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18 March
06
Private
Property Rights, and Wrongs
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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 - in case they may want to subdivide
(often to be able to afford to continue paying escalating
rates) - yet in reality, it is they that 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. View guest column >>>
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This
weeks poll.
This
week’s poll asks: How satisfied are you with the Resource
Management Act? And do you believe a “no regulation without
compensation” clause should be introduced?
To take part in our online poll
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