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OPINION: This is one of the most important things Labor will do this year, and you’ve probably never heard of it.
The Climate Change Adaptation and Managed Retirement Bill didn’t get much talk during the campaign, but there is a possibility that it will be one of the most important and controversial laws passed this period.
It could change parts of our economy and could lead to billions of dollars being paid to New Zealand homeowners.
Managed withdrawal is the term used to describe towns and cities that are slowly withdrawing from coastal and low-lying areas that are vulnerable to the effects of climate change. As sea levels rise, many of New Zealand’s coastal areas will become uninhabitable.
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This presents a problem for New Zealand homeowners, who are stranded with expensive properties that no one wants to buy, and for city councils, who will face costly work to continue serving properties flooded by rising sea levels.
Managed removal legislation seeks to remove people and property from these suburbs.
In a country like New Zealand, that is not an easy task. Many New Zealanders live near the coast and some of the most expensive real estate in New Zealand is coastal.
Managing a recall from these areas will be ethically complicated and costly, but doing nothing is worse.
The idea for a law emerged from the revision of the Resource Management Act (RMA) by the last government. It was a surprise recommendation and got a bit lost in the 500+ page review that focused on RMA.
The RMA, the review noted, lacked the ability to deal with the complexities of rezoning areas vulnerable to the effects of climate change and getting people to move on.
REALTOR.COM
If mismanaged, your taxes could be spent rescuing million-dollar homes like this one.
During the electoral campaign, Labor’s environmental spokesman, David Parker, committed the party to implement the retirement law administered this period. The RMA review did not go into much detail about what the new law would look like or how it would be funded. The Government will complete those details during this period.
The key challenge is obvious: owners must be bought and relocated from land that municipalities can no longer afford to maintain with essential infrastructure thanks to climate change. However, this can be difficult; As the report noted, even in Christchurch, where homeowners were paid to drop off properties in the red zone, many still chose to stay and fight.
Parker said Stuff Tuesday there was still work to be done on who bears the cost of compensating homeowners.
“Obviously, there are a number of options: municipalities bear the costs, does the central government bear the costs, do you run an insurance group? Those are probably the top three options.”
Parker said the government was aware of the fact that taxpayers rescuing homeowners could raise equity concerns, given that many taxpayers are unlikely to be that happy to bail out homeowners.
This will be particularly tricky in today’s political environment, where debates about housing affordability are highly controversial.
A taxpayer-funded rescue of a beachfront property has the potential to become a Gordian political knot, but leaving the owners to their own devices isn’t really an option either.
Parker, one of the strongest ministers in the government, is aware of the difficulties.
“Obviously it depends on the circumstances, and that is why it is complex, because for someone [for whom] it’s a vacation home they recently bought on the coast, it’s a little different from someone [who has lived in the house for a long time]Parker said.
What could emerge is something like EQC: a government-backed body, funded by a property tax that could compulsorily acquire and rescue people living in affected areas.
But government backing for such a body could be tricky. A large lien on homeowners could be politically unpleasant (imagine the “home tax” ads), and a small lien is probably not enough to fund the fund.
But financing the plan in any other way is potentially unfair, given the number of taxpayers currently struggling to enter the housing market. It’s not fair that they bail out the owners.
The other concern, as Parker acknowledges, is figuring out who deserves payment and avoiding moral hazard.
Homeowners have known for decades the dangers of climate change, yet values in the coastal suburbs of Auckland, Wellington and Christchurch continued to rise.
Millions of dollars in oceanfront real estate are at risk. An automatic rescue of vulnerable properties could incentivize the wealthy to invest millions more in beautiful waterfront homes, while ordinary New Zealanders bear the cost of insuring them.
Parker is clearly aware of this problem, but determining who to compensate will be tricky.
It will be a big hurdle in the current legislature, and that’s good. Balancing competing interests around tough issues is what Parliament is for. With so many pressing issues politicians are neglecting, it’s refreshing that this one has a proper audience.
