Local Government Act 2002 Amendment Bill (No 3)

The centrepiece of this legislation, which the Government seems so excited about, is its measures that it claims will improve housing affordability by restricting the application of the development contributions that developers make to city and district councils when they are developing sites, whether they be for residential or commercial development. Although this may make a rather insignificant impact on the affordability of housing, it is, I suppose, a minuscule step in the right direction. It is an addition to the Government’s other infinitesimally small step towards improving housing affordability that was in the Budget—that being its removal of anti-dumping tariffs, which the Government guessed may reduce the cost of building a new home by $3,500, an extraordinary amount in the context of what would normally be about a $500,000 house.

What we are seeing here from this Government is an extraordinarily inadequate response to the single-biggest issue out there in the public. On the day the Budget was announced, the front page of the Dominion Post ran a survey of what were the most important issues to New Zealanders. Right there at the top, at No. 1, was housing affordability. What this legislation claims to do is to address that No. 1 issue. Well, it is a woeful attempt at addressing that issue. House prices are absolutely rampant and out of control, and what does this Government do in response? It has a guessed $3,500 reduction in the cost of building a new home, which is highly unlikely to be passed on to the actual purchaser of that new home, and these provisions to tinker with the development levies are anticipated to reduce the cost by $750—$750. So there we have got a combined total of around $4,000 off the cost of building a new home—

💬 Sue Moroney: Maybe.

—perhaps. There is absolutely no evidence that even that ridiculously small cost reduction will actually occur. And that is it—that is it. That is the National Government’s response to the housing affordability crisis—$4,000. That is it—nothing else, not a jot.

Well, we have got some better ideas on this side of the House. We have actually got a plan to deal with housing affordability. If Labour were in Government, the first part of the plan would be to build some houses. What we actually need to see happening is some houses coming on to the market that are affordable, that people trying to buy their first home can actually buy. Labour will build 100,000 homes over 10 years. That is the first part of the plan.

The second part of the plan is to introduce a capital gains tax, because we need to take the heat out of the speculation in residential property. National backs the speculators; Labour backs the first-home buyers. We want to support people to get into their own homes. We do not want to sponsor the speculators; we want to support clever investment in New Zealand in the productive sector. We want investment in things that create jobs, not in things that just push house prices up.

Thirdly, we need to cap the offshore speculation in residential property. Foreign capital can be very, very useful when it creates jobs and when it supports innovation, but foreign investment in our residential property does only one thing: it drives up the cost of houses for hard-working Kiwi folk who just want the opportunity to buy their first home and get ahead in life.

That is the stark difference between the provisions in this legislation, when added to the other paltry attempt in the Budget, from the National Government and what the Labour Party plans to do. This side of the House has a plan for housing, and that side of the House can offer nothing but tinkering around the edges. That is the sum total of the effort from that side of the House when it comes to housing affordability. There is absolutely no guarantee whatsoever, if there are any savings from these tiny changes to the way development contributions are made—absolutely no guarantee at all—that those savings will be passed on to the home buyer, particularly in Auckland. Of course, it is from Auckland that a lot of this housing affordability issue is being driven. There is a large divergence there between the cost of building a home and the price at which they are actually sold.

So I think it is courageous of this Government to seriously believe that its little effort in tinkering here will actually result in changes that would be experienced by the homebuyer, by those families who are doing all the right things, by people who are working hard in their jobs and saving their deposits. And, of course, saving for a deposit has got a whole lot harder under this Government, as well, because of its failure to address the housing affordability crisis in Auckland. That is impacting right across the country. So all those people who are doing all the right things and saving hard still do not have an opportunity to get into their first home, and this bill simply will not do the job. It might be helpful for the National Party’s donors, those property developers who make substantial donations to the National Party. They might get a little bit of help out of this, but it will do absolutely nothing for those people struggling to get into their first home.

It is a split call?

💬 Eugenie Sage: It is.

The ASSISTANT SPEAKER (H V Ross Robertson): I call the honourable member Eugenie Sage.

I am pleased to speak to the Local Government Act 2002 Amendment Bill (No 3)—not that it is a bill that the Green Party is supporting. My colleague Denise Roche described why the Green Party is opposing this bill. It is because of the changes it is making around development contributions, and the much narrower definition of community infrastructure in the bill. I would like to talk a bit more about that, because that very narrow definition will prevent development contributions being used to fund quite basic and quite essential community facilities like swimming pools, museums, reserves, and other recreational facilities.

This bill will hit Christchurch hard because, of course, in Christchurch, with the residential red zones and people there having lost their homes, there is a lot of new greenfield development. When the bill comes into effect, it will prevent Christchurch City Council from recovering from developers development contributions to help fund facilities like new swimming pools. It is this very narrow-minded approach in the bill that risks encouraging subdivisions that are like ghettos. You need these community facilities as places where people meet, places where children can play, and places where the community can have a heart. So if development contributions are not going to be allowed as a way of funding these facilities, then the burden is pushed on to ratepayers, or the facilities do not get built. In the case of Christchurch, where the city council asked for an exemption and asked for a delay in the provisions in the bill coming into effect, there is a very real risk, with the major financial challenges that face the city council, that a lot of these essential community facilities will not get built in our new greenfield subdivisions.

It is also really narrow-minded because reserves funded by development contributions are often a way of buffering industrial and commercial areas from residential areas, yet the bill means that councils will not be able to charge the developers of industrial land to help create these reserves. So the bill is leading to urban areas that are the very opposite of what the Green Party sees us needing in our cities and towns. We want urban development where workers can go to lunch in a local park, where they can go swimming at lunch time, not just large warehouses or row after row of suburban houses without these facilities.

One of the other reasons we are objecting to the bill is that it undermines local democracy by encouraging the replacement of competent councils with local boards with much weaker powers. That is because this bill allows the Local Government Commission in any current or proposed reorganisation to axe district and city councils and replace them with weaker local boards. Local boards have no ability to hold property. They have no ability to employ or remove staff. They cannot make by-laws and they cannot levy rates.

This bill is the Government’s answer to rolling out the Auckland super-city model elsewhere in the country, by replacing our district, city, and regional councils with big unitary councils, by centralising power with fewer councillors on those unitary councils, and by then having local boards, which can only recommend by-laws and have much more limited powers. At the moment the law is that you can have these local boards only in metropolitan centres with over 400,000 people, but this bill will allow them to be rolled out everywhere, and that is why the Green Party is objecting to the bill—because it is undermining local democracy.

It was very interesting at the select committee when we had Margaret Murray-Benge, who was a long-time councillor for the Waimairi County Council in Christchurch. She said she is a long-time National Party supporter but she totally opposed the bill because it was ripping the heart out of local government and, as she said, there is nothing that says that bigger units of local government will be more efficient or that they will represent people effectively. So when you have strong National supporters querying the bill because of what it does to undermine local government, the Green Party knows that we are on the right ground too, because there is widespread opposition to these provisions, which undermine local democracy and local government.

The question was put that the amendments recommended by the Local Government and Environment Committee by majority be agreed to.