Bloated bureaucracy has hindered recovery

02:41, Sep 14 2011
BLOATED PRICES: Hugh Pavletich says the Christchurch City Council has artifically pumped up the price of housing.

HUGH PAVLETICH believes that failures at the Christchurch City Council have artificially pumped up the price of housing, adding to the woes of residents in the residential red zone.

For most people, local government issues are rather boring. The earthquakes these past 12 months have changed this attitude locally, as Christchurch citizens have seen at close quarters just how the council has not been in a position to respond adequately and allow a normal recovery to get under way.

It has not been a pretty sight.

The centralised structure failed, as the bloated bureaucracy of 1300 people could not access the recently redeveloped Hereford St building for two months, following the major September 2010 event.

It seems likely the building will be knocked out in 12 months, for most of these people, following the February event.

The problem started 20 years ago, however, when local government amalgamation was forced on Christchurch.


The city has become increasing bureaucratically bloated and shabby since.

In development and construction terms, Christchurch had been on its knees before the September 2010 earthquake.

Little wonder the median household income of Christchurch is just $55,000 today - the west $65,000, the east a disgraceful $45,000, the lowest of any major metropolitan area within Australasia.

In contrast, the median household income of aspirational Auckland is near $70,000 - about 27 per cent higher.

Because this increasingly bloated bureaucracy has been too busy financially feeding itself, it has not been able to cope with normal urban growth.

Instead, it has been strangling fringe land supply, artificially pumping up raw land values from their true rural market value of around $10,000 to $40,000 a hectare through to $500,000, $700,000 and beyond.

Fringe section prices are currently around a whopping $200,000.

As this year's seventh Annual Demographia International Housing Affordability Survey (the writer is a co-author) illustrates, the Christchurch City Council has artificially pumped up the price of housing from below three times to six times household incomes.

Normal housing markets should not exceed three times household incomes to rate as "affordable". Christchurch is currently rated "severely unaffordable".

So when the first big earthquake hit in September last year, there were no affordable new serviced sections priced at or below $50,000 out on the fringes to the west and elsewhere, where the good ground is, to allow displaced people to move to.

For the 5100 Red Zone households, where the average payout will be about $295,000, this creates massive problems.

Where do they go if they cannot get affordable sections on good ground to move to?

These are the two major issues facing Christchurch: first, moving from a central council model, to a "one city - many communities" local government structure, and second, allowing its citizens the opportunity to buy affordable land, so they can sort out their lives as quickly as possible.

Last week, Christchurch city councillors had the opportunity to allow this to happen, by replacing the current chief executive, Tony Marryatt, with Ciaran Keogh.

They failed.

Councillors Tim Carter, Glenn Livingstone, Jimmy Chen and Yani Johanson were the only ones who saw the need for change on the second vote. Sadly, and for reasons unknown, Chrissie Williams and Sally Buck switched sides from the first vote. The others were more interested in seeing the old order preserved.

The "old order" councillors didn't consider for a moment the wider interests of the community.

Central government and the Canterbury Earthquake Recovery Authority must now step in, to sort out this Christchurch City Council mess.

Christchurch should be a dynamic growing city and the economic engine driver of the South Island.

There will be no recovery until these changes happen.



* Hugh Pavletich runs Performance Urban Planning ( ). He is the co-author of the Annual Demographia International Housing Affordability Survey, a fellow of the Urban Development Institute of Australia, former president of the Property Council of the South Island and a retired commercial property developer. He is based in Christchurch.

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