Bye bye excessive development contributions

Policy Parrot says:

Awesome news my feathered friends!

This Parrot has been reservedly cagey about the chances that Minister for Local Government Chris Tremain would do much of substance to sort out the pig?s breakfast that is Local Governance in NZ. Disappointingly past governments have systematically shifted more powers onto Local Government with the intent of making central government?s role more efficient but that has occurred at the expense of local level business and development.

The property industry is typically quiet. Nobody puts their head above the parapet in case it is chopped off by the public executioner for breaching the Tall Poppy Act. So when they are drawn out to have a bitch about matters it is done cautiously and reluctantly or behind the veil of lobby groups like the Property Council or the Planning Institute.

For years however the industry has cried foul over the imposition of development contributions. The former Labour Government can be thanked for the introduction of that nasty surprise that aided local government into a LGA enabled taxing regime on new development rather than an RMA enabled regime using financial contributions. It was fairly well-known that the charges were a rort and the Environment Court had done an excellent job of deciphering the bullshit, reducing payments and making things fair and equitable.

Not so under the LGA. Council?s can make up the contributions without any necessity to consult meaningfully and with no requirement to prove the rates are fair. Income from development contributions generally vanishes into the general slush fund and is washed around to pay for whatever Council treasuries need it for on an annual basis. Lax reporting rules further enhance the ability for Councils to run amok with capital derived funding and generally not have to reveal how the ledger is balanced. ?

It was good to see that Chris braved up to the Local Government annual conference and whacked them with a stick. Softly. I bet that has he spoke with a calm and reassuring voice like mummy Local Government missed the subtle hints at impending reform.

In the cold light of day its likely to have rung home like a clanging hang over and gleefully this Parrot has noted Scoop has posted the entire speech.

So on Development Contributions it is not missed that Chris is about to fuck Council?s in favour of property developers. Development Contributions are not going, but they will be severely limited to infrastructure used in the development. For the lay person that means that the new laws will restrict what a Council can charge for and it implies that the charges must relate specifically to public upgrades that are created by the development being charged.

That is materially different to the past where the charge is unrelated and generally used as a source of income that can be spent all over the place. It?s been a tax on developers ? that increases the cost of housing and for which generally is disproportionate to the actual costs to improve localised infrastructure around that development.

Here is what Chris said:

Development Contributions

Another issue which is at the forefront of both central and local government is housing affordability. As part of our work in this area we are reviewing the framework within which Development Contributions are set. ?I am keen to see development contributions made more transparent and more tightly confined to infrastructure used in the development.??I want to thank everyone here who responded to the discussion document released earlier this year. ?There was strong support for the need to update and enhance guidance and training to councils on development contributions, and for consolidating and clarifying the current legislation. ?I am currently working with officials on options for development contributions. Let me make it clear today that we are not proposing to abolish development contributions altogether. ?Legislative decisions from these work streams will be implemented in the second reform bill later this year.

Local Government will likely bitch about the reforms being more of the National Governments ?Emperors new clothes? type of decision-making. Despite what you might hear the reality is that the news goes off like a pork chop in the sun and is not a moment too soon.

Local Government has been ripping us all off for years. Spending frivolously and charging erroneously it has operated in a vacuum with no transparency and with unfettered discretion when it should have been tightly constrained to performing specific functions and roles and limited to quite clear guidelines on expenditure, income and the relationship between the two.

Good work Chris. Brass balls telling them in person.