By Lynn Grieveson
The Labour Party has offered to support a final reading of the Government's bill to amend the Local Government Act to control development contributions.
Prime Minister John Key said on Monday in his weekly post-cabinet news conference the bill had stalled and would not be passed before Parliament rises on July 31 for the September 20 election because of a lack of support and time.
Key has also 'parked' Resource Management Act and Employment law reforms this year because of opposition from either the Maori Party and Peter Dunne, or the loss of John Banks, who resigned last month.
Labour leader David Cunliffe told reporters before Labour's Parliamentary caucus meeting on Tuesday that Labour would support the bill for a third reading, as it had done for its first and second readings. A bill is passed into law after its third reading.
Cunliffe said the bill did have the numbers to pass, contrary to the Prime Minister's comment.
"We will be supporting that Act as we did at first and second reading. It does make a contribution to housing affordability and that is why we are prepared to support it even though it is imperfect," Cunliffe said.
Cunliffe said Key may have been confused.
"Or maybe they just aren't competent enough to schedule the Bill through parliament in its final session. We are giving them the opportunity to do that because it will improve the opportunity for more affordable housing," Cunliffe said.
Key later told reporters on his way into Parliament for question time the Local Government Minister would be contacting Labour to discuss putting the bill forward, provided Labour was prepared to support the bill without changes.
Earlier, Labour Housing Spokesman Phil Twyford also said Labour was prepared to support the bill.
"We are prepared to rescue the Government from their incompetence on the Local Government 2002 Amendment Bill," Twyford said.
"They have been talking about doing something on development contributions for six years now. They haven't done a thing and because of their own incompetence now they don't think they can get a Bill passed in time. We voted for that Bill in first reading and second reading," Twyford said.
"While it is flawed and we think it is a wasted opportunity to actually do something more bold on development contributions, we see it as better than nothing. And we are prepared to vote for it on that basis because the housing crisis demands that no stone be left unturned in trying to reduce housing costs," he said.
"But for the Prime Minister to say yesterday that he no longer had the support in the house to support that Bill is quite wrong. We voted for it at first reading and second reading and we are willing to do it again. I don't know why he would think otherwise."
Hansard records for the first reading showed National, Labour, New Zealand First, Maori, ACT, United Future and Brendan Horan supported the bill, while Green and Mana opposed it.
Records for the second reading show it was supported by National, Labour, ACT and United Future, but opposed by Green, Mana, New Zealand First and Maori.
Local Government New Zealand President Lawrence Yule said Councils generally favoured the proposed changes to the Local Government Act around development contributions.
"We've got a number of members who would like that bill to go through," Yule said, referring to the needs of many for certainty about the future of development contributions.
Twyford vs Smith
Meanwhile, Twyford challenged Housing Minister Nick Smith in Parliament (see video above) to explain a drop in building consents in Auckland in May. Twyford said an average 4,408 dwellings had been consented in Auckland since National was elected in 2008, while the average under Labour from 1999 to 2008 was 9,055.
Smith said Twyford had been selective in his use of averages and consents in Auckland were now treble those seen at the end of Labour's time in power.
Smith said Cabinet approved 41 special housing areas on Monday, which was a process where land was 'zoned' residential in seven weeks, rather than 7 years under the previous regime.
"Cabinet approved a greater area of new land for residential (development) in 1 day than occurred in 9 years of the previous Labour Government," Smith said.
Twyford then raised the issue of Labour supporting the third reading of the Local Government Act changes around development contributions.
"Can he confirm the panicked phone call from the Minister of Local Government about an hour ago to confirm Labour’s support for the development contributions bill at its third reading; if so, why is the Government continuing to play politics with Auckland’s housing and growth like it did with the Resource Management Reform Bill?"
Smith said Labour had made changes to the Resource Management Act and removed the right of appeal on development contributions, which had contributed to a doubling of house prices.
"It is as a very latecomer that Labour now accepts that its changes to the Resource Management Act and its changes to the Local Government Act were wrong," he said.
(Updated with comments from Key and Local Government NZ, Video of exchange between Twyford and Nick Smith in Parliament over housing consents and the development contributions )
8 Comments
The fact that in Christchurch a 2 bedroom 80m2 plus garage unit in the poorest suburbs in the City East on a tiny 200m2 section is likely to pay MORE in development contributions than a 600m2 mansion on a 1000m2 site in Fendalton - even if both are newly subdivided, is by and large the reason why few affordable homes are built.
In the case of the unit, the DC will be about $30k on a $295k unit which has a land value of $70k say. So the DC is over 10% of the total value and nearly 50% of the land value!
In the case of the mansion, the DC of about $26k on a $2.5m home is about 1% of its value and about 2.5% of its land value. In both cases less than the real estate agent's fees.
Since in general developers provide most of the new housing supply, the decision is a simple one, do I build small affordable homes, or build larger houses and multi room student flats and pay the same (or less) in DCs?
The choice is simple, instead of building $300k houses, we build $450k, or $500k ones, so until the supply of affordable units is completely gone, so that prices escalate to such a level that we can build a small unit and sell it for much more (say $350k) then it's not worth bothering. And then even when prices do get to that level, it probably makes sense to add on another bedroom for $25k anyway or perhaps 2 bedrooms for $40k more, as the marginal difference between the cost and the added value to the rental yield are hugely disproportionate.
So the result is prices of affordable homes need to go even more expensive for anyone to build them, so that means supply will decline until that happens, and even when the price does rise, the marginal cost of building a larger home will be so small that developers will continue to build bigger and neglible supply of affordable homes will be undertaken.
With the current situation in ChCh the average price of a will sharply increase further as the average price of newly built homes rises well into the $500s and $600s.
Just how CAN prices of new houses fall if existing homes are disappearing at such a rapid rate and new homes on average are $100k plus above the price of existing homes.
There is only one way for prices to go and that is sharply higher (unless there is massive population decline which we know there isn't with current policy).
Here we go again . Labour accusing Government of "incomptence " , so they will do them a favour .
Sniping , leaderless , belligerant , and backtracking on everything , thats all we see from these rabble rousing losers who are set in a 1970's socialist trade union mindset
Its hard to believe that this is the party that Helen Clarke ran so well and which we all though was doing a fine job , and returned them to office
So do me a favour , Labour ..............
Get your act together, sort out your leadership crisis , get some competent young people into your ranks , get rid of the dead wood who earn $200k of our money a year to sit in Parliament , and are best known for being thrown out for being belligerant , adding nothing constructive to the debate .
THEN , Its time labour got back in touch with middle New Zealand , ordinary folk who barbecue on weekends , and enjoy rugby or fishing . Womenfolk who are concerned about our teen kids and who they are mixing with while we are at work .
People who are genuinely concerned about struggling families , and dont live in Herne Bay
Middle New Zealand could not give a rats backside about everything being politically correct , or even gender equality in the Labour caucus .
These folk aspire to owning an investment property one day , and dont want Capital Gains tax
They just want a strong competent Government that takes care of the basics
An insanely good comment by Chris.
Ratings are generally based against Improvement or improvement + land value. There is no reason that developer contributions couldnt be applied in a similar manner.
Also the transport developer contribution should be done away with and councils given the right to introduce electronic cordon tolling. (Whilst I dont mind cross subsidising developer contributions peak hour road use shouldnt be subsidises.) This will:
- reduce peak travel
- reduce future cpaital expenditure on road improvements (which are built for peak travel)
- induce a mode shift to public transport
- reduce the ongoing subsidy needed for PT.
The other thing to bear in mind and which councils seem to forget is that there is meant to be a direct link between the development and new growth which leads to additional infrastructure demands - DC's are not simply a standard charge on development although it is hard to find a Council who has remembered that. A legislative overhaul is very much overdue.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.