Wednesday, June 12, 2013

A perfect natural experiment - By Alan Johnson

The Government’s recent move in housing policy provides us with a perfect natural experiment to test the validity of their neo-liberal orthodoxy. 

The policy move in focus here is the Housing Accord and Special Housing Areas Bill which is presently being rushed through the legislative process. The basic idea of this Bill is to ‘enhance housing affordability by facilitating an increase in land and housing supply’. The 'facilitating' is merely the stripping away of regulatory processes such as those under the Resource Management Act – a move which the Law Society has described as ‘contrary to the rule of law and good legislative principles’.

A natural experiment is an empirical study in which the experimental conditions are determined by nature. In other words when something like an outbreak of disease happens in the big wide world we can study the impacts of this outbreak to help us establish a causal link to something else such as polluted water or overcrowded housing. 

In promoting the Auckland Housing Accord, the Housing Minister Nick Smith confidently announced that the accord with Auckland Council was expected to produce 39,000 additional dwellings over the next three years including 9,000 in the first year. Such an outcome would be a stunning turnaround in Auckland’s housing fortunes given that less than 4,000 new dwellings per year have been consented over the last four years.  

Thirty-nine thousand new dwellings represents more than $12 billion in new investment which if this comes about, will be all the proof I need that all this time it was excessive regulation holding back the market from building affordable homes for tens of thousands of low income Auckland families.  If investors will stump an extra $12 billion of their hard earned cash to put into affordable housing because of an agreement between Nick Smith and Auckland Mayor Len Brown it will be clear evidence that the problem was always those planners and building inspectors at Auckland Council. 

The good thing about this natural experiment is that we should see clear evidence of progress within the next year. 

Editor's note: What's your hypothesis for this 'natural experiment'?


  1. This is a bit belated, but, welcome back to the blogging world, Just Comment! :)

  2. Thanks Frank. It's good to be back.