ERIC CRAMPTON: Oh Christchurch

April 2013: The downtown demolition job remains unfinished.

It didn't have to be like this.

784 days after the February 22, 2011 earthquake. There's a draft plan for downtown, but nothing's yet certain except for that the CCDU and CERA are pursuing compulsory acquisition for some land where they think they're likely to build a convention centre and stadium.

We don't know when access to downtown's Cathedral Square,will be restored, we don't know whether Town Hall (a performing arts venue) will be restored, rebuilt, or scrapped; what an Arts Precinct will look like will depend on what happens with Town Hall, and continued uncertainty about the Arts Precinct is messing things up for those wanting there to rebuild. We don't know when they'll finalise the city plans for downtown living zones.

We don't know whether land acquired by compulsory acquisition will be used for public purpose or flipped at a profit by some later government.

We do know that a reasonable burden is being borne by those having land taken by compulsory acquisition.

We have a great big mess of interconnected problems. The root of most of them is a fundamental lack of respect for individual property rights. Why do we have a housing crisis? People can't do innovative things to increase housing supply. Why do we have downtown property owners deciding to cut their losses and escape? Because the planners are giving us the worst of all worlds: a determination to pursue a central plan and cast aside the plans that individual property owners might have, but a seeming inability to just set the darned thing so that individual property owners can re-optimise and get building.

There are good arguments to be had about whether it's better to have a fixed city plan with a designed vision for the city or whether we should let the city's vision emerge more organically from the decentralised projects each owner might seek to undertake. I prefer the latter. But surely either of those has to be better than putting town on hold for this long while deciding just what the perfect city plan might be.

It's tragic that most people don't understand the term "leave well enough alone". "Well enough" isn't a compound adverb describing how thoroughly one ought to leave something along, it's a compound noun saying that if things are good enough, we shouldn't screw with it. Read it as "Leave alone that which is 'well-enough'." It's the better English translation of laissez-faire. We've made the quest for the best city plan the enemy of getting anything done.

Let's recap a bit.

January 2011: It was pretty clear that there were already substantial zoning rents built into Christchurch property prices.

March 2011: Businessmen with critical records behind the red zone cordon were still barred access. But if your wedding dress was on the other side of the line, you could likely convince a policeman to let you through. All kinds of other nonsense around the cordon.

We could see that heritage rules were working in opposition to earthquake preparedness and that we needed to fix things if we wanted to keep and strengthen our best heritage amenities. There's now a pretty good chance we'll lose the old Trinity Congregational Church entirely, and the intransigence of the heritage board after the September 2010 quakes is largely to blame.

I do appreciate how Council is simply putting up $1 million towards the restoration for anybody who is willing to do it - it's an amenity that seems worth it. I wish that we could have protected it three years ago by paying the providers of heritage amenities for their provision rather than making it really hard for them to do any earthquake strengthening.

April 2011: Central government and Gerry Brownlee get more power over the earthquake rebuild. I'd hoped he'd use his powers for good and help us to get an IKEA. But it looked like a high variance play: an appointed Czar might sweep aside the regs that were holding things back, or might impose a central plan heavy on expropriation. Meanwhile, the Greens push for an earthquake levy; optimal tax policy dictates instead a mix of spending cuts and future tax increases.

May 2011: We start hearing suggestions that Council sell assets to pay for reconstruction. There's an economic case for it, especially where some of those assets weren't great candidates for public ownership to begin with.

July 2011 We start seeing problems where the insurer says a property can be repaired and so will pay out based only on the repair cost, but the government declares that you can't rebuild on that land. This is the kind of thing where either Council or central government should have funded a test case or sought a declaratory judgement. We still don't know what a high court appeal would say about it.

August 2011: The first cut City Plan comes out. It's vaporware.

September 2011: I get more worried about downtown. RBNZ starts pushing back its expectations of when things might start happening in Christchurch. They then expected rebuilding of severely damaged properties might start happening mid-2012. The downtown demolition job remains unfinished as of April 2013.

October 2011: Downtown developers (rightly) start getting stroppy about Council's planning approach. RBNZ reveals what it was up to during the quakes and its preparations in case things go badly in a Wellington quake.

November 2011: Bomber Bradbury says that the Libertarianz paid political ad highlighting bureaucratic and regulatory failure in Christchurch was "intellectually skanky". Clearly he doesn't live here.

February 2012: Council is still very slow in approving new subdivisions outside of town; too many veto points for getting things done.

We also start seeing how the combination of lax building codes, heritage regs against building strengthening, and the abolition of liability under ACC caused substantial problems; I suggest liability insurance might be appropriate.

March 2012: Outside of downtown, away from the bureaucrats, Christchurch is coming back.

April 2012: Rental prices are soaring; demands for price controls.

Central government throws out the Council city plan, promises a new and feasible one. I'd hoped that the new agency would take a light touch on eminent domain and that it might fund some declaratory judgments on insurance issues. Alas. At least the light rail scheme hasn't resurfaced.

Bill Kaye-Blake reckons Christchurch is screwed. Too much focus on shiny stadium dreams, too little attention to helping folks wade through insurance messes.

The housing shortage gets messy; bureaucratic failure abounds.

May 2012: CERA head Roger Sutton demonstrates a surprising lack of familiarity with zoning issues. I had hoped that CERA's job was to have been sorting out the tangled bureaucratic mess facing homeowners. Yeah, no.

More pressure for Council to sell assets; I worry they might sell things like the Port to buy things like stadiums.

Meanwhile, people who aren't owners of the downtown Anglican cathedral start protesting that it be rebuilt; its owners, the Anglican Church, seemed less than keen. I suggested they try Kickstarter to show us whether the notional demand was effective demand. None of that's yet sorted out as of April 2013.

June 2012: Consents and planning are still stuck in pre-quake mode: the grey men had to make sure that the wheelchair ramps for a new temporary bar had a 1:12 slope rather than a 1:10 and that the handrails were just right. In the midst of a housing shortage, Christchurch is exporting houses from condemned sections; our zoning rules ensure that they can't really be used in-town. And Christchurch City only approved 1271 new dwelling units from April 2011 through April 2012.

Meanwhile, John Fountain figures out a ridiculously simple move to start easing Christchurch's housing shortage: allow people to build flats inside their existing homes. City Council zoning rules don't allow it if the flat has a kitchen, though they make provision for flats of this sort under rules ensuring that few people will really do it. The only explanation I have ever heard as to why Council wants to ban this simple way of easing the housing shortage is that they're scared that the area around the University will turn into student flats of the Dunedin type. If that's the case, they could have banned it in the area around the University, or they could have considered that it just might also be important that we get some cheap student flats if we want to keep having a University.

Gerry Brownlee claims there's no housing crisis in Christchurch. I suggested he's missing what's going on at the bottom end of the market. Ahem.

I suggested scrapping plans for a big expensive convention centre and instead have Council coordinate with the big hotels for a smaller facility linked directly to the hotels. Regime uncertainty gets worse with warnings about forced acquisition for the new city plan.

July 2012: We get the new city plan. I didn't know then, and I think that nobody knows now, just how any of the proposed anchor projects are to be funded.

EQC makes it harder to avoid using their preferred project manager.

Pressure for a broader national push to relax land use planning builds; I point out that it's also good earthquake-preparedness.

August 2012: Seamus Hogan notes that the anchor projects in the city plan might not pass a normal cost-benefit analysis but could help anchor expectations around a good rather than a bad new equilibrium in a multiple-equilibrium world.

I wondered whether the expensive stadium plan was a poison pill. We started getting hints about what the anchor projects might cost. As of April 2013, CCDU is getting tenders for a convention centre but I'm not sure they've sorted out who will pay for it; they're saying construction on a stadium might start in 2015. We don't know what's going on with Town Hall.

December 2012: It's looking like insurers are deliberately dragging their feet so that policy holders take lowballed indemnity payments.

We still haven't had reasonable test cases.

EQC is pushing everybody to its preferred contractor.

Gerry Brownlee scales back a proposed insurance advocacy service, reckoning that it isn't much needed. The service was supposed to help people figure out when their homes might possibly be repaired. Turns out Brownlee was right - we didn't need the advocacy service.

We just needed EQC to leak the big spreadsheet containing all the details on most of the repair jobs and for somebody to stick it up on the internet so that folks could find out where their claims stood.

And remember how the convention centre was an anchor project in the big central plan of July 2012? December, they're shortlisting developers for the convention centre while hiring somebody to make a business case for it. Also, you probably can't finance the big shiny stadium on bake-sales.

January 2013: Christchurch Council's record on building consents remains full of fail.

February 2013: Continued regime uncertainty. That shiny city plan from July 2012? Yeah, we don't really know what's going on with that. And it's starting to matter for those with properties zoned into one of the special precincts.

The Insurance Council says that it's not its fault that 70% of major claims have yet to be dealt with; I'm not so sure. Insurance here feels more and more like a scam.

March 2013: Regime uncertainty continues.

It's mid-April 2013, 784 days after the earthquake.

My builder is still squabbling with EQC about the quote to get the job done at our house.

AMI/SR has yet to come to our house to assess our out-of-scope claims. SCIRT is just about done with what I think is the fourth tear-up-and-rebuild on our street; they all blur into a single two-year-long project interspersed with a few two-month stretches where the street is in one piece. The barricades around downtown block off less than they did two years ago, but they're still there.

The CCDU (Christchurch Central Development Unit) decided that some downtown areas had to have a minimum project size; property owners now are scrapping with each other trying to accumulate titles to get to the minimum size rather than building on the land they own. The planners' grand visions may be nice, but they're driving out the investors who should be rebuilding town.

Contrary to Gerry Brownlee's claims of there being no housing shortage in Christchurch, we see a 60% drop in affordable rentals relative to pre-quake baseline. Now some of this will just be an artifact of the baseline chosen for affordable rentals, and Auckland remains more expensive. But as of last month, the price of the median two-bedroom rental in Christchurch was $365 per week and the price at the 25th percentile was $300. And Christchurch Council still effectively bans building self-contained flats in houses - removing that ban remains the single simplest and cheapest thing they could do to increase low-end supply.

Canterbury University has hemorrhaged students as housing is expensive and town is rather less attractive than it once was. It will not be easy for the University to recover until Christchurch is a place that students again want to live; costs of student housing have to come down into line with the amenities here provided, or the amenities have to improve. Neither of those are easy given the current Christchurch bureaucratic regime.

Winter is coming.

Dr Eric Crampton is a senior lecturer in economics at the University of Canterbury. He blogs at blogs at Offsetting Behaviour.

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14 Comments & Questions

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Nzers should lower their egos and learn from countries like China to really rebuild Christchurch....no ifs or buts.

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What a laugh if it is not so tragic - Steven Joyce and various local & national government officials doing a roadshow in Asia recently showcasing Christchurch as an investment opportunity.

As if the investors have not had a look and decided it's all too hard.

First question - 'what about development and construction insurance for developers and builders?'

Answer - 'We are working on it but meanwhile ..'

Keep pumping those billions of dollars into social welfare, bailing out failed finance companies, failed state owned enterprises and Maori claims.

Christchurch can wait.

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Good work. Needed to be said. Sadly there is not a journalist at the Press with the ability to grasp and articulate these fundamentals. But, what now?

In any city at any time 80% of the investors are locals. Investing often for emotional reasons. We have chased them out of Christchurch arrogantly believing we can then replace them with investors from offshore. sure, but only if we give them grand concessions. That's now the next step in Christchurch.

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Yes, we need the central government to rebuild all of New Zealands cities so they can all be great like Christchurch.

We wouldn't have any cities built without an all-knowing, powerful central government.

Shut up and pay your taxes fools because we know what's best for you.

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National either want state control or to promote free enterprise. its clear by their actions what we have.

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At the time the second Christchurch occured I thought it was the end of Chrsitchurch as a chick little Melbourne. now I think it was the end of NZ as a sophisticated western society. I believe it was the moment Bill English gave up completely. The delays in rebuilding the CBD are reopening a enegetic bar and club scene drive more and more young lively and 30-45 year old professionals and semi professionals away from Chrsitchurch. The failure of NZ's apprenticeship and educational system is indicated by the lack of kiwi tradesman with the skills to rebuild the city- and also probably uncompetitive pay rates and overestirctive councils, RMA and City Plans.
Prior to the Earthquakes to many the CBD was just the strip of supermarkets around or near Moorhouse Ave. Other than the law and accountancy firms that could just as well be in Merrivale, Addington or Riccarton, all probably more convenient to the law school, The CBD was little more than a bar, club and brothel zone. The laneways being a mix of all 3 plus the coffee shops which were in many ways the only lasting innovation of Rogernomics.
One option for the CBD area would be turn into a greenpark with a modern cathedral like that in Parnell. The stadium and convention centre could just as well be in New Brighton.

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A lamentable litany of lies and incompetence - by central and local government, EQC and CERA, and the insurance industry.

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The government cargo cult has been exposed, Gerry Brownlee in the Emperors new clothes.
CHCH cannot be revitalised without socialist policies. In the 1950's the 10 pound tourists were shipped in to create growth. Screwing the water resources of mid Canterbury to create marginal dairy farms is not sustainable growth. There is no business case for property development in CHCH, The landowners are better off with empty land, insurance money invested than they ever were with crappy buildings and cheap tenants.

Apply the WIMPEY model. Import 10,000 Irish builders, sell them a subsidised section and let Fletchers /Placemakers sell them the materials.

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Well articulated.

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And those same CBD disgruntled landowners are re-investing away from ChCh, not wishing to be part of the bland Canberra-east that the gov't plan promises.

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Behind interventionist policies is an uninspected idea that the individual is too stupid to organize their own life and therefore big brother must step in to help those that are of lesser intelligence than the lofty intellectuals in ministerial positions.

An interventionist is someone who promotes interventionist policies.

Behind every interventionist is an ego. And someone who takes the moral high ground believing the ends justify the means, and that it is Ok to violate individual rights to do so.

The values of such a person are no better than that of a common thief or swindler.

Our earthquake recovery planning is being screwed up by interventionists.

Having said that, part of the delay is due to a flicker of honesty. Some, who hyped by the urgency of the crisis took control, and are now realizing they are messing with things they shouldn't have. Their momentum has been lost as they realize to go full steam ahead is to steam roller over individual rights.

In the cold light of day, the reality has hit home as to what they are doing. They cannot move forward and are too tangled up in the power machine and embarrassed to speak out or allow land owners to deal with their own future. So they procrastinate.

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I know that it's difficult to believe, but a lot of ChCh residents and businesses are just getting on with life and taking advantage of the many opportunities currently available in the city. Most of us are not sitting around waiting for things to happen...

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There are also thousands of residents who want to get on with rebuilding their homes and businesses, but are completely stifled by this government and its nominated authorities. Some are literally even being destroyed. This is not the way the people of Canterbury wanted to conduct the rebuild of their city, where some who managed to survive are then sacrificed for the promise of something greater. It is not the Cantabrian way.

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