Affordable Housing: Enabling Territorial Authorities Bill

I move, That the Affordable Housing: Enabling Territorial Authorities Bill be now read a third time. The purpose of the bill is to enable territorial authorities, in consultation with their communities, to develop and adopt affordable housing policy that requires developers to provide an affordable housing contribution for low to moderate income households. The passing of the bill will give territorial authorities new powers and a clear mandate to increase the supply of affordable housing in their areas.

The supply of affordable housing is currently vexing a number of territorial authorities around the country. Those authorities see the need to improve economic development and economic prospects within their jurisdictions in order to enhance the lives of the families and communities living in those areas, yet they see forces over the last 5 years in particular as having worked against housing affordability, for a number of reasons. There are five places in New Zealand that are extremely expensive to buy houses in. The bill will give territorial authorities in Auckland, Wellington, Christchurch, Queenstown, and Nelson, in particular—but also anywhere else where the pressure of unaffordable housing is being felt—the ability to require a contribution of affordable houses, money, or land from developers, in order to satisfy some of the need for affordable houses to accommodate the workers and families who are required to boost and support the kind of economic development to which those territorial authorities aspire.

The use of the new powers in this bill will vary across the country, depending on the need, so it was important to not make the bill compulsory. One might have inferred from John Carter’s contribution earlier that the National Party was keen to make the bill compulsory, or alternatively, to do nothing—that is the only other inference that one could have drawn from John Carter’s contribution. The bill is an enabling provision, not a mandatory one.

The other important aspect of the bill is that the policy for affordable housing must be developed in consultation with the community. Nobody wants to see enclaves of disadvantage proliferating throughout the country—

💬 Hon Clayton Cosgrove: The Tories do.

Yes, perhaps. It may be that they are the only ones who wish to push poor people farther and farther out, beyond the reach of community services and transport nodes. That is not the vision of this Labour-led Government for our communities or our country. This Labour-led Government has a vision of mixed communities with a range of tenures from State house rentals through to homeownership at very high rates, in order to achieve harmonious, cohesive communities that are prosperous and safe for everybody.

The bill includes a range of incentives that territorial authorities can offer to developers, to facilitate the provision of affordable houses. The bill also consequentially amends four pieces of legislation. The select committee process has simplified the bill, and I have worked closely with Local Government New Zealand to ensure that the bill is more closely aligned with the processes that local government bodies are familiar with in the Local Government Act 2002.

I thank all of those who made submissions on the bill. I also thank the Local Government and Environment Committee and acknowledge the work it has done to bring the bill to this stage. Thank you, Mr Deputy Speaker.

I was remiss in the Committee stage for not speaking about the commencement date of the Affordable Housing: Enabling Territorial Authorities Bill, and I would like to raise that now in my third reading speech, which, of course, I am quite entitled to do. Listeners will be interested to know that this legislation comes into force when it receives the Royal assent, which is, of course, almost immediately. That commencement date is quite ironic in the sense that councils may or may not take up this legislation. In fact, most councils across the country have opposed the bill, as have builders, developers, and those who provide housing.

This legislation has come 6 years too late. During the previous 6 years, probably ending at Christmas last year, property prices have skyrocketed in New Zealand. They have been growing much more quickly than household incomes. That is what housing affordability is all about. It is about the balance between household incomes and the buying power of that income—in other words, household incomes versus the cost of housing. The cost of properties is divided into two aspects: one is the cost of the building and the other is the cost of the land. Property prices have skyrocketed over the last 5 years, up until roughly Christmas last year. In terms of those two cost components, building and land, it is land that has increased in cost—more so than the cost of building.

We have now reached the point where property prices have pretty much stabilised right across New Zealand, and in fact they have dropped in some areas. So here comes Maryan Street and Labour. Property prices have finally stabilised, if not dropping further, and she suddenly has an answer; 5 or 6 years later we have had legislation brought into this House, after property prices have stabilised. Am I saying that the stabilisation of property prices across New Zealand has solved the affordability problem? No, I am not. What has happened is that property prices have now settled at a value well over and above what most first-home buyers can afford. They are still in trouble. The reality is that we had a period of growth that went for over half a decade, and the Minister, Maryan Street, now rides over the hill on her white horse to save the day, but she is 6 years too late. That is obscene. What has she saved the day with? She has saved the day with legislation that suggests that local councils across the country may or may not like to force builders and developers to set aside 5 or 10 percent of their land for cheap housing, to set aside a whole bunch of cash from their housing development for first-home buyers, or to build a whole bunch of cheap houses themselves.

The Minister ignores the fact that that will drive up property prices for everybody else. As the correspondent who has been emailing me tonight has suggested, what Labour members “do not want to acknowledge, or at least they choose to ignore, is that if you force developers to provide low-cost sections it will only force the price up of other sections”, meaning that the house price of everyone else in the subdivision goes through the roof. It is quite true that if we force property developers, builders, or whomever to take a big hit on a few sections in a subdivision, all it will do is force up the price of houses in the other parts of the subdivision, because those builders will have to recover their costs. So a whole bunch of people end up paying more for their houses in order to possibly help a smaller bunch of other people.

Of course that smaller bunch of other people may never be helped because, as we heard at the Local Government and Environment Committee, very few district councils across the country are interested in taking up the legislation. In fact, I was quite amazed that the Minister acknowledged the five regions in New Zealand that have serious affordability problems: Christchurch, Nelson, Queenstown, Auckland, and Wellington. Interestingly, Auckland City Council and the councils in South Auckland, mainly, and also North Shore City Council do not want a bar of the legislation. Wellington City Council came to the select committee and had very serious concerns about the legislation. Nelson City Council is not interested. We heard from Christchurch City Council that it may or may not use the legislation. Queenstown Lakes District Council is already implementing the principles of the bill without the legislation. So there we have it. Of the five areas that the Minister Maryan Street identified as having serious affordable housing problems none of the five are likely to use this legislation. That is the disgrace we are seeing here tonight. The 6 years have passed when the Government could have done something. It did not do anything and finally, in the dying days of this Parliament, it passes legislation through this House—forces it through this House—that will have no effect whatsoever upon the regions that may or may not take it on, because they are not at all interested.

My question to the Minister is why she does not do something for first-home buyers that will actually help them. Why does she not address the issues that matter? There are four or five of those issues. First of all, what about tax relief? It is take-home pay and not gross pay that services a mortgage. So why does the Government not give people more money in their back pockets so they can afford to service a mortgage? Why does it not do that? That would help everybody; it would absolutely help everybody. Take-home pay matters. Why does the Government not deliver a tax cut for those first-home buyers so that they can service a mortgage? The deposit is not the problem; it is the weekly or fortnightly payments that trip up people. Members on the other side of the House do not seem to understand that, but that is the case.

Secondly, why do the Minister and her Government not run this country in a better way, economically and fiscally, so that we can get interest rates under control? Interest rates, more than any other factor, affect a person’s ability to service a mortgage. The Minister will acknowledge that the average mortgage in this country is about $200,000. That is not the average cost of a house but the average mortgage. A 1 percent interest rate drop equates to two grand a year, which is 40 bucks a week. So a 1 percent interest rate drop can mean $40 a week to a first-home buyer. That is a significant amount of money, I can tell members, for many households today that are really struggling. A 2 percent interest rate drop would mean 80 bucks a week. That is very significant. The members on the other side of the House who have not made a contribution in this debate all night but simply sit there and mock do not even understand that take-home pay matters and that interest rates matter.

What is more, the Building Act and the Resource Management Act are two pieces of legislation driving up property prices right across the country. Why? It is because builders are finding that the cost of compliance under the Building Act and under the Resource Management Act has driven up property prices over the years. Why? It is because of the cost of the resource consent process.

I raise a point of order, Mr Speaker. I would just like your guidance. I have been speaking for about 8 minutes. [Interruption] Can I make a point of order in silence?

💬 Mr DEPUTY SPEAKER: Yes, we must—

The members on the other side of the Chamber have been heckling me the whole time. It has not stopped me at all; I have not responded to their heckling. They have not disturbed me one iota. Why do they bother, Mr Speaker? Can you answer that?

💬 Mr DEPUTY SPEAKER: Phil Heatley.

Why does the Government not do something about the Resource Management Act and the Building Act? Why does it not give tax cuts so that people can afford to pay off their mortgage each fortnight? Why does it not get interest rates under control? Those things would really make a difference, instead of bringing legislation into the House in the dying days of this Parliament that no local authority across the country will adopt.

It is 25 minutes to 12 o’clock so I will keep this rather short. The working public of New Zealand who are listening to this debate could be forgiven if they feel somewhat confused after listening to the National Party contribution on this significant Affordable Housing: Enabling Territorial Authorities Bill.

The public will have heard speakers from the National Party attempt to portray empathy for the local citizens of New Zealand, but the truth is that those members do not care. They do not care about people who are struggling with private rentals. They do not care about families who want to get into their first home. The truth of the matter, for those who are listening, is that National just does not care about ordinary New Zealanders. We can look at 1990 when National was the Government. National Party members were the ones who sold off the State houses of New Zealand. They were the ones who sold them off to their friends. They were the ones who refused to maintain the stock that we now have to rebuild—that is what the Labour Government is doing.

I acknowledge the Hon Maryan Street, because she is a Minister of Housing who is showing leadership in difficult times. She is a Minister who is showing innovation by coming forward with the Affordable Housing: Enabling Territorial Authorities Bill. Labour believes that access to decent, affordable housing is fundamental to the health and well-being of families and communities. It is a basic human right of New Zealanders that the National Party does not seem to consider to be important.

The bill provides new powers to enable territorial authorities to increase the supply of affordable housing in their local area. It does not try to impose anything on local authorities; it is an enabling bill about working in partnership with local government throughout this country. “Partnership” is a word that the National Party ought to be familiar with; it ought to learn from this Government. This is a Government that is prepared to work in partnership with like-minded parties in this House.

I join the Hon Maryan Street in commending this bill to members of this House.

There is only one comment we can make about Mr Sio’s speech; one word sums it up and that is “nothing”. It was a zero contribution. What a shame. The sad and unfortunate thing is that—

💬 Hon Clayton Cosgrove: Did you think of that yourself?

I tell the member across the House that he certainly would not have done so. He has not the capacity to think of anything. All he thinks of is nothing, because that is what is between his ears.

The unfortunate thing about that contribution and those we have heard so far from the Government side of the House is that this is a serious issue. It is an issue that the Minister of Housing, Maryan Street, did hope she might achieve something on. She hoped that through this legislation she might make housing a little more affordable for some people. Sadly and unfortunately, that will not be the result. The sad fact is that had the Government worked with the industry, worked with building firms, it could have come up with something that would have been very positive for people on low incomes. It could have come up with good, sturdy houses of a smaller size—with three bedrooms, but sturdy, warm, healthy, and safe. All those things could have happened. In fact, a firm up north right now is looking to put such a house on the market. It is a small, three-bedroom home, but nevertheless it is a good start-off home.

Most people in my generation started off in a smaller-sized house then moved up. We have gone away from that in this country because our expectations have grown beyond our ability, and we need to get back to the fact that it is actually acceptable for people to start off in smaller-sized homes—something not quite so pretentious that nevertheless allows people to bring their children up safely and healthily. A firm will be putting a house on the market for about $120,000—just for the house. That firm is to be commended. The shame of it is that this Government did not think to start working with the firm and to ask it how it could help make that happen.

💬 Shane Ardern: They’ve added $30,000 to the price of it.

Well, the shame of it is that if the Government had been prepared to look at the whole issue of the compliance costs, the National Party certainly would have supported it. Local government now issues building permits. The extra compliance costs for an average-sized home are about $25,000 per home. That is a hell of a lot before one even starts building. We also know that compliance costs are imposed on sections, because of councils’ obligations under the Resource Management Act. Lianne Dalziel asked earlier who passed that Act: it was passed by the National Government with the support of the Labour Party back in 1991.

💬 Hon Lianne Dalziel: So what is your problem?

She may have forgotten, but it was actually a unanimous decision—just so that she understands we are all complicit in the cost of it. She sits there and asks who passed the Resource Management Act: we all did. The sad thing is that this Labour Government actually has had a chance to redress and reform a whole lot of it, and the Government has forsaken that opportunity. Well, that will be addressed if we are fortunate enough to become the Government after the next election. But the problem in the meantime is that it actually costs, on average, about $50,000 a section now for someone to start subdividing.

💬 John Hayes: At least.

Well, yes, on average. That is an estimate—it is hard to guess exactly. But it is about $50,000, plus $25,000 for building, so one actually starts off $75,000 behind. If we had addressed that issue in this bill, maybe we would have made some more progress, plus worked with—

💬 Hon Lianne Dalziel: Why didn’t you fix it? You had 9 long years.

Well, we have both had 9 long years—and they have been long years. The sad thing is that this Government has done nothing to address it at all.

💬 Hon Lianne Dalziel: You’re making it up.

Well, the member over there shoots her mouth off, and that is the problem we have. Those members talk a lot and will not listen. She has actually done nothing at all other than chap her gums. If she just listened for a minute, she would see that I am actually trying to be constructive, but that is not something she is known for.

The fact is that had we addressed those issues, we would have actually seen something positive. Indeed, I believe that if we had addressed some of those issues, we would have the support of local authorities across the country, as well. It is they who tell us of the problems they have. When one talks to local government—and I am sure the members here have and do—one sees that it is bound by rules and regulations that cause it problems in servicing its constituents and ratepayers. That is part of the problem that we should have been addressing in this legislation about affordable housing. Sadly and unfortunately, it has not been addressed. I know that members in this House have tried to get round the whole issue of building regulations. Unfortunately, it has just got out of control. I was told just recently by a roofer that if he had to follow every rule and regulation set down by the Department of Building and Housing, every roof he put on every house would leak. That sort of stuff is nuts, and it is that sort of stuff—

💬 Hon Clayton Cosgrove: Rubbish!

Well, I can get the guy to come and talk with the member. The fact is that if that roofer built according to the law, the roofs would leak. The silly thing is that we have people writing rules and regulations who do not know about building. The fact is that sort of stuff is increasing the cost.

On top of that, the unfortunate thing about this bill is that it adds to the continued cost that this Government is imposing on local government. This is just another cost. If the local government bodies pick up this challenge put down by the Government—and most, if not all, of them will not—then it will just be another cost. If members look at clause 42, they will see that it says that local government bodies have to “contain a summary of the local authority’s affordable housing policy,”. Well, that means that if they develop an affordable housing policy, they have to get consultants in to develop it.

💬 Hon Lianne Dalziel: Read the bill.

I am. I am reading it right here. Just for members, I say that it says “A long-term council community plan”—I will read it slowly for the member, because I know she finds it hard to absorb—“must contain a summary of the local authority’s affordable housing policy, if it has adopted one…”.

💬 Hon Lianne Dalziel: “If”!

That is right. I talked about “if”.

💬 Hon Lianne Dalziel: What does “if” mean?

Well, did I not make a speech about “if”? Did I not say that that is why it is so silly? It actually means that local authorities do not have to do anything. So why do we have this bill before us at all? The member just argued against herself. The bill says “if” local authorities do it—well, most of them will not do it. Most of them will not do it, because they know that it will not achieve anything, but if they do it, it will cost the ratepayers money. If they do it, it will cost the homeowner more. The chances are they will not do it; I am sure they will not.

The only thing that is iffy is that member’s future, actually; her ability to continue making these stupid rules is limited, thank goodness. But the fact is we have legislation here, and the member herself has just asked why we should put this provision in if no one is going to do anything with it. The sad fact is that that is what the bill will end up with—nothing. I started with nothing and this bill will unfortunately end up with nothing.

Tēnā koe, Mr Deputy Speaker. It has been a long day. I do not know whether it was my good fortune, but as a consequence of the Order Paper I had to be here at 9 o’clock this morning. Those of our fellow citizens who are working out there and making sure that our country is still alive, who are travelling back from work having completed their night shift, or are travelling to work to start a night shift, may be interested to know that the House is now hearing the third reading of the Affordable Housing: Enabling Territorial Authorities Bill. I stand on behalf of New Zealand First to say that we continue to support this bill.

This country needs more affordable homes for its citizens. The bill provides for that. It is very interesting to hear critics of the bill accuse the Government of doing nothing, yet here we have a bill that was introduced into the House to help the issue of affordable housing for its citizens, and they still criticise the Government for it. The bill provides a vehicle for territorial local authorities, which is voluntary. Those who have spoken against the bill have questioned this voluntary aspect. That then raises the question as to what the alternative is. Making it compulsory, or doing nothing?

Then we heard that those who have spoken against the bill would solve this problem with tax cuts and by controlling interest rates. Well, I tell those home seekers—in fact I caution them—to please, please not get sick; to be prepared to home school their children; and to talk to their neighbours and plan how they intend to protect themselves from criminals. Those are just some of the services that will be affected. But the public can rest in the knowledge that, with the tax cuts, they will be able to pay the tolls to travel on the roads.

I apologise for my cynicism, but here we have a bill that is intended to address a serious issue, and, rather than giving support to it, much of the debate has been to deride it. However, I appreciated comments about how developers would pass on those costs to others. When I heard those comments, I pondered on the houses built in the 1950s, 1960s, and even 1970s, and on the fact that the three-bedroom homes of that era were very much smaller than the three-bedroom homes of this day and age. I wonder whether it could be a practical solution for designers or architects to revert to the 1950s, 1960s, and 1970s design of homes, so that we would then be able to build more on the land that is available. Now that might sound pretty simplistic, but I ask members to think about it, if that is the concern that people have. Quite clearly, this bill is all about allowing territorial local authorities to exercise their option to take it up, but it does—

💬 Chris Tremain: They can do it already.

But, I say to the member that some do not, and, as a consequence, nothing is done. Again, here is another vehicle. I do not want to prolong this debate. I am quite clear, on behalf of New Zealand First, that we support this bill. We commend it to the House.

I will raise some pretty scary issues here. The Affordable Housing: Enabling Territorial Authorities Bill gives councils the option as to whether they want to have an affordable housing scheme. That is great, I say to members. It is optional, but the scary part is that if councils decide to take up that option and go down the path of having an affordable housing scheme, the bill states in clause 28 that binding commitments may be required. We must remember that an affordable housing scheme will have a standing accorded to it alongside the Resource Management Act, so that it goes through an Environment Court process and is then included as a part of—and has the equivalence of—a district plan. That means it will be very difficult to change that policy once it is in place.

I also add that the Governor-General has the power to make regulation to enforce or require some commitments through those affordable housing scheme policies. Some considerable commitments will be required of developers here, so I do not see how that can be supportive of affordable housing, because those additional costs on developers will have to be met in some way or another. Let us look at the binding commitments that may be required when a council develops an affordable housing scheme. The council can make some binding commitments on the developer at the time of granting the resource consent and the building consent. Those are two different occasions when the council can make the developer meet commitments in terms of affordable housing, and that has to come by way of land, money, or the building of houses on property. Whichever way that cake is cut it is going to be a cost on the developer. How is that to be met? It will certainly not be the council that will meet that cost; it will be the developer, and that cost will be passed on. It will be interesting to see how that pans out in the future.

I go to the commentary, which states, in regard to GST: “These amendments should reduce compliance costs for all parties.” Well, hello, I have never seen such a glaringly incorrect statement. That is an absolute joke. It shows complete ignorance and a lack of understanding of what compliance costs are and how they are passed on. It shows that this Government—and in particular this Minister—has no understanding of the fact that businesses provide jobs and wages to people to be able to afford to buy homes. In the Coromandel our average wage is one of the lowest in New Zealand, at around $26,000 a year. How on earth will lower socio-economic groups be able to afford even an average home—even the home that John Carter talked about? It is an absolute joke. It is absolute nonsense that not only will binding commitments be possibly required of developers but also it gets really scary when we consider what has happened through the Resource Management Act process and how it has developed under councils. This measure is just adding to that process and, frankly, anybody building subdivisions should be very, very afraid of what it will mean if a council adopts it. Not only will this put compliance costs on to developers but also it will put added costs on to ratepayers.

Once again, we have to look at the bill to see what the criteria are around developing an affordable housing scheme. The bill has gone to great lengths to outline all the things that are necessary for a council to do to meet the criteria for having a scheme. The commentary states, in relation to clause 10, that the criteria must include the proposed location of the development, the kind of development, the potential of the development, the desirability of the community having a variety of housing tenures or whatever, and also a cost-benefit analysis is required—the whole works. The bill is really, really prescriptive about all of the work a council has to do to come up with an affordable housing scheme. Councils will have to develop or purchase that expertise. That means—[Interruption]

💬 John Hayes: Let her speak!

No, just ignore them. The Minister of Housing is totally ignorant about compliance costs. If we ask Government members to define what compliance costs are, they cannot come up with an answer. Maybe the Minister might like to take a call and share with us what she understands compliance costs to be. If we ask anybody applying for resource consent or building consent what sort of charges they are experiencing at the coalface they will say those costs are prohibitive in terms of undertaking their activities. I challenge the Minister to tell us what she thinks compliance costs are and what compliance costs she thinks will be reduced as a consequence of her bill—that is, if any local authorities take up the opportunity to have an affordable housing scheme.

I think this bill is an absolute nonsense. In her own commentary the Minister said that it should reduce compliance costs. Well, hello, it is not going to; it will have the opposite effect. I wish this Government would get with the programme and really understand what the fiscal implications are. It has no fiscal understanding of the impacts of any of the legislation it puts in place. I see that the Minister of Finance is here. Maybe he should take a call and tell us what he thinks compliance costs really are, and maybe he should enlighten his Ministers as to what they are. This bill will deal to developers. It will do nothing but shut down subdivisions and shut down housing. There will be even fewer opportunities for people to buy their own home.

If we want to build affordable houses, then I am afraid I have to disagree with the Minister. Even if one is living in Queenstown, Wellington, Nelson, or Auckland, and one is earning a substantial income, house prices are very substantial. One could be living in Eketāhuna, earning $12 an hour, and not be able to—

Debate interrupted.

Sitting suspended from 12 midnight to 9 a.m. (Friday)