20 March 2006
Newman Weekly: Private Property Rights.and Wrongs!
This week Newman Weekly looks at the erosion of private property rights through our planning laws and property advisor
Andrew King, the NZ Centre for Political Debate guest commentator, asks whether government proposals could drive rental
property investors away.
New Zealand is a property owning democracy. As Kiwis, we subscribe to the belief that our home is our castle. Property
rights play an integral part in our common law tradition and are enshrined in Article II of the Treaty of Waitangi.
The right to acquire and use property is essential in a free democracy. It is critical to economic growth, with home
ownership being well recognised as a common route to financial independence.
Fundamental to the protection of private property rights is an understanding that these rights cannot be confiscated by
government, without compensation being paid. However, there is no such legal requirement for the payment of
compensation, if the government erodes the value of a property through the imposition of regulations.
According to Wolfgang Kasper, in his book Building Prosperity: "regulations of market interactions are frequently used
to redistribute incomes and wealth on the sly. Governments find it increasingly convenient to pursue political goals and
fulfil undertakings to special interest groups such as environmental and social lobbies by interfering in private
markets through regulation".
These days our property rights are under constant threat, no longer from marauders who attempt to take our land by
force, but from the State, which seeks to confiscate private land using the key weapon of central planners, the Resource
Management Act. Designed by Labour and foolishly passed into law by a National Government, the RMA contains mechanisms
that undermine private property rights by giving planners and bureaucrats the power to confiscate private land use
rights without compensation.
Under the auspices of the RMA, every 10 years, councils are required to review their district plans. One council that I
know of engaged consultants to carry out their review, whose principal is a director of the Environmental Defence
Society (an environmental advocacy group involved in landscape protection). As a result, land assessed as being of
national significance - equivalent to Mount Cook or the Franz Joseph Glacier - has leapt from less than 1 percent of the
district to 17 percent! This is largely as a result of applying revised assessment criteria, which uses new and
questionable planning concepts such as the "mystery", "vividness", "cohesion", and "legibility" of a property.
The whole review process has been captured by environmental activists and is now nothing short of a socialist land grab.
In fact, Karl Marx advocated the abolition of private property rights in his 1848 Communist Manifesto!
But what is so hypocritical is that many of these radical environmentalists are using the RMA process for self-interest
- they want to halt progress in order to protect their own patch of paradise and to prevent anyone from altering the
landscape values that they enjoy but don't have to pay for. They are the first to claim that private property owners who
live in nice homes on well maintained properties in the countryside are greedy - especially if they consider subdividing
to pay the ever-increasing rates - yet in reality, it is the environmentalists who are the greedy ones, because they
seek to prevent others from enjoying the same sort of lifestyle that they hold dear.
In New Zealand, the public ownership of land has been shown to be little short of a disaster. With 40% of the country
already locked up in Department of Conservation reserves, native forests and other endangered species continue to
decline. In contrast species under threat flourish if they live in land areas where private property owners are allowed
to exercise proper management. As Thomas Jefferson once said: "the small landholders are the most precious part of a
State".
My prediction is that the confiscation of property rights without compensation, under the guise of conserving the
environment for future generations, will continue unabated until a "no regulation without compensation" clause is
introduced into the Resource Management Act. Again, as Wolfgang Kasper has suggested: "full compensation for loss of
market value of someone's property as a consequence of a new regulation, also seems desirable as this will act as a
counterweight against regulatory overkill".
The tension between those who say they want to protect the environment against those they say will exploit it, has far
reaching consequences. With greenies and planners alike pushing for the use of the regulatory process to shut down the
supply of new land for subdivision purposes, in many areas around the country, land prices are going through the roof.
This not only forces the establishment of unpopular high-density housing developments, but it artificially inflates the
value of houses.
According to the Housing Affordability Survey (see www.demographia.com), co- authored by Christchurch based Hugh
Pavletich, all major urban cities in New Zealand are severely unaffordable. Affordable cities should have house pricing
at no more than three times household income, yet as at September of last year, Auckland scored a rating of 6.6,
Wellington 5.2, and Christchurch 5.9. When a house is three times the median wage, young couples can pay off a home on
one income and begin a family before they turn 30. At five and six times the median wage, they have no hope at all of
doing so.
The scarcity of land supply is the root cause of the dramatic decline in housing affordability. Proponents of urban
consolidation claim that restricting land use is good for the environment as it protects the loss of farmland. But the
reality is that restricting land use creates a housing shortage: not only pricing young couples out of home ownership,
but as rental yields decline, deterring rental property providers as well.
In the guest opinion piece this week property advisor Andrew King examines the government's planned approach to
residential property investors. He warns that if Labour introduces their planned unpopular and unwarranted initiatives,
such as tenant advocates, property registration and warrant of fitness checks, then they may well drive investors out of
the property market creating a critical shortage of rental housing as a result.
The poll this week asks how satisfied you are with the Resource Management Act and whether a "no regulation without
compensation" clause should be introduced (click here for the poll)? Watch out for readers' comments on this issue
posted daily on the NZCPD forum at http://www.nzcpd.com/forum/viewforum.php?f=2 Last week, 99.9% of Newman Weekly
readers thought the prison system is not working!
ENDS