Twyford Phil: Local Government Act 2002 Amendment Bill (No 3) — Second ReadingText is incorporated into the Bound VolumeTwyford Phil: Local Government Act 2002 Amendment Bill (No 3) — Second Reading[Sitting date: 22 May 2014. Volume:699;Page:18286. Text is incorporated into the Bound Volume.]PHIL TWYFORD (Labour—TeAtatū): This bill the Local Government Act 2002 Amendment Bill (No 3) is yet another paper tiger from National and its ongoing mission to project the image to the New Zealand public that it is actually doing something about the housing crisis. We have come to expect this from the Minister of Housing Nick Smith and now we see the Minister of Local Government taking a similar path. This bill deals with much more than housing affordability but I want to focus my comments on the development contribution components of the bill.Labour’s view is that this bill represents a wasted opportunity. This would have been a great opportunity for a thorough and fundamental review of the way that we fund infrastructure and services to support new urban development and new residential developments. Sadly because of the shallow and limited approach that this Government has taken on this issue as it has with so many other aspects of housing policy this bill will make we believe very little difference if any. It will make perhaps a small contribution to reducing the cost of building a new home. It is another example of National chasing a headline and trying to convey an idea and throw people off the scent really and distract them from the reality which is that very little of substance has been done by this Government on housing affordability. In a nutshell the changes to the development contributions regime are better than nothing but that is a very very low bar.What the bill does is essentially give developers the right to appeal against development contributions that are levied upon them by councils. It sets up a review process. Arguably that will give some transparency to the process and may impose a little bit of discipline on councils that it is argued by some are using developmentcontributions as revenue gathering. The second thing it does is limit the things that councils can levy development contributions for. It excludes community infrastructure. So from now on councils will not be able to levy development contributions for local parks and reserves swimming pools community facilities and local libraries. That is a distinction that National chooses to make—that community infrastructure is not necessary and that it is a “nice-to-have”. What it will inevitably mean is that some councils will find themselves in the position of approving developments and subdivisions and those new communities will not get the community infrastructure that they should be able to expect. It shows the values that National has—that it does not regard community facilities like swimming pools local libraries and community halls as being as important as water and electricity. That is National’s value system. That is the choice it makes. This harks back to Bill English’s comments the other day when he said that developers should be able to build more shoebox apartments. That is his idea—that people should be able to live in shoebox apartments and not have access to community facilities. That is National’s solution to the housing crisis.The big consequence of this bill is that the costs of infrastructure and services for development are going to get pushed over to the ratepayer. The Auckland Council submitted that what this bill will mean for them is an 8.5 percent increase in the average rates bill by 2021-22. So that means an average increase of 8.5 percent on the rates over the next 7 years.Hon Nicky Wagner: Not right.PHIL TWYFORD: That is what Auckland Council said. It provided the workings and the calculations. The impact of this bill is going to mean that the ratepayer is going to have to pick up the cost. It has been shunted from the buyers of new homes on to the general ratepayer. I think that is an irony because for the last 5 years this National Government has railed against councils and all their irresponsible lending and borrowing and irresponsible spending but what this bill actually does is to simply shift the cost that developers normally pass on to the buyers of new homes. Those costs are going to be passed on to the general ratepayer. That is an irony.Arguably that is a reasonable policy choice to consider. In the middle of a housing crisis it is perfectly valid to consider where you draw the line between the user-pays approach that is embodied in development contributions and the rest of the community paying for infrastructure and services that support new development. That is a reasonable policy choice to consider. But I do not want the National Party members in the House today to leave here thinking that they can simply shovel the costs from the buyers of new homes to the general ratepayer. Someone has to pay all right? That is the reality. Someone has to pay for this infrastructure and what National is doing is simply getting the ratepayer to pick up the tab. This measure is National just kicking the can down the road. It pretends to be serious about tackling the drivers of expensive housing but in fact it is doing nothing. It is just kicking the can down the road. If National was serious about tackling the cost of infrastructure and services it would have done a much more fundamental review of how the costs of new development are shared out and how they are dealt with.I want to just put on the record for the benefit of this debate three areas that National could have addressed if it was serious about this problem. The first is that it could have considered the idea of spreading the cost of infrastructure and services for new development over the lifetime of that infrastructure. What happens with almost all the other costs is that they get loaded on to the price tag for a new house. They get capitalised into the value of that house and structured into the market price of new housing in this country. That is what happens. Although development contributions contribute only 4 percent on average according to the Government’s own figures of thecost of a new build when you add all the other costs of infrastructure and services that a developer has to pick up it can add $50000 $60000 or even $70000 to the cost of a new house. That gets added straight on to the price tag of a new house and that is a huge barrier for the New Zealand homebuyer and particularly the first-home buyer.One approach that the New Zealand Initiative has done a lot of work on is spreading that cost over the lifetime of the assets. One way to do this in the New Zealand context would be to pay for that infrastructure and those services by bonds by taking advantage of the low cost of borrowing for local government and then using a targeted rate to pay that back over the next 30 to 50 years. That would not reduce the cost but it would at least spread it. The Government could have considered what a number of overseas jurisdictions do and that is use development levies or contributions to incentivise the kind of development that you want—for example more intensification more brownfield development instead of sprawl—but no the Government showed no interest in that. It could have chosen a productivity approach by getting together with industry and the private sector to look at how infrastructure and services for new urban development could be done in a more efficient way and make cost savings that would ultimately be passed on to the homebuyer. A lot of new urban developments are employing more sophisticated process management of the process of laying down broadband and the three waters and electricity and roads and footpaths and lighting—all the infrastructure that goes into new subdivisions. They are doing that and they are saving a lot of money. If the Government worked with the private sector to template that kind of approach then it could have delivered real cost savings instead of this paper tiger.All we are seeing is Nick Smith and his cronies in the National Cabinet pretending to do something about housing affordability just like they pretended that taking the tariffs off varnish and nails andGib board in the Budget last week would save $3500 for the first-home buyer with no thinking about how they would prevent that windfall from being pocketed by builders and developers in an overheated market. Just like the Government’s lame Auckland Housing Accord which will struggle to do any more than what the market is already delivering in terms of new development this bill is a disappointment. Like we did at the first reading Labour will vote for this bill but with serious reservations.