We are all familiar with nightmares. They can be terrifying. Our subconscious has an evil knack of drilling into our deepest insecurities. And the images it throws up can be so vivid and so real our unconscious mind may be unable to tell whether we are awake or merely dreaming. The loss of something precious, the inability to escape from danger, and even (so I am told) appearing in public naked – all these can be the subject of our worst nightmares.

For many people, however, their worst nightmares have been real. Many of these are chronicled by the Productivity Commission in a devastating critique of New Zealand’s urban planning regime released for consultation last week.

Entitled, Better Urban Planning, the Commission’s report looks beyond our current resource management system to consider whether there are any better ways of organising our cities.

The Commission acknowledges that planning can help to maximize the benefits of cities, while also managing their costs, including the pressure they impose on infrastructure and the natural environment.

However, it seems New Zealand’s urban planning system is ill-suited to meet the rapid and unpredictable way cities evolve and grow. Instead, it has resulted in both poorly-targeted regulation and too much regulation - regulation that is highly-detailed, excessively prescriptive and often arbitrary in its outcomes.

The report is an indictment of twenty-five years of planning under the Resource Management Act, and an indictment of our urban planners.

Planners laid bare

For a change, the tables are turned on the planners. Rather than being a property developer’s worst nightmare, it is they who are stripped bare.

There is a penetrating focus on the "c" word: culture. It seems the culture of our planners is to assume that the need for planning is self-evident. Instead of assessing whether planning is the right policy response, the policy options for our planners are, planning and, well… planning. Little thought is given to the possibility of other, better-suited policy options, including market-based mechanisms.

This is surprising, especially when the report observes that the planning profession has struggled to find “a unique body of knowledge that it can lay claim to, or a specific professional space that it can uniquely occupy”. This has contributed to planners falling back “on legislation to define (and justify) their role in the planning process”.

Unfortunately, the legislation they rely on is notoriously imprecise. The Resource Management Act is replete with terms that have no objectively ascertainable meaning. The result is planners have almost complete discretion in decision-making, with no, or little, accountability.

A catalogue of craziness

The report contains a depressing catalogue of the crazy aspects of our planning system. Here are some of the worst.

First up is the concept of “sustainable management”. This was intended by the Act’s founders, Sir Geoffrey Palmer and Simon Upton, to provide an “environmental bottom line that must not be compromised”. To them it was about protecting and preserving our life-supporting eco-systems.

Indeed, Upton is recorded as saying that the regulatory tools in the Act would be “tightly targeted”. They were only to be used where needed to protect the environmental “bottom lines”.

Unfortunately, sustainable management is such an imprecise term that planners are able to interpret it to mean anything.

Take floor-to-ceiling height rules. You might wonder what they could have to do with sustainable management. Believe it or not, that is how our planners justify them. How, you might ask? Well, buildings are a “physical resource”. And “sustainable management” of that resource requires regulation of internal building structures “to ensure re-use and adaptability”.

You could be forgiven for thinking this comes from a Tui billboard. Yet, floor-to-ceiling rules featured in the Proposed Auckland Unitary Plan. And they are part of several other district plans. And as the report notes, not one of the underlying council analyses appears to have considered the alternative arguments "that owners of buildings will have incentives … to design properties that will meet a range of needs”.

While floor-to-ceiling restrictions may seem a trivial criticism, they are symptomatic of a systemic failing of our entire planning regime.

Next up is the blindness of planners and the planning system to price signals. Despite the critical effect of land prices on housing affordability, the report finds councils ignore price signals. Instead councils rely on population projections, which are infrequent and inaccurate. The blindness to price signals means the system is "slow to respond to growth pressures, tends to undersupply development capacity, lacks important checks on its activities, and can target the wrong issues.” This shortcoming speaks for itself. Auckland house prices are its outcome.

Third is the planners’ crowning glory, the “urban design assessment”. Of course, determining good design is inherently difficult. That has not stopped our planners trying. But the Commission found urban design requirements too often “lack perspective, consistency or a sense of their cost or economic implications”. Perhaps more fundamentally, why should environmental protection legislation put landowners and developers at the mercy of the aesthetic judgement of council urban designers at all?

Fourth are the widespread use of “Centres policies” and “Business-specific zone restrictions”. The former are a council-created hierarchy of business hubs, each level with its own permitted developments. The latter restrict businesses in specified zones to certain types of activities. For example, the Hutt City District Plan restricts businesses near the Seaview marina to fast-food outlets and marine-related activities. Nothing else will suffice in the Hutt’s SimCity.

Not surprisingly, the findings in the report are that these tools are at best ineffective. At worst, however, they are a serious constraint on urban growth and efficiency.

Finally, come the genuinely crazy social objectives, which bear little or no connection to land-use regulation. In the Proposed Auckland Unitary Plan these included the goal of eliminating life-expectancy gaps “between European, Maori, Pacific, and Asian ethnicities by 2040”.

This is a laudable goal. But the report notes (in masterful understatement) that councils have pursued such social objectives “without considering whether land use planning is the most efficient and effective method for their resolution”.

Though long, the Productivity Commission’s report is a good read – that is, if you’re not a planner. As well as assessing the current regime, it goes on to propose a framework for a new planning system.

We can only hope the report heralds a new age of urban planning, one that facilitates growth, is responsive to change, and respectful of the decisions made by private individuals and firms.

While the current one may have lasted a quarter of a century, perhaps there is now a chance we’ll wake from our next planning nightmare and find we were only dreaming.