours about that some of Christchurch's charming deferred maintenance on older buildings stemmed from that getting consents to do any upgrading triggered requirements to bring older buildings up to newer code. And then this will interact with regulations on heritage buildings making any particular level of structural engineering upgrade far more expensive and time consuming. Small marginal upgrades that could have made small bits of difference for some buildings, if that's correct, then required owners to take on reasonably large upgrading costs. In worse cases, heritage regulations effectively barred earthquake strengthening altogether, although 603-13 Colombo was not on the Heritage Register. [Update below]

What's a way forward?

1. Require building owners to carry liability insurance for risks their buildings pose.
2. Establish Council funds, to which people would be invited to provide supplementary voluntary contributions, that would pay owners of buildings with heritage amenity value an annual subsidy for the positive contribution they make to the City. The burden of heritage preservation ought to fall on those enjoying the external benefits; that's best captured through payments by Council and voluntary contributions from high-demanders.
3. Abolish existing heritage protection legislation and fix the RMA - make it extremely easy for building owners to demolish or make safe their buildings. While CERA can stomp on RMA in Christchurch for the time being, I wonder how tough it is for an owner of an older Wellington building to get the permissions to fix it.

New Zealand building insurance markets seem relatively seized up; it could take a few years before private insurers are willing to start writing contracts on these risks. But that's no reason not to start the ball rolling. Announce this year that liability insurance will be required as of say 2018 and that the regs easing up on demolitions and building strengthening will be in place for 2015. That gives Councils a couple of years to start figuring out which buildings really merit subsidy and for owners to figure out whether their buildings are viable in a world in which they bear the risks of failure.

If the choice were between ACC and America's broken tort system, I pick ACC. But I'm not sure that we can't make improvements at the margin.

Full disclosure: Ann is a coauthor of Canterbury's Phil Meguire and, back before the earthquakes, sometimes joined us for drinks at Canterbury's Staff Club. I hope to be able to buy her a drink when the staff club is repaired and when she's again up for the trip out to Ilam.

Update: Ann emails:

Also it was a category 4 heritage building, meaning it was municipally (not regionally, nationally, internationally) significant and it was desirable (not important, very important, or essential) to keep it.  So under the city's own plan, they had the discretion to demolish without consent, even without resorting to the special powers granted by parliament.

Council staffers were far more rigid than the legislation required. Rigid structures collapse in earthquakes. We can't afford non-ductile Councils in earthquakeland. See also this excellent post from TheAntiplanner.

Ikea for Christchurch

Remember back in 2008 when RMA considerations stopped an IKEA from opening up in Wellington? They would have been too popular, ruled the RMA boffins - the traffic would have been too bad to let them open. One wonders how much lobbying by Ikea's crappy NZ overpriced furniture competitors was involved. As a side note: if you're moving to NZ, fill up whatever space is left in your shipping container with IKEA flat packs, then sell them here on TradeMe for double the price.

Anyway, Susan suggests an excellent idea. If Gerry Brownlee is a one-man zoning-and-regulation-overruling machine, let's get an IKEA for Christchurch. Stuff the RMA processes where IKEA competitors wail and moan about lost amenity value or increased congestion. Now's the time to do it.

Lots of us need to buy new stuff due to quake damage. Gerry could designate a pile of land around the airport as being some new business development zone such that farmers could easily sell out to folks wanting to put the land to higher valued uses. It's in the shadow of flight paths, so they've not wanted to allow it for subdivisions. An IKEA would fit in just nicely.

Gerry, make it so. I'm hungry for some meatballs with lingenberries. Please tell IKEA that no red tape stands in their way if they want to open in Christchurch in the next year.

IKEA: if you've any kind of Google Alerts on your name and Gerry doesn't get in touch, and if you were still at all interested in a New Zealand location, now's the time to move. Please? Please!

Susan gets the credit on this one - her excellent idea.

Resource consents

Shades of the Discount Brands case from a few years back, reported in today's Christchurch Press:

Resource consent for a planned Christchurch supermarket should be declined, a city council planner says.
...
Senior council planner Clare Revell said traffic volumes, noise and other issues could affect neighbours, while one of the supermarket’s competitors, Avonhead Fresh Choice, could lose $10 million in the first year.

"While the proposal will allow for more convenient access to a supermarket for some members of the community close to the proposed New World, it is my opinion that this may be at the expense of a number of others who currently utilise and rely on the Avonhead Mall as their existing district centre."

Recall that in Discount Brands, the Court decided that the amenity value of a proposed mall's competitors counted as a resource that needed to be protected under the Resource Management Act. Chapman Tripp noted:

When irrelevant trade competition effects become relevant amenity effects

Section 104(3)(a) of the RMA (previously section 104(8)) provides that a consent authority cannot have regard to trade competition effects when considering a resource consent application. However, the definition of “environment” in the Act specifically includes social and economic considerations affecting people and communities. So when do trade competition effects, which are irrelevant under the Act, become relevant social, economic or amenity effects?

The principle that the Courts have generally applied is that while they may not have regard to the direct effects of trade competition, it is legitimate to take into account flow-on effects that may be consequent on a down-turn in business in a particular centre. It is the consequential social and economic effects on people and communities served by the existing shopping centres that are relevant.

However in the Discount Brands case, the Court of Appeal considered that there would only be a relevant environmental impact which was more than minor if there was a “ruinous” or “major commercial and economic impact on existing centres”. The Supreme Court did not accept that such a high threshold was necessary or appropriate. Justice Blanchard considered that:

“...in equating major effects with those which were “ruinous” the Court went too far.A better balance would seem to be achieved in the statement of the Environment Court, …that social or economic effects must be “significant” before they can properly be regarded as beyond the effects ordinarily associated with trade competition on trade competitors.”

Chief Justice Elias provided further comment, stating:

“The effects on the environment in issue were adverse effects on the amenities provided by the existing centres. There is no basis in the plan for suggesting that any such adverse effect, which could be social as well as economic, must threaten the viability of the existing centres in order to be more than minor.”

The Supreme Court also gave a useful reminder that even the “significant” effects test is not necessary for amenity effects to be established. Justice Blanchard noted that it would be “necessary for a consent authority first to consider how trading patterns may be affected by a proposed activity in order that it can make an informed prediction about whether amenity values may consequentially be affected.”

The Supreme Court’s decision clarifies the position under the Act as to when trade competition effects will be considered relevant economic, social or amenity effects.

I wonder when and if National will get around to fixing this part of the RMA....