Council development charges

August 16th, 2013 at 1:00 pm by David Farrar

Nick Smith has announced:

The Government has decided on changes to the Local Government Act to rein in council development contributions to improve .

“We are going to narrow the charges councils can put on new sections, provide an independent objections process and encourage direct provision of necessary infrastructure to get costs down,” Housing Minister Dr Nick Smith and Local Government Minister Chris Tremain say.

“Development contributions have trebled nationally over the past decade and have gone up more than any other component cost of a new house. This huge increase can be attributed to the local government law change in 2002 that gave councils carte blanche to charge whatever they liked and removed any check or appeal on these charges. These charges now average $14,000 per section but can be as high as $64,000 per section,” Dr Smith says.

How I see it is National is focused on reducing the costs of new houses across the board. Labour just wants to subsidise 10,000 state houses a year that it will sell at a discounted rate through a lottery. If you don’t win their lottery, then bad luck

Tags:

24 Responses to “Council development charges”

  1. Black with a Vengeance (1,868 comments) says:

    Looks more like National is focused on stripping powers away from local government and centralising them in Wellington.

    Shades of ECAN.

    Vote: Thumb up 0 Thumb down 11 You need to be logged in to vote
  2. Harriet (5,201 comments) says:

    So what’s Nationals reason for not taking the axe to the cost of running the entire government – because Labour is not opposing the cost?

    Of course that’s the reason. Running the government properly now comes second to winning elections.

    Key is scared of making all of the proper decisions. And kiwis keep paying for that weakness!

    Vote: Thumb up 0 Thumb down 6 You need to be logged in to vote
  3. Paulus (2,711 comments) says:

    Don’t know where there are enough builders to build theses additional 10,000 new houses a year.
    That is 28 houses completed every 365 days, or 38 per normal working week (5 days) allowing for snapper fishing etc every weekend (but no holidays).

    Vote: Thumb up 4 Thumb down 0 You need to be logged in to vote
  4. gravedodger (1,575 comments) says:

    @ Paulus check your data, 28 per???? day etc.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  5. jcuk (757 comments) says:

    If they adopted the ‘pre-fab’ principle and built them in a factory. I am sure those paying rack rents, or three familys to a house, would appreciate a pre-fab like many in the UK did after WWII. Not wonderful but certainly better. Clustering them in town would be better than eating up valuable farmland. and save on reticulation costs. The quarter acre section is a relic of the wasteful past when the population was half what it is today and even more tomorrow unless people adopt sensible birth control measures.
    Learn to enjoy life without undue population growth.

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  6. jcuk (757 comments) says:

    With a six day week and four weeks annual holidays that is 35 houses a day. Not impossible over the whole country I’d suggest.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  7. JeffW (327 comments) says:

    This is somewhat of a bandage being applied to the serious damage being caused by allowing councils “general competence”, the licence to do anything they want with our money.

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  8. PaulL (5,449 comments) says:

    Labour are proposing that a significant industry work 6 days a week? Didn’t Labour used to support a 40 hour working week? Or is that only when evil corporates are doing the employing – when the employment is for approved ends it’s OK to work longer?

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  9. DRF (19 comments) says:

    It won’t be a ‘lottery’ it will be a ‘queue’, hence Shearer’s comment that he wants Kiwis to be at the front of the queue when it comes to housing.

    Vote: Thumb up 0 Thumb down 2 You need to be logged in to vote
  10. queenstfarmer (782 comments) says:

    Black with a Vengeance, it’s not about “centralising power” in Wellington, it’s about limiting the power of local Councils to gouge its citizens.

    Then again, you’re on record as saying you are happy for the state to price gouge even its poorest citizens, so I’m not surprised you are against this.

    Vote: Thumb up 6 Thumb down 0 You need to be logged in to vote
  11. Alan (1,087 comments) says:

    Explain to me how this simply isn’t a cost transference from home builders to rate payers ?

    Total council expenditure is the same.

    It’s simply a tax on existing home owners to try and lower new house prices.

    This sucks.

    Vote: Thumb up 2 Thumb down 3 You need to be logged in to vote
  12. PaulL (5,449 comments) says:

    @Alan, only if you ignore the fact that the development fees are effectively a tax on new house builders so as to lower rates for existing home owners.

    The problem is that rates effectively embody the cost of capital for all the services that the local govt offers. So if you live in an old subdivision, effectively your rates are paying the cost of capital of the power lines, the sewers etc etc.

    If you build a new subdivision, the obligation shouldn’t be to pay the full cost of the new works to put in the new sewers, only the cost of capital to pay the interest – it should be based on debt funding. If we accept that as a proposition, then the question is whether we think the cost of ownership (including cost of capital) of these new sewers will be higher or lower than the cost of ownership (including cost of capital) on the old sewers.

    Vote: Thumb up 1 Thumb down 1 You need to be logged in to vote
  13. simonway (387 comments) says:

    Development contributions have trebled nationally over the past decade and have gone up more than any other component cost of a new house.

    Well, this on its own doesn’t tell you much. Maybe they should have trebled. If, in the past, councils were under-charging for the cost of things like connecting the new house to the water system (which I understand is what development contributions are supposed to cover), then ramping up the price by a large amount is the appropriate thing to do. Otherwise, ratepayers are just subsidising these private businesses. We need a comparison of development contributions vs. what that money is spent on to properly figure it out.

    I’m not opposed in principle to government subsidies, but I think that where subsidies do exist, they ought to be transparent (rather than hidden), and if they’re going towards a business they ought usually to be in the form of cash or tax credits.

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote
  14. Black with a Vengeance (1,868 comments) says:

    cough*bullshit*cough, it’s not about centralising power in Wellington QSF.

    and yeah…in good times when the money flows, i’m all for price rises. It’s something even the poorest have to live with. In hard times like these, it sucks hairy balls that power companies gouge the needy while the government let’s them.

    What’s needed is more responsible, empathetic and compassionate politicians at both a local and central level.

    Vote: Thumb up 0 Thumb down 2 You need to be logged in to vote
  15. thedavincimode (6,890 comments) says:

    But … but … but … if they cap development contributions, how will Len pay for the free swimming pools? What will happen to his $5m PR spend?

    Vote: Thumb up 3 Thumb down 0 You need to be logged in to vote
  16. peterwn (3,335 comments) says:

    Councils are not democratic with respect to new home buyers – cvouncillors and staffs are generally home owners themselves and many would have a NIMBY attitude. The situation needs a broader view which only a wider democracy (ie central government) can bring. There was one petty minded council years ago that imposed library etc charges on older teenagers and tenants on the grounds they did not pay rates. The tenants sure paid rates – via their landlords, but their political influence was small.

    Every dollar that can be shaved off the cost of a new house will reverberate throughout the housing market and make housing more affordable all round.

    Far better than Labour’s useless policies.

    Vote: Thumb up 1 Thumb down 1 You need to be logged in to vote
  17. Alan Wilkinson (1,938 comments) says:

    Development charges are a complete rort and should be totally abolished. They simply require new home owners to pay twice for their infrastructure, firstly through the development charges and secondly through their rates along with everyone else.

    This is the greatest oppression of first home buyers you could devise. Councils should be forced to treat new infrastructure exactly the same way as old and recoup the capital servicing costs equitably for all via rates.

    @Alan, that is your explanation. All capital infrastructure has a cost and must be valued at replacement cost. The asset value should be the same maintenance and service cost for all.

    Vote: Thumb up 4 Thumb down 0 You need to be logged in to vote
  18. Ross12 (1,486 comments) says:

    jcuk

    Your idea is right , but not new. The concept was around in the 50s and 60s with Ideal Homes and Beazley Homes etc.
    although they probably did not use the factory ideas you are suggesting. But they did have standard designs , basic but functional. For it to work again expectations would have to change for many first home owners —be prepared to live in smaller houses , not flash fittings , one bathrooom etc etc

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  19. Black with a Vengeance (1,868 comments) says:

    We’re a first world nation. If want to build capacity to accomodate growth, we need to pay more for the privilege. New home owners should pay more to maintain our first world infrastructure.

    Vote: Thumb up 0 Thumb down 2 You need to be logged in to vote
  20. Fisiani (1,052 comments) says:

    National gets on with reducing costs and building houses. Labour would have several committees and enquiries and then borrow money from foreigners and increased taxes.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  21. Colville (2,318 comments) says:

    PaulL. Development contributions are for work external to the subdivision. Nothing at all to do with work with the subdivided land.
    Developer pays full cost if all work within the land plus development contribution.

    Vote: Thumb up 1 Thumb down 0 You need to be logged in to vote
  22. Colville (2,318 comments) says:

    If you take an axe to developer contributions which are of course paid for by the end user I don’t see how it changes anything. It just moves the debt from the house owner to the council.

    Vote: Thumb up 2 Thumb down 0 You need to be logged in to vote
  23. Ian McK (237 comments) says:

    Repeal Palmer’s mid-80s Local Government Amendment Act and everyone will reap the benefits. Everything this failed socialist clown touched has had a detrimental effect on the NZ economy and business operations.

    Vote: Thumb up 1 Thumb down 1 You need to be logged in to vote
  24. Alan Wilkinson (1,938 comments) says:

    @Black, brainless comment. Why should first home builders pay twice for their infrastructure and any differently from anyone else?

    Vote: Thumb up 0 Thumb down 0 You need to be logged in to vote