Friday, March 07, 2014

Mike Greer and Spanbuild to do Factory House Builds

Great news. Factory builds are tighter, more accurate, use CNC machines instead of drug-addled hammer hands, and are manufactured under cover. Same as cars and boats, actually.

Yes, of course the factory builds will put some people out of work. That's precisely why the unit costs will be smaller, on the sort of volumes Mike Greer is talking about.

Another thing the article probably did not twig to is (and I'm guessing here...) the enterprise will be self-certified. No mo' CCC contracted-in inspectors needed for a Certificate of Compliance! Which is really only a ten-year warranty anyway. Heck, Mitsi cars offer that....

Now, to persuade the Clueless City Council not to levy the insane Development Contributions taxes, and we'd have ourselves a true game changer. Mike Greer (Press article coupla years back) estimated $75K per house for CCC charges. Roll That back too, and watch the punters roll through the doors!

Or, and sadly much more likely, watch from the CCC sidelines as Selwyn and Waimak take advantage, and continue to eat CCC's lunch....

Friday, February 28, 2014

MUL's, RUB's, Zones and other Unearned Capital Gain drivers

The thing the Clueless Councils have never twigged to, is the economic effect of a zoning squiggle on a map.

The Productivity Commission Final Housing Affordability Report estimates the rural/urban price differential for Auckland at roughly 10 times - P9 - a direct quote follows:

"In Auckland the MUL is a binding constraint on the supply of land for urban growth and has increased section prices within the city. This is indicated by the large differential between land prices 2 kilometres inside and 2 kilometres outside the MUL (Figure 0.9), which suggests that Auckland Council’s proposed compact city approach, based on containment of the city, undermines the aspiration of affordable housing."

  • Instant CG handed to the landowners of 'urban zone', the moment the squiggle is put into effect. Rural land prices (say, top-end dairy) run around $50K/ha. Urban undeveloped land prices, using the PC's figures, start at around $500K/ha.
  • The Urban land price (thus inflated) transmits successively across the market for the adjacent area, the suburb, and the city. After all, if you owned a shack on a formerly rural plot, for which you paid $17,500 in the days of yore, whaddareya gonna sell it for now that it's Urban zoned, and the neighbours on a subdivision where average house/land prices are $750,000?
  • The price is also transmitted directly via the operation of land agents (recent sales), city valuations (entire areas, also based on sales and rules of thumb), and hearsay (did ya hear what ol' Bloggsie got for that darned Shack???)
  • Every such price increment is a minor CG (for the accounting types, a Revaluation rather than a Cost asset component), and added across all sites, this becomes a substantial sum.
  • Now, what do we expect our FHB to buy? Why, a Modern Shack, at Urban land prices which inevitably contain a massive CG component (as distinct to actual rural-land raw costt). And pay for that via a mortgage, delivered by bankstaz eager for the interest revenue stream on that inflated sum, whereupon as much will be expended in Interest as was paid in Principal.

So ignoring, as the Clueless Councils do, the economic effects of artificial squiggles on maps, nevertheless has real-world results, which in the way of this wicked old world, fall mostly heavily upon the young, the poor and the start-ups.

The accounting equation is startlingly simple.
Starting Position:  Raw per ha cost of rural land:
50K debit, asset.  Other side: 50K credit - Landowners equity.

Event 1:   Revalued once urban boundary moved: 
Debit 450K Asset Value      Credit    450K landowners equity Revaluation Reserve  (this is Unearned, just a book entry)

Event 2:  Owner sells the plot:
Debit Landowners Bank Account 500K (which for youse non accounting types is a Credit on der Bank Statement - yum yum), Credit Asset Value 500K

The Asset is now zero for the original landowner, because it's sold to someone else.
(That somone else (assume paid in cash) will then have a Starting Position of:
Debit Asset $500K, Credit Bank 500K.
Note that this new owner has had to account, and fork over cash, at the cost price - this is how CG crystallises).

Original Owner's equity is still 500K - it's now just in the form of Cash, not Fixed Asset. In effect, the $450K Revaluation Reserve has been cashed up.....hence my characterisation as Capital Gain (CG).

Unearned by the original owner.

Untaxed by the Benificent IRD (if the landowner is correctly structured...).

Placed there by a squiggle on a map caused by Planning Fads in a Clueless Council.

Multiply this small but perfectly formed example, by the number of land plots in Auckland, to form some opinion as to the extent of the Unearned Capital Gain which resides within the Cost of Housing.

Placed there, unasked for, by the Economic Cluelessness of Councils, and their Zonerating and Plannerising Teams of Earnest Drones.

And we call this 'Godzone'......

Thursday, February 27, 2014

Roads, Cars, Tiwai and EV's: a Singularity approaches?

I'm always amused by the antics of the anti-roads brigade.  My initial reaction is simple:  don't these clowns realise that public transport (buses, taxis, and rentals) plus essential freight (food, exports, FMCG to yer local supermarket) all need - Roads?  I mean, whadda they expect - a Light Rail branch to every shopping mall?  Pallets of food (organic, naturally) carried hither and yon, on Cargo Bikes?   Bikes and rails chuffing up hills like wot they have in Dunedin, Wellington and Auckland?    Gaah....

So it is with Great Glee that I stumble across an article trumpeting yet another breakthrough in EV's which leads straight on to thoughts about an Impending Singularity here in Godzone.

Just the facts, ma'am.

  1. Tiwai Point smelter (Rio Tinto owned) is marginally economic:  it's COGS is around $USD16-1800 per unit, while the world price for the stuff hovers around $USD1900.  Once transport is factored in, it's hard to make a buck where SALES = COGS, no matter how much volume ya pump through. 
  2. Tiwai is a way of exporting electricity, as the NBR article notes.  It is around 1/7th (that's 14.28% for youse metric types) of total NZ generation capacity.
  3. Now, let's assume that Tiwai (disclosure, I carted  fabricated steel stuff there in ma Tonka Toy phase during TP's construction, so I have an interest in the show, plus I'm a Meridian shareholder) closes sometime between 2017 and 2022.  That releases a lotta electrons from potline slavery.  Hmmm.  What to use 'em for?
  4. EV's, of course.  My guess is that, over that same planning horizon, the likes of Zytek, the hundreds of Chinese makers of everything from forklifts to trucks to cars to scooters, the Japanese, not to mention Ford, Toyota, GM and Tesla etc - will have such volumes and width of product lines available, that EV's will be the Cars and Trucks of the new era.
  5. So we have ourselves a Potential Singularity here:  the EV cavalry (vehicles, power supplies, roads) ride into town at just the point where dino juice starts its inevitable price climb/volume degrade.
  6. Hmmm.  I'd been hankering after a small hybrid (Prius C or similar).  Mebbe I'll just wait and see:  run the existing fleet into the ground....and go pure EV, to heck with hybrids.

Wednesday, February 19, 2014

The stock reply to the Unaffordable Houses threads everywhere...

So, go convince your local Clueless Council not to do the two things that have done most to make houses unaffordable:

1 - draw zoning squiggles on planning maps, thereby ensuring a 10 times raw land price differential between one side of the fence (rural, no builds) and t'other (urban, build away). The difference is pocketed by the lucky land-owner, and guess who pays? Right, the eventual house/section buyer.

2 - levy development taxes on every section/house. Mike Greer, here in Christchurch, estimates direct Council costs as $75K per house/land sale. Guess who pays. Right, you, the house/land buyer, and with oncosts, interest, developers margin on top.

Of course, banks just love increased costs, too, but they aren't the ones who set this whole dreadful ratchet effect in motion.

The Economically Clueless Councils did.

There. Fix these two things, get Affordable houses.

Easy, weren't it?

Wednesday, February 05, 2014

The Christchurch rebuild.

Can Cera handle the Christchurch rebuild?

The rebuild has already happened in commercial terms.

The New CBD (the Sydenham/Addington/Middleton/Riccarton/Hornby/Airport arc, plus the block bounded roughly by Victoria St/Cambridge Tce/Avon River/BealeyAve ) are all humming away.

And, fairly precisely, because they don't have the CCDU and CERA trying to micro-manage these areas.

No commercial enterprise that's survived (and thanks to the Old CBD debacle, some have not) is terribly eager to get back to the Old CBD, and pay 40-150% more in rent.

So that leaves the Precincts as a Government-dominated area: Health, Education, Justice, IRD etc. There will, of course, be ancillary businesses around: lawyers and maybe accountants, and anyone else whose revenue streams flow primarily from the taxpayers generous teat.

And there will, inevitably, be the hospitality and tourism sectors, and with the establishments which seek to scratch the itches that that combination of Government drones, tourists, convention-goers etc, will have.

But the real commercial pulse of the city beats elsewhere...and has done for three years.

It's just taken the clueless empire-builders this long to notice.....

Monday, January 13, 2014

Families determine academic progress, and lifetime earning capacity

In a single, well-referenced article, George Will nails the causes of inequality.

Families.  And, to a lesser but still significant extent, peers.

So all of that blather about 'the Gubmint's gotta Do something about ', completely misses the point.  External agents (Governments, Councils) can do little or nothing to create a positive influence, because the roots of inequality, and hence poverty, lie deep within the oldest structures of them all:  the family, its immediate context (tribe, location, peers) and its culture (what we do around here).

Sunday, January 05, 2014

The Christchurch CBD Precincts

The road to hell is paved by Good Intentions (not an original thought) but let's count some of these 'intentions'.

- Commerce needs to be planned. By Planners. With Degrees. So let's hire a few dozen and see what they produce. And, as John McCrone notes, what they've duly produced is a whole bunch of pretty drawings, some spatial thoughts, and little else. Whereas, as anyone with commercial experience knows, a classic strategy for building a business is simply to start any old where, NOW. Then, constantly tune products, prices, places and propositions,. That way. people (customers) actually shape your business into something that is good for them, and in the process make you profitable. But this approach (which relies on short feedback loops, business nous and a willingness to abandon unprofitable ventures) is simply not understood by Planners, who have rarely run a business in their short, cloistered lives.

- Spatial Plans (the frames, precincts etc) have a nice logic to them, and feed the illusion that Progress is being Made. This is largely what Share-an-Idea turned into - precincts, compulsory purchases to enable a pure occupation of the spaces, and yet more pretty drawings. But, (and John, this is an avenue to explore) the precincts seem destined to be inhabited by Government (the only large tenant with deep enough pockets) - so Justice, Health, IRD, WINZ, and their accessories - cafes, meeting spaces, are destined to be the main occupants of said Frames. The collateral damage (NG gallery, the car yards, any business still hanging on in there) is already apparent. And because the per-square rents for these large chunks of land and their largish buildings are so large compared to those in suburban and new-CBD (Sydenham/Addington/Middleton/Riccarton/Hornby/Airport arc, plus the Oxford Terrace to Bealey Ave strip (Montreal/Victoria street, non CCDU...) locations, most potential tenants outside Government have opted for the lower rents and immediate availability there. This may change, but only at the rate of contractual review. And the high old-CBD rents, identified as the commercial killer three years ago by the original Sir Bob (Jones), will surely not have gone down in the meantime.

- the notion in John's article about the creatives going first is a partial and I would argue incorrect rendition of an idea better developed in Stewart Brand's (SB put together the Whole Earth Catalogue last century) 'How Buildings Learn'. Brand's argument was that creatives need cheap, uncared-for spaces to colonise, and bend to their own whims. This kicks off a cycle of what John's article rightly notes as 'Buzz', money starts to take an interest, the nature of the area slowly but subtly changes, the creatives move on to more old cheap premises and the cycle turns. But an overall regeneration has occurred.

These spaces, of course, (High Street was a local example) are precisely the 'old dungers' that fell down. And no-one is planning more old dungers - they will by definition be new dungers, and not cheap ones at that. So bye-bye creatives, especially since spaces where, as Brand notes 'the landlord doesn't care what you do in there' are not going to be countenanced by new landlords, CCDU, CERA or whoever. Imagine the EPIC building getting modified by its tenants (as was the famous innovation hub that started it all: MIT's Building 20). Hmm, not gonna happen, is it.

- the large Precincts run exactly counter to an interesting streetscape. Jane Jacobs, a half century ago, identified one key to varied-but-rhyming streetscapes: small plots, many owners, hence many ideas and the ability to put them into practice. The precincts are the polar opposite of this.

Finally, a quote from the great lady herself:

“There is no logic that can be superimposed on the city; people make it, and it is to them, not buildings, that we must fit our plans.”
The road to hell is paved by Good Intentions (not an original thought) but let's count some of these 'intentions'.

- Commerce needs to be planned. By Planners. With Degrees. So let's hire a few dozen and see what they produce. And, as John McC notes, what they've duly produced is a whole bunch of pretty drawings, some spatial thoughts, and little else. Whereas, as anyone with commercial experience knows, a classic strategy for building a business is simply to start any old where, NOW. Then, constantly tune products, prices, places and propositions,. That way. people (customers) actually shape your business into something that is good for them, and in the process make you profitable. But this approach (which relies on short feedback loops, business nous and a willingness to abandon unprofitable ventures) is simply not understood by Planners, who have rarely run a business in their short, cloistered lives.

- Spatial Plans (the frames, precincts etc) have a nice logic to them, and feed the illusion that Progress is being Made. This is largely what Share-an-Idea turned into - precincts, compulsory purchases to enable a pure occupation of the spaces, and yet more pretty drawings. But, (and John, this is an avenue to explore) the precincts seem destined to be inhabited by Government (the only large tenant with deep enough pockets) - so Justice, Health, IRD, WINZ, and their accessories - cafes, meeting spaces, are destined to be the main occupants of said Frames. The collateral damage (NG gallery, the car yards, any business still hanging on in there) is already apparent. And because the per-square rents for these large chunks of land and their largish buildings are so large compared to those in suburban and new-CBD (Sydenham/Addington/Middleton/Riccarton/Hornby/Airport arc, plus the Oxford Terrace to Bealey Ave strip (Montreal/Victoria street, non CCDU...) locations, most potential tenants outside Government have opted for the lower rents and immediate availability there. This may change, but only at the rate of contractual review. And the high old-CBD rents, identified as the commercial killer three years ago by the original Sir Bob (Jones), will surely not have gone down in the meantime.

- the notion in John's article about the creatives going first is a partial and I would argue incorrect rendition of an idea better developed in Stewart Brand's (SB put together the Whole Earth Catalogue last century) 'How Buildings Learn'. Brand's argument was that creatives need cheap, uncared-for spaces to colonise, and bend to their own whims. This kicks off a cycle of what John's article rightly notes as 'Buzz', money starts to take an interest, the nature of the area slowly but subtly changes, the creatives move on to more old cheap premises and the cycle turns. But an overall regeneration has occurred.

These spaces, of course, (High Street was a local example) are precisely the 'old dungers' that fell down. And no-one is planning more old dungers - they will by definition be new dungers, and not cheap ones at that. So bye-bye creatives, especially since spaces where, as Brand notes 'the landlord doesn't care what you do in there' are not going to be countenanced by new landlords, CCDU, CERA or whoever. Imagine the EPIC building getting modified by its tenants (as was the famous innovation hub that started it all: MIT's Building 20). Hmm, not gonna happen, is it.

- the large Precincts run exactly counter to an interesting streetscape. Jane Jacobs, a half century ago, identified one key to varied-but-rhyming streetscapes: small plots, many owners, hence many ideas and the ability to put them into practice. The precincts are the polar opposite of this.

Finally, a quote from the great lady herself:

“There is no logic that can be superimposed on the city; people make it, and it is to them, not buildings, that we must fit our plans.”

Friday, December 13, 2013

Four Thoughts re First Homes

The interlocked factors (I ranted aboot this yesterday here) are just too hard to tackle, even individually.
One alternative (which may happen anyway) is letting the whole schemozzle run into the inevitable immovable object. Tempting as that is to those with apocalyptic/Malthusian tendencies, it would cause a lotta grief to a lotta bystanders. Collaterla damage.
I see (feeling more optimistic today, y'see) four aspects which can, together, make a bit of a breakthrough.

1 - wipe the zoning nonsense. MUL's etc cause price differentials, which firstly crystallize as CG to the lucky owners, then propagate to all and sundry (who, after all, would sell their hoose for an agricultural land price when your despised but now cashed-up neighbour has just made a cool $300K cf his original purchase price?). Luvverly free CG all around - after all - we didn't buy the house to Sell it! - but of course paid for by you-know-who. Guibmint by fiat could accomplish this by lunchtime tomorrow if it put its mind to it. What Constitution?

2 - Factory builds. Proper QC, can be erected in hours not months on site, will standardise foundations etc (one of the beefs in Chch is the continuing dither over TC3 founds, which need individual geotech to establish), and being built to tight tolerances and under cover, are a generally superior product to yer average chippie-hammered together set of frames (one of which, just down my street, has been sitting out in the weather for six weeks now with no roof and no wrap - nice.)

3 - GST exemption to factory builds from accredited suppliers. This avoids the obvious problem with a blanket 'GST exemption for new builds' which will be an easy route to no-GST decks, pergolas, baches, new rooms and re-roofs - because as GST has to be taken on raw materials, who can police what they are used for? No such issue with factory builds, which will have a BOM, a nationally valid type certificate of compliance, and a serial number.

4 - The cultural attitudes and legal provisions which make such builds acceptable to buyers (who, let's face it, have wildly inflated expectations of first homes, fed by TV house pron, and egged on by the usual bevy of marketeers), and to developers who are rather fond of placing CCR's (covenants, constraints and restrictions) on their conditions of sale. If we are serious aboot FHB's, then fer crying in the sink, let them set up next to You.

Thursday, December 12, 2013

Hoose prices.

There is a Gordian knot here: a myriad of interlocking and mutually reinforcing factors. No use tackling any one alone.
  • Zoning which by prescribing allowable uses, immediately causes price differentials either side of a squiggle on a map.
  • TLA's benefit (with a time lag) in their revenue streams, as those squiggle-caused prices work their way into valuations. So are disclined to look any closer, let alone kill the Golden Goose which lays Rising Valuations.
  • Any price rise anywhere (an outlier sale, a zoning change etc) immediately propogates to the locality: suburb, area, city, province in a diminishing ring of value effect as the circle gets wider.
  • Any householder with suitably structured credit lines can cash up some increment of these value gains. Many do (ATM-bolted-to-house effect).
  • Banks encourage this: more collateral = more credit availability = greater interest revenue streams.
  • Land agents encourage the general rise in values: being commission-based, generally 2-5%, This promptly reinforces any general rise by cementing in recent-sales actual figures, on which everyone else in the loop relies.
  • Builders benefit from higher prices for existing homes, as it allows them to build to the high end of the market. There's no profit in a 90-squares kit erection, compared to a 300 squares architect-designed mansion.
  • Architects, now we mention them, are another Mr/Ms x% deal: the higher the general price level, the better their incomes get.
  • Building suppliers, that cosy duopoly, benefit from the revamps, the new builds, and the ATM-on-house syndrome. New bathroom? Just draw down that revolving credit line and spend 'er at the nearest duopolist.
  • ComCom is asleep at the switch, so there ain't no cavalry to ride in and Save anyone.
  • Building regulation ( codes tightening, LBP's needed for practically everything, Elfin Safety up the wazoo on sites- it's a Very long list) all has Good Intentions, but a few grand here, a few grand there, pretty soon, it adds up to Real Munny. From the end customer's pocket, of course. That's what that there Credit Line is for.
  • TLA's again, just to complete the loop (they, arguably, have set this whole mad shambles a-trundlin' down the track) clip the ticket to the tune of $75K per house/land package (Mike Greer, Press coupla years ago, Google it yer lazy sods). DC's fees, levies, consents, inspections. Nice racket.
  • And all this is, of course wonderfully rounded off by the rise on average incomes which supports it all. Or not, as the case may be.
But when yez stands back and looks at the whole sorry picture, and asks oneself - Where ter Start? - well, it has to be said, there's no one action, no one sequence, and certainly no painless way to do much about any of it. And zero political will - there's too many voters would get badly burned - many of them the working class. After all, who puts up the scaff, staffs the duopolies, swings them hammers, transports stuff, induces hapless bank customers to extend their indebtedness, mines the steel, etc? S'not the 1%.

We'll just haveta let this runaway train hit the buffers at the end of the track.,

Because all tracks (Thomas excepted, perhaps) have Ends.

Ah, but When?

Sunday, December 08, 2013


The Pope has ruffled a few feathers....

Many of the more history-aware readers of the early capitalists (Smith, Ricardo etc) have pointed to the societal value systems that originally surrounded the practice of capitalism itself.  As they were to an amazing extent Scots (a useful text here is Herman:  How the Scots invented the Modern World ) this world-view incorporated Calvinism and the rather severe religious affiliations that arose out of this.

Those Christian ethics informed business for a good chunk of the first century of the Industrial Revolution, a point made by such recent commentators as P J O'Rourke.  Smith's earlier work, for example, was 'The Theory of Moral Sentiments'.  Along with the 'Wealth of Nations' and a never-published third tome, Smith had intended the three to be read as a triptych of sermons.  Yes, sermons.  That's why the damned books are so wordy.

That intimate association between a stern but ultimately sympathetic value system, and the practice of industry and trade, was somewhat broken by the late 19th century (vide Engels and Marx), and finished off comprehensively by the mid-20th, as competing religions which were essentially (as David P Goldman argues) tribal/nationalistic, brought different value systems to great swathes of the globe.

We are still reeling from the turbulence this competition generated, and the virtual disappearance of organised religion and its value systems, from any association with trade and commerce, has led to two observable aspects of the zeitgeist:

1 - A Chestertonian plethora of quasi-religions (from AGW to enviromentalism in general, not to say Marixism, Leninism, Pan-Africanism, Third caliphate Pan-Muslimism) which all demand faith, have ways of dealing to apostates, and none of which have anything like the spread or ritual attractiveness of the old ones.
2 - a value-free trade and commerce, which tends to an explicit disavowal of any larger pretensions:  societal good included.

The first thing is, given that we have dug ourselves this hole, gotten into it, and burnt the ladder, how do we get out?  And the second thing is, do we have to hit some sort of wall (sorry about the mixed metaphor, we are down a hole, must have walls down there too) to wake us up enough to build a new ladder, and climb out?

And just being nice to Gaia, alone,  won't cut it.  That's another faith-based initiative.  But just like the new Pope may have been trying to warn us, we may have to be much, much nicer to each other first.

Or, possibly, much, much nastier.  Because a whole lotta people will want to jump on that ladder to a Better Life, however defined.  And the laws of Ladder Physics still apply.

Wednesday, September 11, 2013

RMA Reform?

Amy Adams makes a key point:

"When the RMA becomes the basis on which Councils look to
• Take their own stance on national laws they don’t agree with or
• make rules about how big the front windows can be in our homes, or
• the placement of lounges within houses or
• whether a kid can build a tree house...
…we have to ask whether that really is the enabling, effects-based regime that was to allow almost anything to occur as long as the effects on the environment could be properly mitigated, that the original architects of the Act promised back in 1991."

The RMA has been thoroughly subverted by a noxious combination of:
  • old spatial-style Town and Country Planning Act zonerators and map-squigglers. Hence the MUL's, RUB's etc which have massive economic effects but which are sacrosanct under the present regime.
  • NIMBY's who, without needing to put up much in the way of actual arguments, were able until quite recent decisions re costs, to drag out the consenting process by years and years. This has led, quite inevitably, to the EPA which end-runs this nonsense by taking some decisions up and out of the clueless hands of local authorities. Not that a centralised Gubmint bureaucracy is likely to perform much better, but at least they have less spatial-planning deadweight.
  • A fundamental failure to implement anything resembling the effects-based tests which should have been applied from Day 1.
The effects-based tests Amy refers to are actually much sterner than the zoning-and-rule-based processes which persist now. But this failure has lead directly to the tyranny of zoning: no mo' living over the place ya work at, no possibility of e.g. OAP's living over retail or indutsrial buildings (entertainment during the day, watching over the night), no possibility of building a high-rise apartment in Brighton because the zones didn't permit it, but ya can't see over the dunes at three's a long and extremely sad list.

It leads fairly directly to:
  • 'industrial' dead zones which are an extremely inefficient use of resources (commuting, buildings used 33% of the day, security and miantenance issues)
  • illegal actions (it's amazing how many suburban businesses flourish where owners have high fences, good relationships with neighbours, and quiet work habits) which does not do wonders for trust in officialdom
  • a complete inability to police truly noxious activities (tinny houses, P-labs) - after all, they are breaking no Zoning laws because there isn't a Tinny House Zone on some best to turn Nelson's eye...
  • massive economic deadweight costs as SME's either struggle through protracted and expensive processes to achieve some minor tweak to some squiggle or zone, or just give up in disgust and reduce activity to suit the strait-jacket

YMMV, and other common taters may have different views on the reforms, but there is no doubt in my aged mind that the old RMA is a mare's nest, a fabulous feeding ground for Legal Eagles and other Birds of Prey, and needs a fundmental re-think.

Tuesday, September 10, 2013

ACC Deputy Mayor on the Housing Accord

“I’m very comfortable that we haven’t started to bleed out into the countryside.”

Ms Henny Pulse, chair of the Auckland First Unionaterised Council / Unitary Planners (AFUCUP) made this astonishing statement in response to the Central Government's total steam-rollering of the Auckland First's "Unit Rabbit Hutches plan for Urban Densification, Train Sets and Fees/contributions/levies/but/not/rates! funding".

Your humble reporter reminded Ms Pulse of the thousands of 1-10 Ha lifestyle blocks in the immediate vicinity of Auckland, which have served as the expansion outlet for their inhabitants, blocked from easy expansion inside the MUL/RUB/squiggle-du-jour.

"Pouf" she replied, and waved her hands in a gesture which seemed practised.

"We don't concern ourselves with those who choose to escape the City and go play Good Life in the sticks."

"We are here for the downtrodden masses inside the RUB, and we plan Lotsa Affordable Housing for them as part of this Marvy Plan."

"Once, of course, we reach deep into the pockets of those Awful Land-bankers, Greedy Developers, Cowboy Builders, and of course the Marketers, and extract some long-overdue Fees/contributions/levies/but/not/rates! funding from their capacious pockets. We term this 'robbing the rich' but I probably don't want That on the record.."

Your intrepid reporter, hastily concealing the return trip ticket to his Pukekohe lifestyle block, then ventured a follow-up question.

"But, shurely, Ms Pulse - may I call you Henny? - the immediate effect of any such development tax will be to add, and cost-plus at that, to build costs, as these types simply pass it on?"

Ms Pulse paused, then answered carefully.

"Why, we had anticipated That, of course. We've entered into an arrangement with an un-named but gigantic building company as part of our Accord, and for a Modest Fee, this company will have exclusive rights to all such development for three generations or Ragnarok, whichever shall come first."

"This will of course ensure low unit costs, a good deal for our downtrodden masses, and did I mention lotsa Fees/contributions/levies/but/not/rates! funding for our poor yet sagacious Council."

Your by now aghast reporter started to mumble about Cartels and Monopolies, but the Pulse had by now departed, exercising her arms in what seemed like a parting gesture, and counting to herself - one Million and One, two Million and Two, Three Million and....

Tuesday, September 03, 2013

Commissioners to administer challenges to TLA Development Contributions.. Egads, Transparency and Appeals. Will the madness Evah stop?

The Left Honourable President-for-life of the Union of Local Gubmint Drones, Larry Fool, has slammed the introduction of Commissioners for the oversight of Development and other contributions.

"Since time immerorial - well, actually, since that lovely Sandra Lee handed TLA's the power to make charges up for 'social and cultural wellbeing' and other chimerae, back in 2002, but I digress - Local Gubmint has proved a marvellous steward of the ratepayers money. We've provided wonderful festivals and entertainments, had a busker on most street corners, and provided Art in every Council-owned chunka dirt that's possible. We've brought happiness and contentment to many lives.

And now this heartless, heedless Gubmint is gonna bring this marvellous outpouring of human creativity to a crashing halt.

And the best part about the Development Contributions which funded quite a lot of this merriment is that Ratepayers didn;t Pay for it! Greedy developers did! "

When your intrepid reporter pointed out to the Fool, that DC's are a cost component of either homes (if residential), businesses (if commercial) or industry (if - er - Industrial), and that therefore by the simple notion of Cost-Plus Pricing, the homeowners are gonna pay anyway via increased housing costs, increased commerical prices or less industrial jobs, he waved his arms airly.

"I;ve practised this arm-waving for - oh - about a decade now. Good, Aren't I?"

Your scribe reminded him that there was actually a question implicit in our last exchange.

Larry waved his arms again - a smooth and clearly well-choreographed gesture.

He narrowed his eyes and answered slowly.

"Well, put it like this. Try and find a Source and Application of Funds statement in our voluminous Financials, which clearly sets out in one place, who pays DC's, and how they are used. There's yer Answer!.

Now, must be off. For some completely unconnected reason, I seem to have a whole pile of Subdivisions to assess for Contributions-that-definitely-aren't-Rates-oh-no-never.


Wednesday, August 28, 2013

Local Gubmint receives another planning shock: complulsory 30-year asset horizons

The Left Honourable President-for-life of the Union of Local Gubmint Drones, Larry Fool, has slammed the new 30-year planning horizon to be legislated for tomorrow lunchtime.

"This is a heedless, expensive and totally unwarranted intrusion into local democracy", he opined.

"For half a century, Local Gubmints have not worried about this sort of expensive overhead. We maintain infrastructure as best we can with the pittance we receive from an uncaring public by way of rates, fees, levies, contributions, charges, and not to mention dog registration imposts and library fines. We are very proud of the fact that we manage to do so much with so little."

When your intrepid reporter reminded the Fool about a string of infrastructure accidents over the years - Abbotsford (leaking storm and potable water, at the top of a clay face), Wellington (leaking pipes at the top of inadequately consented gully infills), the occasional sinkhole when old, brick-barrel sewers unaccountably collapse, the more occasional water-main fountain when the termites stop holding hands, the frequent discharge of raw sewage into estuaries, rivers and harbours, and other small incidents, the Larry was quick to defend the status quo.

"Why", he said, splutteringly, "It isn't Every council who can actually afford to mount a cellphone camera on a child's radio-controlled Cat D9 model, and photograph every last blooming pipe. This gear is Costly, takes teams of highly paid engineers Months to work through the images, and we can never be sure just where the so-called cracks and collapses are when we start digging, so we just start any old where.

We much prefer the time-tested, age-old methods: we simply rely on our trusty ratepayers to drive into the holes or over the slips, or to notice nasty smells or the sudden absence of a key hillside road, they then tell us, and then we blame the dairy farmers for everything."

The interview was, unfortunately, cut short at that point. It seems that the Fool had parked on a double yellow line, had been towed, but the towtruck and its precious cargo had then fallen down a large sinkhole caused by dairy farmers.

We promise to resume transmission once the offending agronomist has been dealt to.

Sunday, August 18, 2013

Development Contributions to be limited

Transcription of Lawrence Yules' (Chair, Local Gubmnint Apologists' Association) remarks (remember I did predict wailing and gnashing of teeth...) re the shutting down of their Devepment Contributions rort.....

You mean we gotta treat our new residents as Customers?

C'mon, folks!

For years, we have managed to treat them as Serfs, Minions, and Cash Cows.

We'd like to keep up this proud tradition.

By inventing ever yet more Artful (pun, geddit?) charges, fees, levies, contributions, and please note I did NOT say back-handers.

And also please note that None of this affects Rates up till now! Because our elected representatives (we send 'em a postcard each Christmas to make them feel a bit noticed) keep an Eagle Eye on the Rates roll-up, and it's darn hard to get anything clever in there.

So we just have all these other revenue buckets - a one-liner on the Annual Report, if'n' yer really lucky and we don't hide it all in a Note to the Accounts! "Other fees and charges' is the name, and there's so much in there that the poor Councillors (who are not, I must confess, the most financially literate bunch in the burg) just swaloow it whole. They probably think it's all Parking Meters or something.

And we have had a Glorious Tradition (well, decade, really) of accumulating yet more costs for which we need Revenue Streams - Rivers, actually. Buskers, Community Development graduates, City Planners, MUL-Measurers, Business Development Assisterators and a host of other Vital Individuals, who, BTW, all need paid next Thursday.

Someone's gotta stump up - and who better than the first-home-buyer, who is so darn grateful to get their own leetle Castle that they'll crawl over broken glass to kiss their bankster's cheeks and sign away their next thirty years of discretionary moolah.

Why the poor suckaz - whoops - I mean these Fine Upstanding Citizens (we have a TLA for them but that's BTW) don't even realise that (as Mike Greer has said re Christchurch) $75K of their new house and land costs is solely down to the Council - we salami-slice it and disguise it sooo well. We Certainly don't give 'em a detailed itemised invoice....

But, and I give this Government clear notice - if we Have to start doing stuff transparently, then Rates are Gonna sky-rocket. As we are forced to disgorge all the hidden revenues outta them hidden Buckets and put 'em in Rates.

Well everyone will know who to blame - that's right - the Government!

Like I said, fair warning!

Well, can't hang around all day justifying what we've done since time immemorial, to you bunch of picky inquisitors.

Besides, I can already smell freshly minted Plans in that there Inbox - time to Have some More Fun! While we can....


Sunday, June 23, 2013

New Christchurch International Convention, Gambling and Pleasure Centre Announced

Sir Very Clownley, ably flanked by Dodger Button with Hob Carker bringing up the rear of the entourage, today swept into town to announce the imminent construction of the VOSCO-WalPart-QuantityBins-Yakuza-BurstRail International Convention, Gambling and Pleasure Centre.

'We are pleased to have been able to secure the services of this prestigious international cartel, for our fair city', Sir Very said by way of introduction.

'Not only are we going to enjoy the patronage of a vast number of international gamblers, convention-chasers, organisers, and 1-percenters, but we have been able to negotiate a number of additional benefits.'

' For a miniscule 10% of the facility's turnover, the Yakuza-BurstRail part of the consortium will push through an Airport-CBD light rail system which will incorporate the much-talked-about University-to-CBD link'.

'So, not only will international playaz be able to whizz in and out, as it were, but the fine young students of our esteemed Halls of Learning will be able to partake of the multitudinous delights of this facility, and perhaps to pay off part of their vertiginous student debts via a flutter on the tables, or of course by taking up one of the many employment opportunities offered. Waitpersons, croupiers, security, IT, chefs, drivers and many other menial if not actually horizontal positions are envisaged.'

'The bulldozers for this rail extension are due to start Thursday next week, so if you are a Fendaltonian, and the house next door suddenly crumbles before the onslaught of a large yellow machine, you'll know what's going on. It's called ConsultationLite.'

'The rates, employment, choo-choos and general ambience offered by this proposal were simply too good to walk away from.'

' So we haven't.'


(I know We will - we are all Honarary Life Members)

Where we sit....

 I'm a conservative in most matters now - markets work - why supplant them?

But we don't and never have had a 'free market' - it's always been a Mixed/Hybrid beast, and the early religious restraints and latterly Gubmint codes and regulation, are needed to keep everyone honest. Ish.

Markets work just fine and have done since the dawn of trading around 4000 years ago: they are nothing but a switchboard between people with something to sell (like the copper miners at Great Orme in North Wales) and other people with something to sell (the traders from the Mediterranean who travelled all the way up there with foodstuffs in amphorae), the former lacking what the latter have in surplus and vicky verser.

A massive plus in markets (gentle commerce, in Adam Smith's phrase, recycled by Pinker in ''Better Angels') is that they innately if slowly build mutual trust and kick off a Civilising Process. We're at the far end of that now (see below, it is possible to discern a De-civilisng process at work in our fair land...) so all this progress is somewhat taken for granted. But the main alternative, which tends to be control by a (male, quelle surprise) elite, by fear, violence, repression and tyranny, has been the default setting for most of modern humanity's (last 50K years) history. And it is frighteningly easy to push that 'Factory Reset' button: PNG being a current example.

Culture has almost everything to do with everything, as any competent manager will attest. A common case-study in MBA-land is the new manager, determined to change culture in a business, firing, fairly much randomly, 10-20% of staff to kick-start the change effort. It puts down this marker: 'Things are gonna Change around here'. But what we have in funky l'il Godzone is a set of two cultures vying for the minds of the young.

There is or was a much older, formerly better-civilised European-derived culture which in its heyday valued adherence to widely held norms, reinforced by a religion that had itself shed most of the excesses yet retained the ability to bind (religare). It valued deferral of reward, hard work, a spiritual journey based on an individual's response to wise books, and a self-introspection that gradually but firmly expanded the circle of empathy, squeezed out excesses like torture-executions, rewarded simple states of being like marriage and the delight in children, and mandated fair dealing and trust in commerce.

But this culture cannot now be said to exhibit much if any of these qualities: viewed from that high point, it can be said to be degenerate, hollowed out, unattractive, and failing.

The other culture is of course indigenous - a communal, pre-literate, tribal culture which has been propelled over 10-15 generations into close and unrelenting contact with the above. Its historic version values Tribe over Other, strength and dominance over compassion, and in general exhibits all the hallmarks of the Factory Default setting which we all came from. For a primer: Nicholas Wade's 'Before the Dawn'.

The mixing has been as one would expect, very patchy. We are left with a decayed and decadent Euro fragment, an abiding and unrelenting distrust of religion or indeed any other dominant binding philosophy, a present-centred mind-set which steeply discounts the future, a Partner culture with distinct tribal reversion tendencies especially at political level, attitudes generally which tend to favour dominance and lack of empathy over the alternatives of gentle commerce and trust, and a financial utter dependence on intensive food production for a newly dominant China, itself flexing international muscle, and approaching carrying capacity in order to do this on our land.

So, 'culture matters', and 'incentives matter'.

Tax only affects the latter, and I somehow do not think that fiddling with IRD codes and deciding whether and how to tax who for what, is gonna tackle the wider issue of Culture - what we do around here.

Now, if only it were as simple as firing 10-20% of the population , to convince the rest that "Things Have Changed'.

Bob Dylan sang:
'People are crazy and times are strange,
I'm locked in tight, I'm outta range,
I used to care, but
Things have Changed'

I don't think it's that simple. Especially not on such a small set of islands....

Tuesday, June 11, 2013

What Local Governments Do

New Central Gubmint legislation could "potentially neuter a big part of the what this country's local governments currently do"

Which is (e&;oe):
  • restrict land supply against a rising demand thus causing ECON101 price rises
  • as the first side effect, handing a luvverly CG to a selected lucky few landowners
  • as the second side effect, watching as that vastly increased land price for undeveloped land instantly transmits itself across all comparable developed land plots in the adjacent market, thus multiplying the initial if localised CG thinly across that entire market.
  • as the third side effect, handing banks and financiers a vastly increased interest revenue stream, as eager or desperate buyers borrow to buy said plots (existing or new)
  • effectively lock out new entrants to the housing market
  • effectively transfer development to the many thousands of lifestyle blocks outside the MUL/RUB or other squiggle on a map
  • levy fees, contributions and other costs upon any and all attempts to develop the land or densify existing properties
  • add multiple cost layers to any attempt to develop, densify or otherwise improve properties in a way which attracts a resource consent (a sampling: pre-application consult, require engineers/surveyors/feng shui consultaterations, inject time into processes, impose conditions during the process)
  • display a breathtaking ignorance of such basic economic fundamentals as supply and demand, or the time value of money
  • make decisions, plans, policies and processes which (what else) ignore economic fundamentals
  • act rilly, rilly surprised when one of the following occurs:
    • massive public opposition to cherished policies and plans
    • first home buyers throw in the towel
    • developments Unexpectedly are cancelled or deferred (Always the U-word!)
    • people don't want to live where and how the Planners want them to live

For the life of me, I just cannot imagine why a Gubmint would want to clamber in and alter Any of the above.....

Monday, May 27, 2013

Modular Housing, Factory-produced.

Factory produced housing components have been around since the 1870's (look at early Kauri Timber Co catalogues....) but the transition to producing sections is painfully slow (roof trusses, some pre-built simple walls, some exceedingly simple modules).

Benefits of real production-volume and high-design-quality builds of this sort would be:
  • Real QC. On the factory floor. Instead of which we get 'Inspections' on site by underpaid, ratty, barely competent TLA staff, who do however have the fulll power to halt the job until that weather seal of bracket or widget is tweaked, adjusted, or otherwise have Yet Mo' Cost sunk into it. And the Next 'Inspection' will be by a different minion, with different ideas, but just as much Power to Obstruct.....
  • Real assembly, by staff who can be closely supervised, timed, who use highly automated tools, and a whole lotta CNC wizardry. Instead of the slapped together on site approach, by drug-addled hammer hands, loosely supervised, but of course wearing HiVis, and wearing Approved Safety Hats (tin-foil lined on Karamea and Waiheke jurisdictions) and Steel-capped Boots. Talking around with earthquake repair guys, it seems that having floors 30-40mm out of level, gibbing ceilings that are the same out of square, etc, is par for the course in new on-site builds....
  • Real design. Conduits and designated ducts for all services (black/grey/potable water, electrics of various voltages (solar, 12vDC for marine-style LED's, 400V or 230V AC for appliances, workshop etc), gas, refrigerant (for heat transfer from fridges, driers, hot water etc to where it's needed) and so on. Maintainability is just so poor (because not designed in) in most current housing. Doesn't need to be this way.
  • Real cost advantages. High-volume, yet customised production lines. Low, but highly skilled, labour requirements. Low margin possible if enough volume passes through. Possibility of deals with financing to provide an end-to-end type cover, and cut out the plethora of middle layers (ranging from the TLA Pre-Consent Discussion session (un-needed), through architects (replaced by CAD design, imported electronically), quantity surveyors (replaced by a BOM), and of course those Hammer Hands (and their local Tinny House).

But this approach will be thwarted, obstructed and outright blocked by the usual suspects:

  • TLA's and employee guilds, who are not gonna let the real 'inspection' pass out of their clammy ineptocratic hands, into whole-product factorys' certification....
  • TLA's who see a luvverly lucrative revenue stream, produced by demanding Extra Time Everywhere at an Exorbitant Hourly Rate, threatened.
  • Building Standards wallahs, who will have about as much to do with eventual housing quailty as happens with vehicles or boats (Peter Cresswell's favourite example)
  • The materials cartel, who have a really nice lock of the individual-component market, and who will find ways to either take over or block any such real 'competition'
  • I'm sure eager common taters can thinka more along these lines.

So I have a confident Prediction.

Nice thought.

Won't Happen.

Thursday, May 23, 2013

A Tale of Two Scrapers

A follow-up piece - how Did I manage to Break a Scraper in Half?

First up, I was working for the Copulating Spiders - the ol' MoW insignia. The gear was probably 20+ years old (in 1972-3), and instead of a proper Cat tow-pin between dozer and scraper, MoW being the cheapskates they always were, had thoughtfully supplied a shortened piece of truck axle. Didn't quite fit the hole - rattled around a bit.

A fully loaded scraper could hold around 15-20 cubic metres of spoil (roughly a 3x3 floor pan, and could be crowded in good stiff clay to 3+ metres high) so I guess total weight could run 35-45 tons all up. Two winches needed for the two cables: one for blade height, one for apron trim and material eject/spread.

The usual round (this was topsoil stripping, to a temporary heap) was run the dozer in high gear to the pickup, change (on the fly, yes, possible) to low, drop the blade into the material, let the material crowd (if it would) until it spilled over, raise the pan to travel position, crawl back to the heap and up it, wind the dump winch which first raised up the front apron and let the material out, and then pushed the whole rear wall of the scraper forward, ejecting all material. Bring 'er back to travel mode, high gear, off the heap, wash, rinse, repeat. 50-100 times per day - an average round was perhaps 3-5 minutes.

Working this gear gets quite repetitive, so the old mind tended to wander.

So it was, coming off the heap in high gear, with quite some surprise that I was awakened from my reverie to hear both winches screaming their heads off. Turned around to ascertain the cause.

Oh dear.

The tow-pin had sheared. The scraper was in two pieces, quite a few metres back from the accustomed position. The cables were running out against the brakes, hence the screams.

The scraper, empty but running down a 20-degree slope, had promptly dug in the towbar to the ruffled surface of Gaia, run clean over it tilting it around 180 degrees so it ended up facing backwards, and comprehensively foobarred the ball joint that joined the front set of wheels plus towbar, to the rest of the scraper. Not a good look. A two-piece scraper.

What to do?

Uncouple the cables from the winches (hammer and wedge), run back for the dozer blade and hook it on, string its cable onto one winch, and proceed to move the pieces out of the way of the heap.

Then confess all to the bosses, but point out that a Real Caterpillar Towpin would be henceforth a Good Idea.

We ended up (days later, this was Gummint work, y'unnerstand) going way out to the backblocks of Fortrose, and bringing back another even more ancient scraper, with which I (lopsidedly - darn thing had two different sized tyres on the back, which controls cutting attitude) completed the earthworks.

With (what joy!) a Real Caterpillar Towpin which appeared, along with the immortal words 'Let's see if you can manage to f... This one Too!'

A little addition, about Elfin Safety.

The old D7 had zero electrics: it was a hand-crank petrol pony motor start.

But the crank handle was vertical.

So, the Elfin Safety issues to start the beast:
  • stand, in yer gummies, on an iced-up top track, in a typical Invercargill frost.
  • prime the pony motor and offer up a small prayer to the appropriate deities
  • Insert the crank handle from on top of the bonnet (about chest height IIRC)
  • Pull it gently around to compression on the pony motor.
  • Take another purchase on the crank (no thumbs around the handle...) and mutter another smaller prayer.
  • Pull the crank smartly towards you.
  • If lucky, pony fires and runs. Trim it, engage the clutch and turn over the main donk.
  • If not lucky, pony backfires and pulls you straight into the edge of the bonnet (curved, fortunately).
  • If really not lucky, bounce off bonnet, slip on track, clobber appendages on the way down to the cold hard ground.
  • If inclined to Push the crank to start, expect the backfire to merely throw you off of the track. No bonnet edge. Take yer pick.

Ah, and they call 'em the good 'ol days....

Wednesday, May 22, 2013

Ancient History ( a slice of a younger , machine-operator Waymad)

The context is that common taters aver that a residential subdivision needs a lotta Plannin'.


A much younger Waymad built the rough levels in a section of an entire subdivision (Newfield - the hilly bit, Invercargill) with a Cat D7 and a cable scraper (which I broke in half, but that's a story for another day.) Yes, there were Plans - and a few sticks in the ground, and the occasional surveyor with a dumpy, but nothing a tech drawing refugee from the local Technical College could not handle. Strip the topsoil out to a temporary heap, cut out the main road and footpath levels to 20mm or so, level the sections, respread the topsoil on siad sections, done. Services, K&C etc, laters. Not a lot to it.

Te Anau useta be grass verges and gravel tracks, off the main drag. Making streets was a two-man operation: a grader with towed vibratory roller, tractor to buzz around, sweep and tow, contractors for K&C and gravel, sealing last. Services (water only) already there. Not a lot to it.

We useta seal 20+ miles per year, from a starting point of average County gravel roads. One rough-cut grader, one do-everything-else grader (Cat 112, me), contractors for gravel, make yer own topcourse from screened river run and clay from a likely local roadside bank, excavated with - what else - a grader. No plans. No surveyors (a level bolted to the front cab rail in the graders was all we ever used). No engineers (except if they fancied a long drive into the sticks, which was not often). Experience, feel, a taste for the right clay, and the knowledge that every single person ya met was a ratepayer, who Paid you, and who Expected Service. Not a lot to it.

Them were the days, so you can see why I get a little excited about the current ways: 12-tonne diggers everywhere, mostly at idle, Elfin Safety up the wazoo, a whole lotta jobs for the unskilled, and 'a lot of planning needed for a subdivision'.


A lotta Cost fer a subdiv, more like......

Friday, May 17, 2013

Lifestyle Blocks

Well, lemme just tee up the Broken Record for another spin. Right.
RPM - check.
No dust on needle - check.
Lower needle - check

The popularity of lifestyle blocks is a direct response to the relative unavailability of, and exceedingly high price of, serviced urban plots.
There are roughly 175,000 lifestyle blocks scattered around the larger cities in NZ.
Auckland - every direction.
Wellington - the Wairarapa,and the West Coast (Plimmerton to Foxton)
Christchurch - all directions
The agricultural production from these blocks is negligible.
The commute distance for these blocks is typically 50-80km.
The average lifestyle block is of the order of 1 to 3 ha (a typical urban plot is 0.06 ha or 600 sq m)
The average lifestyle block is serviced as to power and water, but disposes its own sewerage on site.
Few lifestyle blocks have public transport connections in a reasonable distance, of a type suitable for business commuting.
Most lifestyle blocks therefore have heavy dependence on private, fossil fuelled vehicles, with low vehicle occupancy.

And yet most common taters wail about the Weevils of Urban Sprawl......and uphold the Sanctity of MUL's, RUB's and other squiggles on Planning Maps.

Funny ol' world, innit.

Thursday, May 16, 2013

Green reaction to Whiteware Initiative

Mr Normal Russian, spokesperson for the Alliance of Indigenous Laundrettes (AIL), had this to say about the initiative to bulk-buy whiteware for lower-decile consumers:

"We absolutely oppose this initiative, for seven reasons.
1 - the whiteware is made of plastic and metal, substances that don't occur in that form in Nature.
2 - the whiteware is foreign-made and denies Aotearoans the chance to make their own (from substances other than metal and plastic, of course)
3 - the whiteware is dangerous - there have been many - well, dozens, OK, one in Aotearoa - fires and explosions caused by the operation of these devices
4 - the whiteware uses electricity, which now has to be bought from Rich Aotearoans since the MRP float, further perpetuating the inequalities in this allegedly egalitarian land.
5 - the whiteware is to be made available for private usage, which denies the possibility of community, joint or shared use to the recipients.
6 - the whiteware is to be financed using dollars which have been earned by the export of Dairy, Meat and Oil - all products which to be perfectly Francesca we would all be better off not producing.
7 - the whiteware is in any case unnecessary - there are many rivers throughout Aotearoa full of Large Stones , which in combination can be (and are to this day in many, many countries) used to launder clothes quite satisfactorily.

There are many, many more reasons, but we regard Seven as a Particularly Significant (if not Magical) number, so that's it.


Saturday, March 09, 2013

Rates required

Every line item in a Council's Long Term Plan (LTP) , rolls up into one of several main buckets.

The political-dynamite bucket is Rates Required, because the media and the commentariat know exactly what that means in economic terms: the Council's Long arm, in Your short pocket, after your stash.

So they will move heaven, earth (and every other plausible line item which requires funding), into Some Other Bucket. Leaving Rates Required as a high but explainable figure.

The trick is to keep the punter's mind on Rates Required, because the machinations in 'Fees and Charges', or 'Contributions', or 'Other Revenue', then slide straight under the radar.

So Councils will not stop charging these ridiculous figures per section or lot, because they have ineptocrats to house and feed, plans to write for other ineptocrats to read, and all safely out of the sight of real public scrutiny.

It's a bit like the Bankstaz. Run into a bit of an issue, create an off-balance-sheet vehicle of some sort, shift the problem deals into it, and continue to pass audits and stress tests.

Shell game, really, but there you have it.

Those Fees, Charges, Contributions, Levies etc are all input costs to ratepayer purchases - just at several removes. In manufacturing lingo, Raw Materials, not Finished Goods.

But given that these inputs wind up on section and lot pricing (and then - the bywash effect - feed straight back into Existing Section pricing - a nice little CG for the householder who can then borrow against it or cash it in and light out for other parts), it is still the Council's long arm, in your short pocket.

Councils are, quite simply, economically clueless in this area. And they have completely foobarred the housing and residential land markets....


Wednesday, March 06, 2013

Farming and Infrastructure

'Farming' cannot ever be talked about as though it's a single activity. It depends exquisitely on a host of factors: altitude, soil type, depth of soil, rainfall, rain shadow, growing degree days (which are crop-specific), and that's just the beginning.

Parts of the Canterbury Plains (e.g south bank of the Waimak from Annat to Courtenay) have been cropped intensively for a century and a half, and are still going strong. Te Pirita was Strugglers Flat for that same century and a half until the Selwyn Plantation Board, tired of the ETS hoo-ha, mulched every single one of their downland planations, sold it for dairy, and with the application of mucho dihydrogen monoxide, the dairy farmers made those dry stony plains Verdant.

'Infrastructure' has a surprisngly long life. There are Roman drains still running under York Minster, and much of central Christchurch horizontal infrastructure dates back to the efforts of the Christchurch Drainage Board in the early construction period 1875-1889. That's 130 years give or take.

So when learned common taters worry about 'intergenerational equity' and how it is sooo last-century, let's just recall that 7 generations of Christchurch have benefitted from one concentrated burst of 19th century drain-laying.

Friday, January 25, 2013

LG gets a long overdue Purpose Re-definition

Statute has been amended: see the redefinition of 'Purpose - sec 10 - reproduced below.

If I was still in LG wiv my cold hand on the financial tiller, I'd be looking at the Social and Cultural hangers-on and thinking - Gosh - how long am I gonna see your well-remunerated faces 'round 'ere for? Being as how yer Statutory Purpose has been negatorated? In fact, I'm not sure I'm allowed statutorily to Pay y'all next week!

As Bob the Dylan sings 'Things have Changed' - (written and performed for the film 'Wonder Boys') Oh, the new LG purpose: (I've just kept the straight definition, there's a lot of inserting and replacing as it's yet another 2002 Act Amendment):

“(b) to meet the current and future needs of communities for good-quality local infrastructure, local public services, and performance of regulatory functions in a way that is most cost-effective for households and businesses.”

and 'good quality' is defined as:

In this Act, good-quality, in relation to local infrastructure, local public services, and performance of regulatory functions, means infrastructure, services, and performance that are— “(a) efficient; and “(b) effective; and “(c) appropriate to present and anticipated future circumstances.
 LG readers - in the words of the aforementioned:

"People are crazy and times are strange
I’m locked in tight, I’m out of range
I used to care, but things have changed"

Wednesday, January 16, 2013

How to Fix the Housing Mess

A thought experiment.... There are so many dimensions to what needs to happen that no Gumnut is gonna get them all done. It will take a crash and another generation. But a preliminary list:

  • Stop the local Gumnut racketeers. Roll them all the way back to reserve contributions in land or cash, and no other levies or new-section imposts. Because every such section-cost input, has to be paid for by householders, from a mortgage, with interest. The message is slowly getting through, but not to the bureaucrats, who quite rightly perceive that cutting off funding is cutting off their oxygen. I delight in making a submission every year, using fairly much this language, to the local Council's Draft Annual Plan, and demanding to speak to the Council in person. Does absolutely no good, but it puts a non-bureaucratic view on public record.
  • Restrict Local Gumnuts to core specified activities in infrastructire provision. They've gone hog-wild over Social and Cultural Wellbeings these last 10 years, and their costs are unsurprisingly through the roof thereby. But in Other Thasn Rates cost trees, natcherally, because we cannae have a Rates Revolt, can we. So Rates are wound back, and Other Fees and Charges reach for the sky....Release the buskers, event planners, community liaisers, cultural advisers to better employments such as factory hands (building houses of course, see below) with a massive productivity gain/deadweight decrease. But do expect some blowback.
  • Find a way to tune house-related lending: LVR's, capital ratios, whatever. Cheap credit just fuels the fire when supply is so restricted.
  • Do away with zoning. This causes massive MUL land value distortions, and as the rise in capital value is untaxed once yer local friendly Planner does the next squiggle on the map to incorporate Your bit inside the red line, better to ban map squiggles for a generation or two. As Hugh P notes, a direct result of MUL's is the rise in rural lifestyle blocks, which typically grow only ponies and thistles, and occupy far more physical area than the relaxed or abolished MUL could have ever consumed at urban density. An Unintended Consequence....
  • Yes, a Tobin Tax - stamp duty, CGT or something to increase friction in sales, would help. But results around the worls are decidely mixed, and one has to shudder at the thought of Yet Mo' Gray Suits needed to be administering the whole shebang....
  • Light a fire under ComCom re the materials duopoly, or heck just tweak the duties on said items, and import a few dozen shiploads of Chinese gib or US cabinetry, tools, fittings and doodads, and bankrupt the sods.
  • Do away with local Council planning and inspection, and use a uniform, centralised mob. The differences between jurisdictions are crazy, drive builders and engineers mad, and raise costs as common solutions cannot easily be created, disseminated and used.
  • Factory-build houses and drop-ship them to sites. Only foundations ever need to be truely localised to site and circumstance. Once you have a platform anything on top should be assembled in QC-controlled spaces, by anyone but drug-addled hammer hands, and picked/packed/shipped/assembled by factory certified putter uppers. This will drive unit costs through the floor, and will cause a great winnowing of the Exterior Decoration crew - architects and designers - into more productive employment. Factory hands, what else. Win/win/win/win, I'd say.
  • Wind back the LBP nonsense (the factory certification should cover all competencies) because it's an overreaction and an overhead and has driven many older craftsmen right out of the business.
  • Mandate eaves, pitched roofs, external guttering, and a design ethos which allows easy access to plumbing and electrics for repairs via access panels, conduits, etc. Lack of these features causes unmaintainability, lack of watertightness, and other woes. The guidebook here is Stewart Brand 'How Buildings Learn (what happens after they're built)'. Exceptions can be permitted only under a notified resource consent process (make the buggers really suffer....)
  • Institute a central photo database of every new build showing the as-built location of services (wiring, pipes, etc) before walls or foundations are skinned over. Index photos to site/floor plan and elevations. Huge help in later additions, maintenance etc. Keep this as-built record up to date (yes, I know, counsel of perfection....)

Not one of these is politically possible, can withstand the deadweight of custom, guilds, unions and convention, or can be defended against the Legal eagles of said duopolies and assorted corporate interests. But it was a fun thought experiment, hey?

Thursday, November 29, 2012

Economic madness in housing policy

The economic damage caused by these crazy policies is what needs to be hammered home: HughP has been very focussed on the 'broken-record' approach and it is gradually seeping through. Perhaps. Let's tabulate the said damage: - Median multiples in perma-unaffordable zone - Acquiescence in a materials supply cartel - Lack of nation-wide type approvals (for e.g. factory-built dwellings) - consents are Still a local-authority issue. Welcome to the ineptocracy! - Complete absence of time-money rules in the entire consents etc processes including the RMA. Quick fix would be to adopt current IRD rules - just try missing a tax payment and see what happens! - Disenfranchisement and disengagement of young citizens shut out of the housing market - Consultants, lawyers, engineers, insurers all feasting on the corpse of what passes for the development industry - 100% pure deadweight - Regulation of everything that is an input to the industry - if only the synthetic-cannabis rules could apply (use it until sufficient numbers of addled users clog up the A&E's of the nation, then stroke chin and say ' why, something's Gotter be Done) - Granting untaxed capital windfalls to landowners by continuing to squiggle on maps - Acquiescing on land-banking - Transmission of this economic malaise (as it applies to new-house pricing) throughout the housing market, as existing-home sellers who wish to buy new at roughly the same level of amenity, need to sell at near the same price (and trouser the CG, mais naturellement, if they play it right) Play this record at Every Opportunity, and don't forget that it Cannot be fixed by voting in a new lot of faces at either national or local government levels. It's a classic cluster-f**k. This stuff is systemic......


A village/tribe (direct descendants of the monkey clans - see 'Before the Dawn' - Nicolas Wade) may well be the default setting if we have to hit the factory reset button. But consider the losses in this highly sustainable way of living: •kiss goodbye to most present rights, including personal freedoms and gender equality. Tribes are ruled by The Big Man (note that gender) and if'n yer not in with The Man's crew, (like, wearing the wrong colour cap down Main Street) you'll shortly find yerself on a Ship of Fools (on a Good Day) or pegged out on the local beach at low tide (on a Bad Day). •kiss goodbye to most scale enterprise: mining, metals, the shaping thereof etc. Enterprises and capitalism depend on the utmost trust between total strangers, and tribes/clans do not take kindly to strangers (that's part of their core definition..,.) •kiss goodbye to cities and hence to the clustering and innovation thereby made possible: the various Renaissances that have taken place over the centuries have arisen from the cross-fertilisations of (quelle horreur!) Different Types Mingling: tribes don't take well to such uncontrolled goings-on. The genius of the Anglosphere is that we invented portable, discretionary (choose your own) tribes via countless associations, enterprises, and ventures, after millenia of imposed tribes via blood, locality, religion etc. The Enlightenment did for all that. Mind you, the re-tribalisation of the world has been long predicted, and Blut und Boden still has a visceral appeal to the revanchists amongst us....

Thursday, November 22, 2012

A common tater complains about Housing Material Costs

Oh, it gets better, Boatman. •Duopoly in materials (see the Productivity Commish on this) •Massive front-loading of fees on the land by Rapacious Local Governments who have Four Wellbeings to house and feed •Cheap credit, which fuels the fire •Licensing of every tradie, tool, and anyone silly enough to consider a new build •Planning which generates an unearned and untaxed capital gain (typically 10x rural land price) as soon as yer draw that MUL squiggle on a map •Land banking (in the reasonable expectation of said CG) by Them with Knowledge and Insight (and a tame Planner or three on the Inside) •Elfin Safety, which typically adds 30-50% to the raw cost of e.g. a roofing or other at-height job (scaffolding, railing, harnessing, it's a Long List) •Inspections and Engineering Certification, which can easily exceed the raw materials cost by a wide margin •And never, ever forget the time value of money, throughout this ponderous process. Recall that the 'Mericans built the Empire State in 18 months. Yer'd be very lucky to get a Notified Resource Consent through in that time, and all the while the interest costs tick up, your Banker smiles at the interest revenue stream (or Frowns when yer miss the payment), and the Gumnuts of the world reject yer Permit Application for the 13th time because you haven't Detailed that there Joint in the Gubbinses by the Roof Thatch, which is another three-week go-around with your Engineer not ter mention his Fees. And did I mention that the Banker's grin is getting wider? •Plus (the icing on the cake, economical dead-weight-wise, ht PhilBest) is that all this cost-loading then transmits osmotically throughout the entire housing market, enrichening (and without being taxed on the CG generated) every existing houseowner. Because if'n she sells, and buys new, she'll haveta pay all of the above plus the agent's commission on the sale, to get an equivalent place. Universal pricing signal! Perfection, ain't it? Tip all these ingredients into a supply-starved Housing Context, mix 'em together, and Watch Them Prices Explode! And, like getting Milk from a Latte, or populating an Aquarium from Chowder, un-Mixing this sorry mess is a trifle, shall we say - challenging!

Tuesday, May 15, 2012

Councils and Cluelessness

The issue with Councils (I used to be a Treasurer of one back in the day - the title says it all) is quite simple to state, and very hard to fix. They now have power over so much of the regulatory aspects of housing and building (a partial list: - land prices (via zoning) - land developmnent (via consents and taxes) - housing design (via consents, design rules) - housing build (via inspections, requirements) - continuing use of house plus land (via Plans, consents and permitted uses) that their ordinary operations, in puddling through all of the above, have a major economic impact on the lives, businesses and prospects of anyone enmeshed in their gears. And yet, at the very same time, Councils are economically clueless. - they have no idea of, let alone penalty for causing monetary loss because of, the time value of money - they have no idea of the principles of monopoly (who else runs the sewers, roads, stormwater?) and take no precautions against the ancient abuses arising from this - they employ staff on salaries, who are completely disconnected from quantum or quality of output, and who thus experience precisely zip/zilch/nada of the consequences which would follow in the business world (termination, bankruptcy, or at the least, serious loss) - they are able to compulsorily demand fees for services (or no consent, buddy), rates (or we'll sell the place from under you), and levies (or no subdivision, you 'orrible greedy developer). Thus they wander serenely about the landscape, causing economic havoc in their wake, and congratulating themselves on a job well done, because they Do carefully count the awards made by juries of their peers... But how to change this horrific combination of power and incompetence - aye, well there's the rub....

Monday, March 19, 2012

LTP season is upon us again!

I occasionally take an interest in the Long Term Plan of of the local Council. It's my money they're spending, and they are obliged to Consult aboot it all.

I generally ask some pointed question: like:

•I see you have budgetted for X million pesos revenue, from Development Contributions. Please set out the average revenue per section expected, segmented into residential, commercial, industrial and Gummint.
•Please provide some economic commentary about these figures, given that they are significant inputs into section prices, and coming as they do early in the development cycle, attract significant developer financing cost additions prior to section sale, and are ultimately paid for by the incurrence of household, public and business debt.
•Please provide commentary about the revenue risk implicit in these averages, focussing on the most likely such risks: development flight to cheaper jurisdictions, housing inflation, buyer resistance, disadvantagement of low-income new-house purchasers.
•Please provide a table showing comparative Development Contributions for adjacent jurisdictions, for equivalently sized Councils across New Zealand, and against a New Zealnd average.

Y'see? A statement (on public record, no less), an education for Councillors who are often shocked! Shocked! to understand just what their faceless bureaucrats are inflicting on anyone enmeshed in their processes, and (best of all) a chance to stand up in front of the Council and tell these hapless fools just exactly what a dire effect they are having upon their local economy, residents and businesses.

Now, the Open Season for the LTP's is again upon us. Happy Hunting!