Local Government Act 2002 Amendment Bill (No 3)

Talofa lava, Mr Chairman. It is a privilege to speak on this, the Committee stage of the Local Government Act 2002 Amendment Bill (No 3). This bill is about encouraging and facilitating improvements in how local government operates. It builds on the Government’s Business Growth Agenda to build a more competitive and a more productive economy. It is about improving housing affordability, which is such a big issue across this country, particularly in Auckland, where I reside, but also in places like Christchurch, Queenstown, and other centres across our country.

This amendment bill really is about making amendments to the development contributions regime that has been in place since 2002, when the Labour Government put this regime in place. It is quite clear under the definition of the Local Government Act 2002 that development contributions can be spent on capital expenditure for infrastructure as a result of growth—as a result of growth. It is not to be spent on non-growth projects, maintenance, or operation. It is not to be double-charged to developers for pet projects. What we have got over time has been an exploitation of that regime, with examples like a timber processing mill in the South Island being charged $400,000, when all the infrastructure—the pipes, the sewerage—was already in place. Development contributions were charged—$400,000. That is a tax on jobs. That is a tax on the economy. That is a tax on hard-working New Zealanders. This bill is designed and is framed in such a way that this type of charging of development contributions cannot occur.

More recently, in terms of residential development, in Christchurch—and the Hon Amy Adams will know this—recently there were two apartments in Sumner that were charged a $72,000 development contribution. That is just unrealistic.

💬 Hon Amy Adams: It is housing affordability shot.

It is housing affordability shot, as the honourable Minister has just said, and it is really driving up prices around this country. This National Government has taken to refining this Local Government Act in order that we can get more appropriate charging, so that we can improve fairness and transparency around development contributions, and so that housing affordability improves across the country. We urge parties across this Chamber to support this bill.

We can still charge development contributions on reserves and network infrastructure. Of course, these are the essentials—not the “nice-to-haves”, but the essentials: water, waste water, and stormwater. Transport infrastructure is critical. Community infrastructure was looked at in the Local Government and Environment Committee quite intently, but in our view—and certainly in my view—limiting the community infrastructure to halls, community centres, toilets, and play equipment is wholly appropriate. Again, it is because we are trying to drive down the cost of new homes.

💬 Phil Twyford: Show some conviction, Sam.

I urge Mr Twyford to support us. I urge Mr Twyford to support this bill. I see that he has changed his mind on it. I see that he has changed his mind on the bill. I am glad, because by limiting the definition of “community infrastructure”, we are going to save, on average, across this country, between $3,000 and $3,500 per section. This bill is very much welcome in Maungakiekie, my own electorate. It is very much welcome in Māngere, Mr Sio’s electorate. It will be welcome in Te Atatū, which will be Mr Ngaro’s electorate, or Mr Bridges’ electorate. It means that councils cannot provide this community infrastructure from other sources.

Clause 60 of the bill also deals with development agreements. That is about encouraging councils and developers to work together. They can work together on alternative infrastructure provision arrangements. If you talk to developers out in the communities, some of them are saying that they can build that infrastructure for less than the council can. If they can do that, why not? Why can you not have a development agreement that allows a developer to get on with building new homes, new plants, and new warehouses, and where they are able to go on and do the development with that infrastructure? An example of this is in Hobsonville, where developers have said that they can do things cheaper than local government and the council, and they went on and did it.

If I could, finally, in my opening remarks, just talk about the objection process. That process is about greater natural justice. It is about having independent commissioners who are experts in their field and who can adjudicate on an objections process in an objective way. It is about these commissioners bringing about timely decisions, which are cost-effective, and not just for councils but also for developers. Again, it is about this Government showing leadership in terms of bringing down costs for development, and bringing about better housing affordability for our communities, who are really demanding that we bring down the costs of construction. It is aligned with the measures that the Hon Nick Smith mentioned earlier today in his answers to parliamentary questions, which were about bringing about more supply of land to our communities through housing accords, but also about bringing down the costs of materials.

💬 Phil Twyford: How’s that going, that housing accord?

Mr Twyford might ask how that is going. Well, Mr Smith answered that we have now got record consents, we have got record building occurring in Auckland City—

💬 Phil Twyford: It’s the market; it’s not you.

—and Mr Twyford should support that. If we are not doing enough, Mr Twyford says it is the market. If we are doing too much, he says “Oh, no, you’re overextending yourselves. You’re intervening too much.” I encourage Mr Twyford to support this bill, because, again, it is about bringing housing affordability to bear. It is good for New Zealanders, it is good for our communities, it is good for developers, and it is certainly good for local government. We have the support of local government. Having spoken to a number of mayors this morning at the Central Government Local Government Forum, they were extremely happy about the bill. They were extremely supportive of what we have brought about with this bill, and they were particularly impressed that we had inserted transitional provisions in order that they can grandfather the current projects and the assets that have already been built, going forward.

So, again, I say to members opposite: support this bill, support pro-growth and pro-jobs and the way that this Government has gone about promoting jobs and growth in this economy. Thank you.

Talofa lava, Mr Chairman.

The CHAIRPERSON (H V Ross Robertson): O a mai oe?

Manuia fa’afetai, Mr Chairman.

The CHAIRPERSON (H V Ross Robertson): Fa‘afetai lava.

Fa‘afetai ua lava loa.

To just quickly respond to the Associate Minister of Local Government—people might think that he has a sore throat, but he was choking on those words. He just struggled with trying to convince the rest of the Committee about whether the Government really does have any commitment to having more houses. I want to say to the public that the Government has no commitment. You heard earlier from the Minister of Housing, and he listed the consents and the various dots on the map, but there were not any houses. If you are wanting more houses, the Labour Party is the party that you should look to in order to build 100,000 houses in the next 10 years, and that is what we will do. That is what we will commit to.

Can I just briefly thank you, Mr Chairman, for the introduction in Samoan, and, with the indulgence of this Committee, just briefly pay my respects to a Samoan elder in Māngere who has passed away. In accordance with Samoan Language Week this week, may I just pay my respects to this elder by saying: Ua gasolosolo ao i Taoaluga ma Taoalalo, o le maota e afio ai Satele ma ou Alo. Ua ta’ape papa i Si’ufaga, o le maota e afio ai Paitomaleifi. Ua lagia foi Tuavao o le maota e afio ai Leota. Ua pō le nu’u i le Matua ma le Falefa o le Aiga Talimalama, ma upu ia te oe le Falelua. Ua usuia le fono i le Tofa Tuigate’e, o se tasi o poutu o le Ekalesia PIC i Magele. The chief Tuigate’e Tino Elia passed away this week at 83 years of age. He was a lay preacher for the Pacific Islanders Church in Māngere, which the Minister would be aware of, and a pioneering member of that church. More important to me and the people of Māngere, and particularly to the family, he was a staunch Labour supporter, going back to the days of David Lange. This man never forgot that David Lange asked him to be a JP, and so he become a JP.

May I simply give some preliminary comments about this particular bill, the Local Government Act 2002 Amendment Bill (No 3), and say that our vision—Labour’s vision, not this Government’s—is to ensure that local government is responsible, responsive, and accountable to local communities, affordable for its residents and ratepayers, and effective in dealing with local issues. The Government’s reforms to promote amalgamation, council-controlled organisations, and local boards are concerning, not only to us but to the local government sector and to many ratepayer organisations. The true cost of the Auckland super-city reforms still has not been calculated and we should not be pushing that model out on the rest of the country, ignorant of the cost to local communities.

Local boards do not have the same powers and competence of full councils. Establishing them as a replacement for representation from councillors can shut communities out of the important decisions made about them, and that is certainly a strong view expressed by regions outside Auckland City. Although local boards may work in an Auckland context, it is felt that the imposition of these on provincial and rural New Zealand will undermine the existing territorial authorities. The ability of the Local Government Commission to impose council-controlled organisations on communities in the process of amalgamation is undemocratic—a view held by a growing number of New Zealanders. Council-controlled organisations significantly reduce the ability of council services to be transparent and be held accountable, and although there needs to be flexibility in consultation, meaningful input from the community must not be shut out.

In our view, this bill erodes the consultation that councils have with ratepayers, by repealing most requirements to use the prescribed formal process when consulting under the Local Government Act 2002. I have got to ask the Associate Minister of Local Government why the Government wishes to scrap this provision. I have introduced on behalf of our Labour Party five Supplementary Order Papers. The aim of those Supplementary Order Papers is that in our view, although we will support this bill, there are significant elements of this bill that we would like to be able to improve upon, to give us confidence, and to give the rest of New Zealand some sense of confidence, about some key elements of the bill that we believe ought to be strengthened.

I also want to ask the Minister this. Not too long ago a group of local mayors calling themselves the Local Democracy Coalition were concerned about the forced amalgamation agenda being pushed by this Government. This coalition is an organisation that favours regional cooperation on service delivery. It is against the removal of responsible local democracy and, particularly, it is against the imposition of the super-city structure on them. I want to ask the Minister whether the Government is in receipt of the Supplementary Order Papers that this group, the Local Democracy Coalition, forwarded to the Minister. I ask whether the Government has a view on that and whether it is prepared to introduce them as Supplementary Order Papers at this particular time.

This organisation and other local territorial authorities, including, I would say, in the Bay of Plenty region, have very strong cases as to why they feel—and I believe that they are in the right—that they should not be compelled to amalgamate without a cost-benefit analysis being done, and they should not be forced to amalgamate without genuine and meaningful input from the ratepayers. They have proposed, I think, at least two or three Supplementary Order Papers. I take it that they were in the name of the Hon Paula Bennett as the Minister of Local Government. I just want to ask the Minister in the chair, the Associate Minister of Local Government, whether he is in receipt of those, and whether it is the Government’s intention to table those for our debate.

Can I go through the Supplementary Order Papers. I will just briefly say that Supplementary Order Paper 456 amends Part 1 and schedule 5 to restore the four well-beings. I think that this is important because the four well-beings, in my view and in the view of the Labour Party, are the foundation of why we do things. We do not do things just to keep count of how many councils there are. We do not do things to keep count of what our gross national product is. We do things for the sake of people. We do things because we are trying to achieve social, economic, environmental, and cultural outcomes. I think that as long as the four well-beings, which are at the core of the Local Government Act, remain intact in the Resource Management Act, I am asking this Committee to consider that we have also got to ensure that they are put back into the foundation of this particular bill.

We will support Supplementary Order Paper 458 from Eugenie Sage of the Green Party. It is very similar to my Supplementary Order Paper 459, with the exception that it provides one further technical change. We are asking that we restore the definition of “community infrastructure” that can be funded by using development contributions. Those members of the Local Government and Environment Committee who sat through the public submissions would have heard strong and passionate advocacy from local government, local boards, mayors, chief executives, and a range of organisations that have serious and genuine concerns about what we then do with local infrastructure. Many of those people, who were quite angry with the changes that this Government is proposing, are, in actual fact, members of the National Party. I know that because I did ask one or two of them who turned up in Auckland. They were paid-up members of the National Party, but they were very angry with the proposition by this Government to change the definition of community infrastructure.

Supplementary Order Paper 460 is a Supplementary Order Paper in my name from the Labour Party to amend schedule 2 to remove the ability of the Local Government Commission to impose council-controlled organisations during the process of local government amalgamation. We believe that councils already have the ability to create council-controlled organisations outside an amalgamation, and simply legislating that you are now going to force councils to do this is something that I think we need to correct in this piece of legislation.

The Green Party strongly opposes the policy basis for the Local Government Act 2002 Amendment Bill (No 3) because it undermines local democracy, it deprives councils of significant and important revenue from development contributions, and it compromises their ability to fund and provide basic community facilities. We do not regard libraries, sports centres, and swimming pools as “nice-to-haves”; we regard them as part of a civilised city or town and something that the community benefits from.

This whole bill encapsulates National’s lack of respect for local government. It continues the approach that National adopted with the 2012 amendments to the Local Government Act 2002, when it centralised power, gave more power to Ministers to override local government, and constrained local government with a whole raft of requirements that do not apply to central government agencies. The Green Party believes that citizens’ ability to elect local representatives and to make decisions about local matters is a fundamental democratic right, and that this bill—like so much of National’s meddling with local government—actually overrides those rights and shows quite a lot of contempt for them.

National says that this bill is part of its Better Local Government programme, but we cannot see how it is promoting better local government if you are weakening the democratic base of councils, weakening their capacity to represent their local communities, and increasing the regulatory burden on them—because this bill is another 128 pages of law on local government. The Local Government Act 2002 has already grown in recent years from being about 350 pages long to 465 pages. How can it make local government better by adding another 128 pages? The Government is taking away the power of local councils to make the decisions that affect their communities. As the size of the Act increases, so does the regulatory burden, and so do the costs faced by councils charged with its implementation. That shows the shallowness of the Government’s efficiency agenda. As the Green Party has said before, it would be so much better if the Minister of Local Government and the Department of Internal Affairs worked with Local Government New Zealand and councils to provide good guidance, rather than using this sledgehammer of new law to impose its wishes and additional requirements on councils.

In this first call, I would also like to talk about development contributions. The Minister says that development contributions will lead to more affordable housing. That is quite at odds with a lot of the submissions that the Local Government and Environment Committee heard. The Tauranga City Council and developers associated with the city council opposed the changes to development contributions. They opposed this very narrow definition of “community infrastructure”. The Tauranga City Council said that the bill would do little, if anything, to promote the delivery of more affordable housing, because, of course, development contributions make up only a very small portion of the costs of developing new sections and houses. The council thought it was quite unlikely that any reductions in development contributions would actually be passed on to consumers by developers. They make up only 4 percent of the total cost of a new 145 square metre house and land package in Auckland, and in Tauranga, which is another high-growth area, the council estimated that these changes might reduce the cost of a new house by $750. That is chicken feed when you look at the overall cost of houses of around $400,000.

The whole purpose of development contributions is to enable councils to recover from developers a fair and equitable portion of the costs of the capital expenditure that is needed to cater for population growth. They are a way of ensuring that new ratepayers pay their share of putting in new infrastructure to service them, rather than that all falling on existing ratepayers, and they help reduce the pressure on rates revenue.

I am intrigued that the Minister said that councils are supporting this bit of the bill, because Local Government New Zealand in its submission said that the development contributions aspect of the bill was the most concerning to councils because of the way in which it restricted the definition of “community infrastructure”, to which development contributions could be levied and applied. We think it should be councils that anticipate where growth is going to occur and what sort of facilities should be provided to cater for that growth, whether it is libraries, swimming pools, parks, museums, art galleries, or the like. It is their responsibility; they are elected to represent their communities. It is very patronising that under this Government, Ministers in the Beehive think that they know best and intervene to restrict the ability of councils to decide what sorts of facilities should be funded through development contributions.

The changes that this bill makes are in marked contrast to what is happening in the United Kingdom, where they have a Conservative Government. It recently legislated to give councils the right to levy development contributions for community infrastructure, including libraries and swimming pools, based on its view that those facilities are essential to community well-being, not “nice-to-have” as the Minister says. These clauses in the bill are going to have quite a major impact on councils’ ability to fund community infrastructure.

It was estimated by officials that it could have an impact of $510 million to $900 million over the next 10 years. In Christchurch the council estimated that it would reduce its revenue by $32 million, compounding the financial challenges that that council faces. You have Ministers in the National Government railing against councils increasing their rates, yet through this bill they are offloading additional costs on to ratepayers because you will not have development contributions as a source of funding for new swimming pools and the like.

When you combine that with the oppressive requirements around the objection process for development contributions, where property developers and others not only can make submissions on the council policy of how development contributions should be set but also now have the right to object on the actual amount of those contributions for particular developments, it is going to mean that councils get very shy of investing in infrastructure that is going to be needed for future growth. That is where developers in the Tauranga area were very critical of the bill. That infrastructure that needs to be planned for the future needs to be invested in now, so that development can occur. What this bill could potentially do is constrain future subdivision and development and constrain the supply of land for housing, by making councils wary of planning for new facilities and looking to finance those through future revenue raised through development contributions.

The bill is also really unwise because councils such as Auckland Council have engaged in considerable consultation with developers and others to finalise their development contributions policy. What the bill does is it cuts right across that. It is very short-sighted. It will provide a short-term gain for some land developers and property developers. But it is very short-sighted because it is not planning for the future. It is not going to accommodate and provide good facilities in new areas around Auckland, Tauranga, and other centres. It will increase rates quite substantially by reducing the ability of councils to use development contributions for some quite basic community facilities.

We will talk in other calls on some of the other failings in the bill, in terms of the way it overrides our competent councils by replacing them with local boards. But this issue around development contributions is providing for short-term needs and it is not looking to the future. It will potentially lead to some of our new subdivisions and developments being much more like ghettos than real communities because the facilities where communities can gather, where children can play, will be much more difficult to fund and build.

Talofa lava, Mr Chairman. It is very good to have that renowned expert on housing affordability, Peseta Sam Lotu-Iiga, in the chair for this debate, because he knows a great deal about housing affordability. I know this because he appeared on prime-time television last year on The Vote programme on TV3.

💬 Su’a William Sio: What did he say?

He said to the public of New Zealand that there really was not a housing affordability problem in New Zealand, and in fact in his electorate—is Carol Beaumont here, by any chance? No. He said in his electorate there were plenty of affordable houses and that all any aspiring first-home buyer needed to do was just go on TradeMe, where there were dozens and dozens of affordable houses. I think, if I recall correctly, about 80 percent of New Zealanders, in an opinion poll a couple of days later, disagreed strongly with the Minister. It is good, and I hope the Minister will take a call and express similar such opinions about the state of housing affordability in Auckland, in his electorate, because I think we would all be interested to hear that.

A prominent economist a few days ago referred to the Government’s housing policies as being itsy-bitsy. It calls to mind a line from a song, I think from the 1960s: “itsy-bitsy teenie weenie”. It was a very good description, I thought, of the Government’s housing policies. The provisions in this bill, the Local Government Act 2002 Amendment Bill (No 3), which purportedly are setting out to save money for first-home buyers and drive down the cost of new homes by reducing development contributions, are, I think, another one of these itsy-bitsy policies that fit into a pattern that we see very clearly from this Government. It is about Nick Smith, the Minister of Housing, trying to look as if he is doing something about the housing crisis. What we will see, as we look in more detail at the bill, is that it is better than nothing, but that is a very, very low bar given the fact that homeownership rates in this country are the lowest they have been in 50 years—50 years. The average house price in Auckland is now more than $650,000. First-home buyers have been shut out of the housing market because the Reserve Bank was forced into these loan-to-value ratio restrictions because the Government had utterly failed to get a grip on the housing crisis. A generation of New Zealanders now are consigned to renting because of the skyrocketing cost of houses in Auckland and Canterbury in particular.

The spill-over effects of the Government’s failure in Auckland and Canterbury have meant that all over regional New Zealand, first-home buyers have been afflicted by these loan-to-value ratio, 20 percent minimum deposits, and all over New Zealand homebuyers are having to cop thousands and thousands of dollars on their mortgage repayments because interest rates are going up because the Government has failed to deal with the Auckland housing crisis. It could hardly be worse. The poor old National Party members on that side of the Chamber had to put up with the indignity, the humiliation, of Nick Smith being forced to concede at question time that 1 year after he announced the Government’s flagship housing policy, the Auckland Housing Accord, not a single new house has been built in the special housing areas—not one; zero, nada, zilch. There is nothing to show for 12 months of Nick Smith wittering on about the Auckland Housing Accord and how this was going to solve the housing crisis. So what are we left with? We are left with rats and mice—rats and mice.

In the Budget, the great announcement was that the Government was going to lift anti-dumping duties from varnish, nails, and Gib board. Hold the front page! The whole of New Zealand stopped in their tracks, amazed at the boldness of this new initiative. I put this in a similar category to trying to drive down development contributions, because it is on a similar scale. The Government estimated, with no calculations to back it up, that lifting of the anti-dumping duties on varnish and nails might save $3,500 off the cost of a new house, with no assurance to the New Zealand public that that saving, even if it did eventuate, would be passed on to the homebuyer. In an overheated market, what possible incentive is there for the developer or the builder to pass on that little saving to homebuyers? The same point applies to this.

The other thing I want to say about this is that the Government’s main policy about the housing crisis has been to try to blame other people for it—a sort of blame-shifting policy. It blamed the banks for lending too much money to first-home buyers with too-small deposits. It blamed developers. It blamed the fifth Labour Government—we hear that every day. It blamed the building supply companies for being anti-competitive. It blamed the Reserve Bank for loan-to-value ratios, because it is the Reserve Bank’s fault, not the Government’s. But the organisations that have most come in for the blame for the housing crisis by this Government are councils. Bill English famously remarked that 20 town planners at Auckland Council were holding the macro-economy to ransom. Twenty town planners in cardigans and walk shorts, with their tea trolleys of teacups full of tea, were holding the macro-economy to ransom.

💬 Hon Jo Goodhew: That’s a bit cruel.

I say to Jo Goodhew that I am quoting directly from the Minister of Finance. This is the National Government’s policy—to blame everybody else.

To be honest, it has run out of scapegoats. It has run out of people to blame. The motivation behind this bill is to try to attach blame to councils for pushing up the cost of houses by charging development contributions to developers. That is the fundamental political driver behind this bill. What does the bill do? It inserts into the legislation an appeal process, which will allow developers to challenge councils, and challenge the actual levy of development contributions, in case they can be argued to have contravened councils’ policies. Secondly, it restricts the definition of community infrastructure, and councils now will no longer be able to levy developers for a contribution to libraries, swimming pools, and community facilities like that. So it is going to make it harder for councils to build that kind of infrastructure in new residential developments.

I would argue that in the context of the housing crisis, it is perfectly legitimate for the Government to look at how it can reduce development levies. As Eugenie Sage pointed out, on average, from the Government’s own figures, development contributions amount to about 4 percent of the cost of a new standard house. That may not seem like much—4 percent—but it is still significant. When you add development contributions to all of the other expenses in infrastructure and services that developers have to invest in a new development, that can add anything up to $60,000, $70,000, or even $80,000 to the cost of a new dwelling. The Government is doing the right thing to attempt to do this, but I would argue that this is a wasted opportunity. It could have done so much more. This is a shallow, limited, tinkering approach that is likely to deliver at best a very small saving to the homebuyer who purchases a new home. Let us be clear that although development contributions are levied on developers, virtually the entire cost of those levies is passed on to the homebuyer. That is the person in this equation whom we should be trying to help here.

The effect of this is going to be extremely limited. If it saves $3,000, as I think the Minister said—and I would invite him to take a call in this debate, to share with the Committee the calculations and the rationale for those savings; I think we would be very interested to hear precisely how much money will be saved—that is the equivalent of 2 weeks’ house price inflation in Auckland. So by the time this bill is signed into law, that saving, even if it does eventuate, will have been swallowed up, at least in Auckland, by the runaway house price inflation that is going on there. The downside of this very limited, shallow approach to reforming development contributions is that communities will be built without the fundamental community infrastructure and social infrastructure like swimming pools and like libraries, which those communities need. I say that this is consistent with Bill English’s and Nick Smith’s recent statements. They want to see more shoebox apartments built in Auckland. They believe that driving down quality is the way to save money.

I move, That the question be now put.

Excuse me a minute, I—

💬 Hon Member: Lost for words.

I am not lost for words. I take a call on Part 1 of the Local Government Act 2002 Amendment Bill (No 3). I must say that I agree with much of the comments of the previous speaker, Phil Twyford. It is quite amazing that in this day and age, when all over the world people are going with decentralisation, this Government is continually pushing on with the centralisation of government. We have some real issues facing us in the next few years with the massive advances in technology, and with that people will be carrying their laptops and their iPads with them, as we do today. But with all of the digital literacy that is coming on board, it is actually “Goodnight CBD”, and that is why we need to go to decentralisation, not centralisation.

The intent of this bill is to attract developers to Auckland. It is very bad for nearly every council in New Zealand, except for Tokoroa, because Tokoroa did away with development contributions, and it is quite happy. But for every other council it is going to cost them, and the country as a whole, and ratepayers at the very end of it, tens of millions of dollars. We need to have these contributions because we need to be building facilities. We need gymnasiums and swimming pools for our senior citizens. We need schools and universities for our younger citizens. We need to upskill our senior citizens, our children, our young people, and our existing workforces. I am very concerned that Auckland Council has said that doing away with the contributions will mean it will have to increase rates by 8.5 percent, which is incredible.

But I do not want to take up too much time, so I would like to speak to Supplementary Order Paper 463. It proposes three quite specific and technical amendments, and I thank Mayor Stuart Crosby of Tauranga and his offices for raising them with me. I would also like to thank Dave Cull, the Mayor of Christchurch. The first change would allow the development contributions—

💬 Phil Twyford: You mean Dunedin.

I am sorry; Dunedin. Thank you. He is from Dunedin.

💬 Hon Amy Adams: Somewhere down south. It’s all the same to you northerners.

No, it is not. Look, I have not even started on Christchurch, but I will. I will get to Christchurch. The first change would allow the development contributions to rise in line with changes in the producer price index—that is, inflation as it affects the building industry—and that means that development contributions will be kept constant in real terms. Importantly, my Supplementary Order Paper means that councils would not have to go through a formal consultation process. As I read the bill, councils would otherwise have to embark on formal consultation processes. On its own that might sound reasonable, but councils are being strangled with consultation requirements, and people and developers have numerous opportunities to have input throughout the year. Allowing councils to ensure contributions stay constant in real terms should not incur extra cost to councils and ratepayers, so I propose amending clause 36. There is a consequential change to the regulation-making powers in clause 65.

The second change, to clause 53, is to ensure that cumulative effects of multiple developments on infrastructure will be taken into account. In new section 199D(a) and (b), inserted by clause 53, the word “or” is twice changed to “and.” And, yes, that would raise the bar for making an objection under section 199C. That is the intent, and it provides a more appropriate test that would have to be met.

Finally, in schedule 1 I would insert a savings provision, new clause 5C, amending new schedule 1AA. Councils do not collect contributions at one point in time; they collect them over time—indeed, as developments happen. Councils then fund and build community infrastructure when they have the money. So what has happened is that councils such as Auckland have collected some development contributions, so you could say that the jam jar is half full, when all of a sudden the Government is just changing the goalposts. Yes, some purposes, some community infrastructure purposes, that are allowed now will not be allowed in a month or so when this bill comes into effect. But councils have acted lawfully and properly and reasonably in collecting moneys, and that has led to the jam jar being half full. The amendment to the schedule will remove any doubt and allow councils to keep the money already lawfully in the jam jar and apply it to the new definition of “community infrastructure”. That would seem to be a reasonable and fair way to cover off this transitional matter. By having to refund developers, it is going to cost Auckland Council alone tens of millions of dollars for money that it has lawfully collected, and to change the goalposts—I mean, earlier today I asked the question about whether the Government could move forward free medical care for children under 13. I was given a reason why they had to wait 13 months, so to bring this law to fruition in such a short time is unreasonable.

Finally, I would say that with the 39,000 houses that are suggested for Auckland alone, that is over $30 billion worth of development. Who is going to build them? Thank you.

I move, That the question be now put.

Thank you very much, Mr Chairman, for the ability to take this call on Part 1 of the Local Government Act 2002 Amendment Bill (No 3). I want to refer to some of the matters that other members have raised, particularly around the development contributions and what that does in terms of supplying us with those social facilities, those community facilities that we very much need. These matters speak very much to the heart of my colleague Su’a William Sio’s Supplementary Order Paper 456, where he talks about restoring to the Local Government Act 2002 the four well-beings, which were removed at some point earlier. The four well-beings were the notion that local government actually has a responsibility to its community around supporting the social and community functions. Looking after the four well-beings is more than just removing waste, providing water, or collecting rates; it is about looking at what the heart of the community needs in order to thrive.

I would say that local government is the place where the community can have that voice, and it should have that voice. Local community boards and local councils actually know and have a better idea of what is required for their communities than we necessarily do sitting here in Parliament. So I would recommend and suggest that my other colleagues look at that Supplementary Order Paper and consider it to be a very useful addition to this amendment bill. But I want to talk specifically about clause 16, which amends section 56 of the Local Government Act 2002. It is a matter that is very appropriate to Christchurch and the Canterbury MPs. Section 56 is about the consultation process, and consultation is currently being initiated by the Christchurch City Council regarding the housing accord.

The housing accord looks to the development of affordable and social housing options in our city. It is a great initiative—goodness knows we need more housing at affordable rates for our people, particularly those on low incomes, and I am sure that getting more stock into the mix will be of benefit. But what I want to talk about is this particular process. The Local Government Act 2002 talks about the processes of consultation. What I want to raise in this matter is something that the Minister of Housing talked about yesterday at the estimates meeting that the Social Services Committee had. He made it very clear that access to temporary housing was high on his agenda, particularly for those people who are now entering the phase of rebuild or repair for their homes. As part of the housing accord that he cited, there were three initiatives, including those on the Awatea Road and Welles Street sites, which were intended for temporary relocation of our population, and then at some point in the future they would go on to be sold as affordable housing. However, he did not, when I questioned him, know when the developments would be completed and therefore be available for people to occupy.

It misses the point for me if the Minister, who claims to be sympathetic to the development of temporary accommodation for our population, actually does not know when this accommodation will be developed and when it will be ready for people to move into. This also contradicts his statement yesterday, but it stacks up alongside the cuts to the appropriation for temporary accommodation. There is a specific service in Canterbury called the Canterbury Earthquake Temporary Accommodation Service, which has had its appropriation cut by two-thirds. It is obvious that the need is now, and it will be around for some years to come, but in order to inject that affordability and availability back into the Christchurch housing market, you need the supply right now.

In reference to this bill in particular, I want to speak to subpart 1A, inserted by clause 15. Within subpart 1A I am looking at new section 48J, which looks at the decision-making responsibilities of the governing body. I also want to speak to new section 76AA, inserted by clause 18, and new section 93A, inserted by clause 29, which speaks to the consultation process, and I refer to an earlier comment I made. It is very pertinent, as currently there is a proposal in the public consultation process initiated by the Christchurch City Council to consider a social housing option that sets up a separate entity to manage the social housing facility that currently resides with the council. Much of our social housing property was damaged, and I know that the council is still waiting for the insurance payout.

Tēnā koe, Mr Chair. Tēnā tātou katoa. I am happy to take a call on the Local Government Act 2002 Amendment Bill (No 3). My take is that it is one of those bills that, in my considered opinion, contains so many complex issues, and it is a piece of legislation that I think has been poorly thought through and has too many big issues in one bill. For me, it is symptomatic of a Government rushing through poorly drafted legislation to meet its economic growth agenda. This amendment bill, on reading it, definitely talks about doing exactly that. We have seen plenty of examples in local government where that is actually occurring—where the local voice, the voice of democratically elected councillors, is getting sidelined to ensure that economic growth and development opportunities are pushed through.

When I look at the provisions of this bill, I see, for example, talk about the transfer of responsibilities, which is about allowing regional councils to transfer responsibility to territorial authorities and vice versa. I can see that, practically, that is going to create a whole lot of confusion out there for people in terms of who is being held accountable for regional and local government issues, and the fact that you could transfer your responsibilities. For me, there appear to be some shifting sands when you have the ability to transfer responsibilities. I think a lot of our public out there expect that when they elect their local councillors, at the end of the day they are where the buck stops. So faith in the democratic process is utmost in a lot of our people’s minds.

Turning to the local boards, we see the reorganisation, the creation, of local boards, as determined by the Local Government Commission. To me that speaks of a lot of forced amalgamations that we are seeing around the country. I think earlier speakers have spoken about bigger often not being better. Removing the local voice from having a say on whether amalgamation is the right thing to do around the country is, I think, an injustice. We need to ensure that how local communities shape themselves is determined at that local level and not forced by this whole need to rationalise and bring them into a single unit. Again, we are not a large country, and the unique differences that communities bring to decision making is, I think, overlooked when we look at local boards.

The one provision in the bill that I really want to take some time on, and give some thought to, is around consultation. Again, we have seen plenty of times when we have got that so wrong. I spoke earlier on in the debate on this bill about my own local project, the Ruataniwha Water Storage Scheme, which is taking place as we speak in Central Hawke’s Bay. From my observation of that process and the people who came to submit to the board of inquiry, the paramount thing that came up in those hearings, which were over 26 weeks in length, was the fact that no consultation occurred with people who had an interest in that area. That was a sad thing to hear time and time again. The board of inquiry on that particular matter telling the Hawke’s Bay Regional Council to enter into an open consultation process goes to the heart of saying it did not get it right in the first place, but was going back to do it again.

So any bills that come through this House that, in my view, undermine the importance of consulting widely on critical and large issues like building a dam and like building other local infrastructure require—

I move, That the question be now put.

Councils are basically in the business of planning for the future, planning for their populations, and the development contributions policy that a council has is a crucial part of that planning. The idea is that development contributions, through a levy on developers who are extending housing opportunities across territorial authorities, will pay towards the new infrastructure that is needed to create communities and create housing. What development contributions do is create the assets that communities need to make a community. Those assets include things like libraries, swimming pools, recreational facilities, and sports fields. We have a grave concern that this legislation, the Local Government Act 2002 Amendment Bill (No 3), sets out restrictions on that.

In the next 10 years the Auckland Council estimates that there will be 270,000 extra people living in Auckland, and the council needs to be planning for them. The council also expects to take around $2.1 billion in development fees. The development contributions policy that Auckland Council has in place at the moment has taken years to get to. We had to standardise across the eight previous legacy councils, which all had different development contributions policies. So it has taken years of negotiation to find a pathway that met both the developers’ needs and the greater needs of the Auckland Council as well, but we have achieved that in Auckland. In Auckland there is a vision that the council has, which is to create the world’s most liveable city. We cannot do that unless we have participation from those who are developing the housing as well, and that includes the development contributions fees.

We have heard from previous speakers what it would cost homebuyers. It is without doubt that the cost of the development contributions is passed on to those who buy the houses that are developed, but the cost of that is, on average, about $750 per house, which, in the scale of things, is not that much. But when you consider that if you removed development contributions fees in Auckland, the ratepayers would have to bear the cost of the infrastructure that needs to be put in place in order for those houses to be created in the first place, it is not fair that ratepayers should have to pay for that when the new ratepayers should play their part as well.

Without development contributions in Auckland, the cost of that to ratepayers would be an increase of about 8.5 percent in the rates. At the moment the Auckland Council is still trying to standardise rates across the eight previous legacy council areas, and what that means is that in some areas rates increases at the moment are at around 10 percent. That is incredibly difficult for people who are on fixed incomes in the community where I live, Waiheke Island. They are facing rates increases of around 6 percent and upwards at the moment. So if we were to take development contributions away from councils and look at putting an 8.5 percent increase on top of that, we are getting into a situation where it will become unaffordable for people to own their own homes, or to stay in their own homes, in the areas where they want to live.

I have to say that this Government is probably the first to criticise councils for rates increases. Rates increases and the cost of rates have been used time and time again in this House, in previous legislation, as a reason for taking away some of the role that councils play. I think it would be irresponsible of this Government to put in place legislation that increases the costs to councils, which they then have to pass on to ratepayers. In this legislation there are also the costs around the fact that developers can oppose the contributions policy that the councils—

I take a call on behalf of New Zealand First on the Local Government Act 2002 Amendment Bill (No 3). New Zealand has two tiers of government: central government and local government. Both tiers of government rely on either taxes, rates, or other forms of income to operate. It is most important that local government has every tool at its disposal to ensure that it can provide that second tier. Over the last decade or so development contributions have gone through extensive litigation through the courts, through processes of local government, through central government involvement, and that has resulted in a system that has allowed local authorities to impose development contributions and levies on growth in their areas. That growth creates increased demand on the infrastructure of a town or city or district, and it means that those who are coming into that particular region or district contribute to the expanding growth that is required.

In this particular instance the Government is talking about removing a portion of those development contributions: the element around community infrastructure. It is not talking about removing it from other hard infrastructure like roads, sewerage, and all that sort of thing; it is talking about removing it from community infrastructure. In that respect it is a retrograde step by this Government to do so, because a society and a community is not just reliant on roads, sewerage, footpaths, and hard tarmac - type areas. It is also reliant on what the community has to offer in the way of community infrastructure. That community infrastructure includes sportsgrounds, recreational facilities, swimming pools, libraries, playgrounds for children—all sorts of areas of community infrastructure that are important for the good, balanced lifestyle that we would expect in New Zealand.

Therefore, if this portion is going to be removed, it will put greater imposition on local authorities to try to fund that community infrastructure from other sources. That means going to the ratepayers and charging them higher rates to pay for that necessary community infrastructure, because they are not just going to stop putting it in, even though in the Local Government and Environment Committee at least one of the National Government members made the comment that councils do not need to put in all this stuff and that they can just stop putting it in if they cannot afford it. Do we in New Zealand want to live in a society where we end up with housing ghettos and housing estates, as some parts of the UK and the United States and Europe have had, where basically the community is not living in a reasonably good lifestyle environment? Do we want that? We do not. I do not believe that any of us would really want that. But this Government seems intent to take this tool out of the local government tool chest and make sure that it will charge it by another means, which is rates.

In the case of the Auckland Council—and it was one of many, many councils that came and submitted on this—it said that it has budgeted for $450 million in revenue over the next 10 years from that community infrastructure levy. If that is removed, Auckland Council will have to find that $450 million somewhere else, and that will mean an increase of 8.5 percent in rates in Auckland over the next 10 years. You can imagine at the end of 10 years if rates have gone up by an additional cumulative 8.5 percent over that period to achieve that, just so children’s playgrounds can continue to be put in and sports fields put in for the growing population—another 40,000 or 50,000 people every year arriving in Auckland. They need more places to play sport, more recreational facilities, more libraries, and more swimming pools. Just so Auckland Council can continue to do that, it will have to find that $450 million, or else Auckland will certainly not be heading towards being the most liveable city in the world. It will be on a downward spiral.

So this is a retrograde step and it is incredible that the Government still cannot see sense, even when developers came along. One large developer from Tauranga came to the select committee and disagreed with this, as well. He said that it was madness to remove this community levy. He said that he has sold over 2,500 properties in the Bay of Plenty and Tauranga and the wider area, and he said that people come to the area because of the sorts of community facilities that are there and the lifestyle environment that is offered in that area. He said that it worked out to something like $750 per property developed in the Tauranga area that you were talking about removing, and he said that that was a false economy. He said he would far rather pay that extra $750 in the development to ensure that the council had sufficient funding going forward to put in the required community infrastructure. But if you look on the other side of the ledger, if the Tauranga City Council, for instance, loses $750 from every property that is going in and every new section and every new subdivision of every property in the Tauranga area, that adds up to a lot of money for a council to have to find somewhere else to continue trying to carry out its programmes.

So this is not wise. We hope the Government will see sense in this. I know there are a few Supplementary Order Papers along these lines to change this, but rest assured that this will be one thing that will be repealed under a Government that New Zealand First takes part in. We will repeal this and we will ensure that it goes back to how it should be, because we have heard from councils all over New Zealand and we have heard from submitters all over New Zealand who say that this is not in the best interests of local government. We cannot understand why this Government continues to kneecap local government, continues to say that it has to keep rates within affordable levels for all New Zealanders, and why it criticises local government for the way it operates and for its spending levels. Local government is doing its very, very best to maintain and provide a huge range of services in towns and cities and regions throughout New Zealand, and to then take away yet another means of income for them to provide for New Zealanders is wrong. This Government is not acting in the best interests of New Zealanders in doing that, so New Zealand First will not be supporting this bill.

I move, That the question be now put.

Members, we have a number of amendments. The first amendment in the Minister’s name is set out on Supplementary Order Paper 457. The question is that the Minister’s amendments be agreed to. Those of that opinion will say Aye, to the contrary, No. The Ayes have it. The Ayes have it. Party vote? I just remind members that if you want a party vote, you must ask for a party vote. I will allow it to happen this time. A party vote has been called for. I will ask the Clerk to conduct a party vote.

The question was put that the amendments set out on Supplementary Order Paper 457 in the name of the Hon Peseta Sam Lotu-Iiga to Part 1 be agreed to.

There is just one point. I do not know where the call for the party vote came from. I think it was from Holly Walker. If you are agreeing when I say the Ayes have it, you cannot then call for a party vote. A party vote is to challenge the Chair’s decision, all right? I do not know whether it came from you or not, but I was looking at you, because you voted for this. If you are voting for it, you do not then call for a party vote. I do know that the New Zealand First Party voted against it, but I do not know that it actually asked for a party vote. Just bear that in mind.

Apologies for the confusion there. The Green Party did vote in support. We called for a party vote to record the opposition of the Mana Party and then incorrectly recorded its vote in favour, so can I seek leave to correct that vote now, please?

Leave is sought for that purpose to correct that vote. Is there any objection? There is no objection. The record will be amended accordingly.

The question was put that the amendments set out on Supplementary Order Paper 456 in the name of Su’a William Sio to Part 1 be agreed to.

The amendment set out on Supplementary Order Paper 459 in the name of Su’a William Sio is out of order because it is the same in substance as Supplementary Order Paper 458, which has been lost.

The question was put that the amendments set out on Supplementary Order Paper 463 in the name of Brendan Horan to Part 1 be agreed to.