Gridlock on community infrastructure bill

Wednesday 3rd October 2018

A divide along party lines meant MPs couldn't recommend passing a law making it easier for councils to charge development levies to pay for community infrastructure.

Parliament's governance and administration select committee reported back on the Local Government (Community Well-being) Amendment Bill but couldn't reach an agreement on whether to recommend it proceed. The eight-strong committee has four government members and four opposition MPs and is chaired by National's Brett Hudson.

The bill aims to reinstate the social, economic, environmental and cultural well-being aspects to the law governing local bodies, and restore their power to collect development contributions to fund a wider array of infrastructure.

The government MPs recommended amending the bill to ensure that if councils receive New Zealand Transport Agency funding they would still be able to levy developments. However, National MPs opposed the legislation saying it will allow poorly focused spending and increase costs for residents and businesses.

In the bill's first reading in April, Local Government Minister Nanaia Mahuta said many councils have struggled to keep up with the growing cost of maintaining infrastructure since the development contributions were removed in 2014. Reinstating the ability to levy removed a barrier to growth. It would also resolve a technical problem for councils accessing transport infrastructure funding through the $1 billion Housing Infrastructure Fund, she said.

The bill's regulatory impact statement said the status quo wasn't providing the level of development needed to meet current and future needs of communities. While a broader remit for collecting the levy will increase the costs for developments, Department of Internal Affairs officials felt the benefits of the change outweighed the negative impact on the viability of specific developments.

"The inability of local authorities to recover the costs of developing new community facilities from development contributions can lead to deferred investment and a consequent reduction in the level of service for ratepayers," DIA said.

Local Government New Zealand supported the bill, saying the restoration of the well-being measures strengthened integrated service delivery. It backed a wider definition of community infrastructure, saying it wouldn't diminish accountability for setting the levies.

Business New Zealand opposed passing the bill until there was a public inquiry into the drivers of local government costs, warning of potential expenditure creep that will largely fall on the shoulders of business. The Productivity Commission has been tasked to conduct a new inquiry into local government funding and financing.

Property Council New Zealand supported the reinstating of the well-being elements, but urged legislators to put off changing development contribution provisions until an inquiry was held. The industry group disagreed with the DIA advice, saying development contributions will probably be passed on to potential buyers which will exacerbate housing supply shortages and rising costs.

Fletcher Residential supported the Property Council's submission.

(BusinessDesk)

Comments from our readers

No comments yet