Relaxing urban limits will lead to sprawl and a less productive economy

The Productivity Commission's main recommendations for affordable housing will create sprawling, congested, and less productive cities, Green Party Co-leader Dr Russel Norman said today.

Dr Norman was critical of the Productivity Commission's final report on housing affordability which recommended relaxing Auckland's Metropolitan Urban Limit and leaving the current tax advantages enjoyed by property investors untouched.

"Relaxing Auckland's urban boundary, combined with Government subsidised motorways, will simply lead to further unsustainable urban sprawl and further congestion on Auckland's roads," said Dr Norman.

"Facilitating urban sprawl is not the way to build highly productive cities where people live close to their workplaces, can easily travel around the city on alternatives to congested roads, and can enjoy high quality amenities within walking distance of home.

"The Productivity Commission's plan will condemn people to spending large amounts of their time sitting in traffic, spending money on fuel.

"New Zealand already spends $8 billion a year importing oil, which will only continue to rise over time. The so-called Productivity Commission wants us to spend even more importing oil to fuel traffic jams on Government subsidised motorways.

"Smart urban planning can be achieved through rules that facilitate medium density development on mass transport spines, not more urban sprawl."

Dr Norman also highlighted the incongruous findings of the Productivity Commission with the Savings Workings Group and OECD's findings last year on the role a capital gains tax has in creating more affordable housing.

"The lack of a comprehensive tax on capital gains is keeping the dream of home ownership out of reach for many New Zealanders, especially first home buyers who struggle to get a foot on the home ownership ladder," said Dr Norman.

"The Government appointed Savings Working Group found in 2011 that house prices rose an additional 50 percent from 2001 to 2007 due to the preferential tax treatment of housing including the absence of a capital gains tax on housing.

"Likewise, the OECD found that the absence of a capital gains tax had significantly affected home affordability, widening inequalities in wealth, and leading to disproportionate levels of investment into housing instead of into the productive sector.

"The Commission is defending the status quo saying that the impacts of a capital gains tax would be 'unclear' and have 'significant practical challenges' to implement, yet New Zealand remains an outlier by not having a comprehensive tax on capital gains.

"A capital gains tax which excluded the family home would benefit the vast majority of New Zealanders through more affordable housing and jobs as investors take money out of housing speculation and invest in the manufacturing and export sectors."