There is something deeply rewarding about Magic Eye puzzles, where if you stare at the image for long enough, and with the right kind of focus, you can discover the clearer picture.

Public policy is not like that. In fact, it is often the complete opposite: the longer you consider a policy problem, the more complex it appears. Policy problems are often multi-faceted, face unintended consequences, and are difficult to measure. There is no one, direct and immediate solution.

But just because policy problems are complex, it doesn’t mean all solutions are equally effective. And although silver bullet policies are about as rare and mythical as a golden unicorn, Ryan Bourne from the Institute of Economic Affairs argues that planning liberalisation gets pretty darn close. Although writing from a UK context, Bourne’s assessment is just as –if not more— relevant to New Zealand due to our heavily regulated planning sector.

He argues that not only would planning liberalisation ease housing affordability, it could also lower the cost of many goods and services, lead to a better functioning labour market, and improve productivity and wages.

It has long been recognised that planning restrictions and bureaucratic red-tape have been serious barriers to housing affordability. However, the connection between New Zealand’s planning regulation, enshrined most comprehensively in the Resource Management Act, and its impact on the labour market and the cost of living is often obscured.

When land costs are artificially high, as has occurred because of planning restrictions, these costs can in-turn affect workers and consumers. From childcare to social care to restaurants, high rents and property prices in turn raise prices for consumers. Land costs can also hurt lower-skilled workers’ employment options when lower margin businesses are forced out by artificially high rents.

Moreover, strict planning rules can affect labour mobility, as the cost of living in productive areas such as Auckland will price many potential workers out of the market. For obvious reasons, people want to live where the work is. If the cost of living is too high, there is a serious disincentive for people to move to the most productive regions.

While liberalising the Resource Management Act will not solve all policy problems found in these sectors, it is the one piece of legislation that inhibits the efficacy of all other policies purporting to improve housing affordability and the cost of living.

Land is a pervasive input into all kinds of production. When land costs are skewed by regulation, it’s hard for anything else to be right. It is only by lifting this layer of unnecessary complexity that we will get a clearer picture of policy challenges.