Affordable Housing: Enabling Territorial Authorities Bill

Madam Chairperson, I am intrigued that, as the Chairperson of the Committee of the whole House, you required members not to talk about solutions for affordable housing—

The CHAIRPERSON (Hon Marian Hobbs): Please do not trifle with my ruling or discuss it.

I am hoping that in the debate on Part 2 we can canvass solutions regarding affordable housing, given that that is, to all intents and purposes, what the Affordable Housing: Enabling Territorial Authorities Bill is hoping to achieve. I will move through clauses 40, 41, and 42, and will address those particular issues, with that backdrop—without actually mentioning any solutions.

I will first convey my concern to the Committee that although clause 40 does not deal with affordable solutions to housing, it does make a couple of amendments to the Building Act. In fact, it makes three amendments. I have to say that three is too few. I do not know any builder who does not want amendments to the Building Act. Builders across the country will be delighted to see three amendments here. They have another 333 that they would like to introduce, and I am a bit disappointed that the Minister of Housing, in improving the lot of first-home buyers, has not introduced more amendments to the Building Act. It is the Building Act, along with the Resource Management Act and a bunch of other Acts that the Government has forced through this Parliament—while ignoring necessary changes—that has driven up house prices for first-home buyers. Clause 40 was a great opportunity to make amendments to the Building Act, which is making life very difficult for builders right across the country.

A builder who has done the hours and has been in the trade for 20 to 25 years cannot move a window 1 foot to the right—30 centimetres, for those of us born after the change to the metric system—without trotting off to the local district council with a bunch of plans under his or her arm to explain why it has to be done, even though the window does not change the structural strength of the wall. A builder has to down tools, go to the council with a bunch of plans, submit them, wait 5 days for a decision—

The CHAIRPERSON (Hon Marian Hobbs): Please could you take a seat. I will read to you Speakers’ ruling 44/1 on the question of relevancy: “Because a matter is incidentally mentioned”—namely, the name of the bill that is being amended—“in the course of a debate, … does not justify discussion on the …” Building Act.

I raise a point of order, Madam Chairperson. Clause 40 involves amendments to the Building Act, and I am speaking about amendments to the Building Act.

The CHAIRPERSON (Hon Marian Hobbs): You are not speaking about the appropriate amendments to the Building Act—the ones in this bill.

Who judges what is appropriate?

The CHAIRPERSON (Hon Marian Hobbs): It is whether it is written in this bill.

I appreciate that members are not allowed to talk about affordable housing solutions in the debate on the Affordable Housing: Enabling Territorial Authorities Bill, nor about Building Act amendments when the clause is about Building Act amendments. I will move on to clause 41, dealing with amendments to the Housing Corporation Act.

I shall remind members of the Committee of clause 35 in Part 1, to which clause 41, “Amendments to the Housing Corporation Act 1974”, in Part 2 directly relates. Clause 35 refers to covenants being made void. They are covenants across developments that would otherwise restrict social housing from being provided. For instance, a builder with a development of 100 houses might put a covenant across the property to say that no Housing New Zealand Corporation houses may be built there, and none of the houses may be sold to Housing New Zealand Corporation. Certainly National, as we said earlier, supported the intent of the legislation to make such covenants void, but we did mention that there is no doubt that when Housing New Zealand Corporation purchases 100 houses in a subdivision of 200 houses, that is of huge interest to the local community, and it ought to be consulted on and considered. So although National supports the idea of voiding such covenants, we do make that point. A case in point is the Hobsonville subdivision, where 400 to 800 State houses are being built. The local community is very upset about that. There has been no consultation at all, and it has caused a lot of angst in the local community.

I now move to clause 42, which does not address issues to do with the Building Act and does not address issues to do with affordable housing solutions. It is well worth canvassing, because it deals with amendments to the Local Government Act 2002. This clause does not deal with development levies. Development levies are charges to builders and developers that in some cases are spread across property developments throughout the country, driving up the cost of properties and driving up the cost to first-home buyers of building houses, because in the end they pay the development levy through the added cost on to their homes. That is not what this clause is about. This clause is not about the Local Government Act driving up the costs of first-home buyers. This clause is about an amendment to section 102(5) of the Local Government Act by adding the following paragraph, which is a fascinating paragraph indeed: “(c) an affordable housing policy, under the Affordable Housing: Enabling Territorial Authorities Act 2007.” It has no mention of development levies or anything like that; there is just that mention of that amendment.

Earlier in this debate I made a note to myself on the Order Paper—as members do—in response to one of your rulings, Madam Chairperson. The note said that I thought this Affordable Housing: Enabling Territorial Authorities Bill was about providing solutions. I thought Part 2 was about making amendments to other enactments that enhance and underpin the aim of this bill, which is to make housing more affordable for people.

💬 Phil Heatley: Don’t talk about that.

You see, I made a note to myself earlier on in this debate, during the debate on Part 1. As I think about things I like to note them down in case I get an opportunity to speak again. My note was that I thought this bill was about providing solutions. But apparently we are not supposed to talk about that, so I will move on to Part 2, “Amendments to other enactments”, and to the amendments to the Building Act 2004.

I started my contribution to the Committee stage by keeping it local, so I will go local again, and I will go back to the Waimate District Council and its grappling with the Building Act. I had a letter from the chief executive of the Waimate District Council, Tony Alden, outlining the compliance costs that his small rural local authority has to meet in terms of audits, long-term council community plans, and, most specifically, compliance with the Building Act 2004. The Waimate District Council, if it decides—because this is an enabling bill, and is about providing solutions—to undertake a housing needs assessment, will have to apply the consequential amendments to the Local Government Act 2002 and the Building Act 2004, but that will be at a cost, and at a time when councils like Waimate’s are grappling with accreditation and coping with the poaching of their planners and engineers by larger authorities. The Government has created a trade in planners because of the Building Act. There is not only a shortage of planners but a trade in planners. Small, rural local authorities are the very ones that are least able to cope with the requirements of this so-called enabling bill, which has the so-called purpose of providing solutions. National can see only problems and costs with this bill.

The amendments to the Building Act will not just happen by themselves. The Waimate District Council, if it decides to undertake a housing needs assessment, will require a great deal of work from its one planner—if it has a planner. I do not whether it does at the moment, because sometimes in small authorities those positions remain vacant for a time, and they have to bring in consultants. That is life! The Government’s changes in the Building Act have created a market for planners and engineers, and the small local authorities are the ones that miss out. So my Waimate District Council will struggle with these amendments to Building Act 2004, should the council decide to have an assessment—because this is an enabling bill with the aim of providing solutions, which apparently we are not to talk about, but they are there none the less, apparently. It will struggle with these amendments to the Housing Corporation Act 1974 and these amendments to Local Government Act 2002. This bill will come at a cost to the ratepayer.

Allow me to beaver away to see whether I can stay within the rules that you have set, Madam Chair.

The CHAIRPERSON (Hon Marian Hobbs): The rules have been set by the House.

Of course they have, Madam Chair, and I will do my very best to comply with them.

I want to talk to clause 42, “Amendment to Local Government Act 2002”, and draw to the Committee’s attention that subclause (2) amends schedule 10 by inserting new clause 7A, which states: “Affordable housing policy—A long-term council community plan must contain a summary of the local authority’s affordable housing policy, if …”. I want to talk about that word “if”.

💬 Sandra Goudie: “Eff”?

Call it what you like. However it is pronounced, that is the word I want to focus on. That word is the nub of this whole bill. We are here tonight talking about something that may never happen. This bill, and particularly this subclause, says to local government: “If you want to, then go ahead and do it, if you think it’s important and if you think it’s necessary. If you don’t want to do it, then it does not matter.” Councils do not have to focus on it, or talk about it, or put it into their long-term council community plan—only if they want to make the comment. That word “if” is the nub of this whole debate.

💬 John Hayes: “Eff”?

The Committee should be talking about this word “if”—or “eff”, or however one wants to say it. To me, that one little word makes that clause meaningless. Local government up and down this country is saying to this Parliament, and said so in its submissions: “Not interested, thank you very much. We aren’t interested because we can’t do what this bill asks us to do.” When the bill says “if you want to”, we have had a response from local government right across this nation saying “Nope.”—

💬 Hon Member: “Eff”?

—with rare exceptions; there were one or two. No, we are not saying “eff off”, but the fact is local government has rejected it. We have to ask ourselves why, if we put a bill out before local government and they come back to the select committee and say “No, we don’t want to be involved, and if you give us the option of not being involved, then we’re not going to.”, this Parliament would ignore that advice from local government. There does not seem to be any sense in it.

The problem that local government authorities have, up and down this country, is that they are met with increasing costs. We are going through another ratepayers’ revolt, and one of the issues that local government authorities raised with us is that if this bill gets imposed on them and if they have to follow it and undertake to do the work, then that will add more costs to their ratepayers. They were asking collectively why they should have to be responsible for social housing. They said they think it is a Government responsibility, generally. Certainly, that was the view of the smaller local authorities. They say that if they have the option, then they do not want to have to be responsible, thank you very much. They say they will not put this sort of thing in their long-term council community plans.

I say that is the tragedy of what we are debating tonight. Some people will be listening to the debate on their crystal sets, thinking that this Parliament is going to address the issue of affordable housing, and their expectations will be raised. Unfortunately, they will turn to their local authority and ask whether it is going to do that. The local authority will say: “Nope, the Government said ‘if’ we want to, and we are not going to. We are not interested. You’re not going to get it.” What a shame!

I wish to continue the theme in the speech made by my colleague John Carter, but, first of all, I turn to clause 40, “Amendments to Building Act 2004”, and pick up on the theme in the speech made by my colleague Phil Heatley, our housing spokesman. I support his comments that it is really unfortunate that this legislation does not provide for greater amendments to the Building Act.

Clause 40(2) amends section 49(2)(b) of the Building Act by adding the word “and”. Subclause (3) amends section 49(2) by adding paragraph (c): “if section 28 of the Affordable Housing: Enabling Territorial Authorities Act 2007 applies,”—if it applies—“notification under section 28(6) of that Act.”

I think that a number of other amendments could have been made to the Building Act to help us secure more affordable housing. We could, for example, have amended the Act to reduce the cost of building permit charges applied by territorial authorities. You see, what seems to be happening amongst my five district councils in the Wairarapa electorate is that they are being asked to cover their backsides with such a lot of—

💬 Hon Member: Bumf.

—bumf that they are having to make huge charges and are requiring vast amounts of information that are not necessary for the task of building things. So I feel that this legislation could amend the Building Act in order to reduce the cost of permits by requiring less information.

Secondly, I feel that the legislation could amend the Building Act to reduce the cost of resource consents. In the last year, for example, the South Wairarapa District Council, in my electorate, found fit to charge a constituent in Greytown, where I live, $900 for a resource consent to build a hen house that would take five hens—$900 for a hen house to accommodate five hens. I think members would agree with me that these sorts of charges unnecessarily add to housing construction costs.

The next area where we could ask for an amendment relates to clause 40. The amendment would require that there be less responsibility on the part of councils to collect 20-page and 30-page sets of plans for very simple dwellings. If we are to build affordable housing, we need such an amendment. The planning framework at present requires far too much on the part of builders. I am told that the cost of applying for a building permit in my electorate, from any of the five councils, begins at $7,000 per house.

I move on to clause 40A, “Amendments to Goods and Services Tax Act 1985”, and I pass on the thoughts of many of my constituents that this Act could be amended in such a way as to remove the cost of GST from the purchase of first homes. I am doing that on behalf of my constituents, not on behalf of the National Party or myself. The idea has been suggested to me by constituents, and it could be addressed by an amendment to clause 40A if the Government were serious about reducing the cost of housing.

If we look at clause 41, “Amendments to Housing Corporation Act 1974”, we see that, again, we are not being asked to make any significant amendments at this point in the legislation, except for subclause (3), which amends section 3B of the Act by adding new paragraph (c), which states: “to arrange for territorial authorities applying the Affordable Housing: Enabling Territorial Authorities Act 2007 to receive appropriate advice and information, of a policy or other nature, about housing and services related to housing.”

This legislation is totally unnecessary. That clause delivers absolutely nothing to the people of my electorate. It will make no difference whatsoever to the cost of their housing, except that it will add to construction costs.

I would like to follow on from my most eminent colleague John Carter, who spoke about clause 42, “Amendments to Local Government Act 2002”, and particularly about new clause 7A, “Affordable housing policy”, which is to be inserted in schedule 10 of that Act by clause 42. This is Mr Carter’s famous “if clause”, and it states: “A long-term council community plan must contain a summary of the local authority’s affordable housing policy, if it has adopted one under the Affordable Housing: Enabling Territorial Authorities Act 2007.”

What I understand that to mean is that there is no way that a council could actually consult on an affordable housing scheme in conjunction with a long-term council community plan. It would have to run a separate process in time to catch the process of a long-term council community plan if it wants to include a summary of the affordable housing scheme within the long-term council community plan. So in actual fact it will have to either wait for another 3 years before it can do its long-term council community plan or run it in a pretty condensed time frame through a consultative process with its community to try to get it in the next round of a long-term council community plan.

So, in spite of the comment made earlier by a speaker, I do not see that there is any way that an affordable housing scheme could go through a consultative process in tandem with a long-term council community plan. That just adds another cost, because the council would not have that advantage. If it wants a summary, then it will have to do all that work beforehand, and it will not be able to run it concurrently. So there we have that separate cost of consultation and, of course, the hundreds of thousands of dollars that go with that. Councils have already said that there are 60-plus pieces of legislation that already add about 6 percent to the rates bill as it is.

Further, in speaking to Part 2, I am looking at the commentary on the bill with regard to the amendments to the Goods and Services Tax Act 1985. As my learned colleague John Hayes mentioned, there was a recommendation for the inclusion of new clause 40A, which would make consequential changes to that Act. There are two main effects of the recommended amendments. The commentary states: “Under new clause 40A(2), when a person undertaking a development made an affordable housing contribution payable to the territorial authority, the authority would be deemed to supply goods and services to the developer. Under 40A(3), when a contribution from a person doing a development was in the form of land, both sides of the arrangement would be charged at a rate of zero percent.” The commentary goes on to state: “These amendments should”—not “will” but “should”; ever hopeful—“reduce compliance costs for all parties.”

Well, it quite patently will not. It will not do anything in terms of reducing compliance costs. If we look at what compliance costs are, we see that they are the costs of applying for a resource consent and the process that one has to go through to do that, and, hopefully, the consent process is not challenged. That is a compliance cost. Then, the cost of building consents for actually putting any housing on the subdivision, if that is what one is doing, is a compliance cost. So I do not see that having a GST rate of zero percent will do very much at all, because a person is already incurring all those other costs and they are not being changed in any way, shape, or form.

I refer to the comments made earlier by my learned colleague Phil Heatley, who talked about development contributions, which are another compliance cost that will not be addressed by this bill.

💬 Phil Heatley: They listen to me!

Oh, we absolutely do listen. You know, the tragedy of it is that those members on the Government benches are not listening, because they do not understand this stuff. They cannot get their heads around the simple cost of doing business, because all they can see is the profit line, and they hate that. Businesses making a profit is an anathema to them. So we are looking at amendments that “should” reduce compliance costs, and at the word “if”, which John Carter was fixated about in clause 42, “Amendments to Local Government Act 2002”.

I rise to speak to Part 2 of the Affordable Housing: Enabling Territorial Authorities Bill and to address specifically the amendments being made to the Local Government Act 2002 in clause 42. This clause amends the Local Government Act, and I will tell those people who are listening out there to this debate what it does. Clause 7A, “Affordable housing policy”, which is to be inserted in schedule 10 of that Act by clause 42, states: “A long-term council community plan must [now] contain a summary of the local authority’s affordable housing policy, if it has adopted one under the Affordable Housing: Enabling Territorial Authorities Act 2007.”

Government is about providing leadership and about providing the tools to achieve certain goals in that leadership. Clearly the leadership that we are trying to achieve here is to provide and increase the supply of affordable housing. I am guessing that the aim of inserting clause 7A is to help achieve that goal. I have some questions for the Minister in that regard. I ask the Minister in the chair, the Hon Maryan Street, how many councils indicated to us in their submissions that they will be looking to include a piece on affordable housing policy in their long-term council community plan.

💬 Jacqui Dean: How many? None.

None. So here we are, introducing legislation with the aim of increasing the supply of affordable housing by introducing a clause into Part 2 of this legislation and changing the amendments to the Local Government Act, and taking up Parliament’s time to do something that will not achieve the goal that we set out to do. So I ask the Minister a second question. Did we do any analysis of the cost to local councils of doing an affordable housing policy?

💬 Phil Heatley: No, but Local Government New Zealand did.

Did it? And what was the cost there?

💬 Phil Heatley: It blew out in the case of most council’s plans.

OK. I have another question for the Minister in relation to this long-term council community plan policy. If a council already has affordable housing within its boundaries—as the Napier City Council does—but does not intend to expand its affordable housing, will it now have to include a piece in its long-term council community plan about how it manages that affordable housing? That is an interesting question. And I ask the Minister this: in doing this legislation, in the analysis—in the projections that have been done for the cost of implementing this legislation—how many affordable houses are proposed by local governments around New Zealand? Were there indications from those who submitted that they would be going down the track? Maybe there were 150 in Auckland or 60 in Taranaki? I have another question for the Minister in regard to the long-term council community plan and the analysis that was done. How many families will benefit from this?

The point I make—and I will finish on this—is that Government is about leadership. Yes, there is a problem in this country about affordable housing, and we have gone through this legislation with the aim of doing something to improve the lot of people by providing affordable housing. But the clear fact is that there are very few, if any, local governments that will actually do anything about the amendment that we are proposing to the Local Government Act 2002. They will do nothing. This is a complete waste of time. Thank you.

I move, That the question be now put.