Five Items and One Entertainment in this CRMS Digest.
This Digest is also attached as a pdf file.

Items.
Item 1:  Who Really Caused all our Housing and Finance Problems?
Item 2:   How to Identify an Expert.                                                      
Item 3:   Are Large City Governments more Efficient than Small Cities, Towns and Villages?.
Item 4:   Should Councils Collect Fines from their own Prosecutions?
Item 5:   How do we respond to new knowledge?

Entertainment:  John Clarke (aka Fred Dagg) helps P.M. Rudd explain  
emissions trading.

Item One: Who really caused all our Problems?

“Planning-induced housing bubbles not only threaten individual  
families and local economies,” my friend and colleague, The  
Antiplanner wrote in his recent excellent book, The Best-Laid Plans,  
“they threaten the world economy.” Those threats are being realized  
today. He goes on "While all kinds of reasons have been offered to  
explain the housing bubble, I still insist that growth-management  
planning was the initial cause. My evidence is the dog that didn’t  
bark."

The Antiplanner then presents some very persuasive graphs comparing a  
few Smart Growth cities – which have gone through the bubble cycle –  
with a few lightly regulated cities – which have avoided the boom and  
bust cycle altogether. Drawing attention to "the dog that didn't bark"  
he concludes:

"So next time you fret about the devaluation of the dollar, the  
current recession, or even high fuel prices, thank an urban planner.  
They caused the housing bubble and they are responsible for the  
world’s current financial crisis."

We strongly recommend you visit the page at: http://ti.org/antiplanner/?p=468#

The "comments" are fascinating, if only because so many urban planners  
maintain their confidence in Smart Growth and insist it has no affect  
on the price of land.

Sadly, for all the commentaries on the housing market, and the  
consequent collapse of the finance companies, the folding of property  
companies and the loss of people's life savings, hardly anyone pays  
any attention to the role of our local bodies and their planning  
policies in this disaster. The standard targets are greedy banks, who  
are accused of lending too much money, and the regular homeowners who  
are blamed for having a obsession with investing in residential  
property.

Unless we all come to terms with the real drivers of the housing  
bubble then we are doomed to repeat this disaster and worse, will have  
no idea of how to get out of the current recession.

The Centre is working on a paper which will document the whole sorry  
cycle from its beginnings in the early nineties to the present day.

Item Two: How to Identify an Expert.

The collapse of so many finance companies has stimulated much  
discussion on how the "ordinary investor" can identify expert advisors  
and hence seek out and utilise expert advice on placing their  
investments.
The Centre has little to add other than to support those who suggest  
that economic literacy would be a useful item to include in our school  
curriculum.
Just a few days ago a contributor the Green Party Frogblog presented  
as fact that businessmen are worse than politicians because while  
politicians take our taxes to spend on the public good, businessmen  
take our money to line their own pockets. It seemed not to have  
occurred to him that when businessmen take our money we have normally  
received something in return – unless thieves are included in the  
definition of businessmen.

However, the collapse of the housing bubble has also generated much so- 
called expert commentary on the nature of the housing market and the  
causes of the crisis. Much of this commentary is no more than pleading  
from those with a vested interest desperately trying to argue that  
this is a short term problem only and that if we wait a short while  
everything will come right. I was seriously unimpressed by a US  
"expert" invited to speak to our local Real Estate folk. In an  
extensive interview with Leighton Smith on Newstalk ZB the only piece  
of sound information he passed on was that properties right on the  
beach were more valuable than those a few blocks behind. He studiously  
avoided any commentary on what was really going on in the US and  
elsewhere in the world. I trust the dinner made the evening's  
entertainment worth the price.

One useful rule of thumb in sorting out the expert wheat from the  
chaff is the following: Any expert commentator who talks about the  
United States housing market clearly does not know what he is talking  
about – or is pushing some hidden agenda.
There is no such thing as the US housing market – except as a  
generator of meaningless statistics. The United States is made up of  
its fifty states and a federal district. Each of these states is  
essentially independent in setting the rules which govern the housing  
market within its boundaries and cities have considerable freedoms  
within these states.
Claims that the United States housing market is suffering the worst  
collapse is true but only because a few states, and in particular  
California and Florida,   are suffering so badly that the average is  
highly skewed to be well above the median. There are many states which  
have had no housing bubble at all.

Some reports conceal their bias by claiming to describe the state of  
the US housing market while reporting only on California and Florida.  
Watch out for these – this approach is rather like reporting on the  
New Zealand climate from the top of Mt Ruepehu and Mt Cook.

Instead of assuming that the United States market is the cause of all  
our woes we should examine the many States to see which have been a  
source of the problem and which have avoided it all together. This may  
seem an onerous task but the Demographia web page at:
http://www.demographia.com/
makes it all quite easy. Right at the top you will find:
4th Annual Demographia International Housing Affordability Survey
SMART GROWTH & URBAN CONSOLIDATION: THE HIGH SOCIAL & ECONOMIC COSTS
227 Markets in Australia . Canada . Ireland . New Zealand . United  
Kingdom . United States
Former Reserve Bank of New Zealand Governor Donald Brash writes in the  
introduction to this 4th Annual Demographia International Housing  
Affordability Survey that "the affordability of housing is  
overwhelmingly a function of just one thing, the extent to which  
governments place artificial restrictions on the supply of residential  
land." This report MORE...

These links may not work from this Digest but naturally work properly  
from the web page.

Immediately below this section you will find a whole list of papers  
and reports establishing the connection between Smart Growth and  
unaffordable housing and the "housing bubble", including the paper  
Housing Supply in the Auckland Region 2000–2005 prepared by Motu  
Economic and Public Policy Research. This has been highly praised  
around the world and is ground breaking research in this important  
area. Here in New Zealand it hardly gained a mention because Professor  
Grime's work went against the popular grain.

Bernard Hickey makes some scary observations and predictions in his  
blog "Show me the Money" at:
http://stuff.co.nz/blogs/category/showmethemoney/
Scroll down to "We're in Stage One of the Five Stages of Real Estate  
Grief." Hickey focuses on where we are, and where we are going, so  
don't look for any of the cause and effect analysis presented by  
Demographia and O'Toole.

Item Three: Are Large City Governments more Efficient than Small

Cities, Towns and Villages?

While you are visiting the Demographia web page it is worth  
downloading Wendell Cox's most recent report on the proposed  
amalgamations of the towns of New York State. The first paragraph of  
the foreword has a remearkably familiar ring. His report appears to  
have dampened enthusiasm for the idea.
Go to:
http://www.nytowns.org/news/Government.Efficiency.The.Case.for.Local.Control.pdf

Those who want arguments to mount against the Super City proposal  
should examine the several reports Wendell Cox has prepared on this  
topic.
There is a rumour about that Wendell is actually a set of quadruplets  
who all work for Demographia. Link to:
LOCAL GOVERNMENT CONSOLIDATION
Government Efficiency: New York Report
Growth, Development & Government: Pennsylvania Report
Are Bigger Governments Better?


Toronto Consolidation Report (1997)
Failure of the Toronto Megacity: National Post Oped
Montreal Demerger: National Post Oped

The links may not work but you will see these listed on the front page  
of the Demographia web site.

Item Four: Should Councils Collect Fines from their own Prosecutions?

(Part 2)
The Cente raised this question in the last Digest and it came to mind  
again while watching the Close Up programme on the hapless Russell  
family of Kaharoa Road, Rotorua. I took some special interest in this  
story because I spent many of my primary school years living at Oturoa  
Road just a few miles south of Kaharoa Road.
The Daily Post (where my brother was printer for several years) has  
covered the story beginning at:
http://www.dailypost.co.nz/localnews/storydisplay.cfm?storyid=3779167&thesection=localnews&thesubsection=&thesecondsubsection=
and most recently at:
http://www.dailypost.co.nz/localnews/storydisplay.cfm?storyid=3779699&thesection=localnews&thesubsection=&thesecondsubsection=
The Council has responded to a neighbour's complaint. He was scared  
that because the Russells were living in a motor home they might be  
Gypsies.
In the EU this would be a racially offensive objection – but it seems  
to pass muster in Rotorua.
Council has decided that they are breaking the rule against having two  
dwellings on a single lot - counting the motor home as a second  
"Household Unit"

The defintions and rules for the Rotorua City District Plan suggest  
that the Council's claim that
the Russells have two dwellings on their property is without substance.

They have let out the existing dwelling and live in their motor home.  
Having a Subsidiary Household Unit is a controlled activity in the zone.
So the question is whether the motor home constitutes a Subsidiary  
Household Unit.
It would have to be huge – at least 40 sq metres in area.

The District Plan allows a "household unit" (dwelling) and a  
"subsidiary household unit" (minor dwelling) on a lot as a permitted  
activity.
These are defined as follows:

Household Unit : means a self-contained home or residence of a single  
household which contains a single kitchen facility, with a minimum floor
area of 40m².

Subsidiary Household Unit: means a household unit, attached or  
detached, having a total floor area of all floors not exceeding 72 m²,  
excluding garaging
and designed to harmonise with the existing dwellinghouse.


So how do they get two dwellings on the site? The motor home would  
have to be more than 40 sq metres as a household unit or 72 square  
metres as a subsidiary household unit.
All they are doing is parking their motor home on the site. It is a  
genuine motor home because it seems they have driven off the property  
for a few days to get a break from all the stress. Does this mean they  
could not park a large launch or yacht on their site?

An officer of the Rotorua District Council assured viewers of Close Up  
that it cost only $600 for a controlled activity application. But  
after rushing down to Council offices the next day it seems they have  
been told they will be up for hearing costs and a development  
contribution of several thousand dollars. So it seems the $15,000  
dollars originally quoted by the Close Up team is nearer to the mark.  
So it seems we should not believe everything we are told on Television.

The Council has threatened them with jail or a fine of $200,000 which  
of course, if collected, would go into council's coffers and pay for  
their staff to persecute more people.
They will settle for the $15,000 I suppose but most organisations  
cannot use such threats to extract money from low income families.

The Council officer kept on insisting that most people had applied for  
a resource consent in the same situation and that Council was only  
asking that the Russells do the same. I have a strong suspicion that  
these willing applicants had not trotted down to Council offices  
holding out their cheques and application forms but had been subject  
to similar pressures.

Item Five: How do we respond to new knowledge?

Forget the Nitrogen – it's the phosphorus!
"Fifty years ago, no one knew what exactly caused algae blooms to  
appear on lakes and rivers. There was some evidence to suggest that  
carbon, nitrogen and phosphorous, which are associated with  
agricultural runoff and waste water, were responsible. ...
In a commentary published in this week's issue of Proceedings of the  
National Academy of Sciences, Carpenter predicts that a single-minded  
focus on nitrogen control would have disastrous consequences for  
aquatic resources around the world."

Read the full report at:
http://www.canada.com/victoriatimescolonist/news/story.html?id=381d4ce5-89a2-4901-864e-34239419bf67

Now I do not want to get into an argument about the relative weight we  
should give to nitrogen and phosphorus in protecting our waterways.  
But surely this raises an issue of how rapidly our environmental  
management regime can respond to changes in scientific knowledge. What  
if, within a few months, there is universal agreement that we have got  
it largely wrong and need to change our approach. Many rules based on  
the assumption that we must control nitrogen are built into planning  
documents, which take literally years to change. Our adversarial  
system in the Environment Court means that defenders of the status quo  
can use technicalities to prevent the court from hearing the most  
recent evidence. Should we have an independent expert authority along  
the lines of the Environmental Risk Management Authority given such a  
task acting as a Board of Enquiry rather than as a Court of Record.

Our ignorance of the biosphere remains profound, which means the  
biosphere is fertile ground for those who want to promote their own  
fads and fashions. The banning of DDT as a malarial control agent is a  
salutory reminder of this fact. It is far too easy for "environmental  
science" to take on the style of religious belief.

We need to accept this reality as part of any reform of the RMA and  
environmental management in general. Your thoughts are welcome.

Entertainment: John Clarke (aka Fred Dagg) explains Global Warming.

Go to:
http://www.abc.net.au/7.30/content/2008/s2307023.htm
This surely confirms that John Clark is one of the great losses to New  
Zealand political satire and commentary.

And do remember to "breathe out and plant a tree" now that it's so  
perfectly clear.

Funding.

It's that time of year again. Never has the Centre been asked by so  
many to do so much. And we try to oblige. However, everything costs  
money and the Government is remorseless in its demands for provisional  
taxes and GST. Many of our normal sponsors are seriously hurting from  
the downturn in property and development. We really don't want to fold  
our tent and creep away so your donations are essential to our ongoing  
efforts. The Centre donation form is attached.
Remember – even a dollar helps!