Parrot happy with Local Government reforms from Tremain and Smith

Policy Parrot writes:

On Saturday this Parrot was pretty annoyed with Minister Amy Adams. If I recall the afternoon correctly it was made up of expletive laden rants about how Amy should be shoved from her role for being entirely ineffectual and for delivering us the ultimate wet bus ticket in terms of RMA reforms.

I was even more dark on Sunday, Monday and Tuesday when voodoo dolls were punctuated by large knitting needles and a blunt rusty hacksaw blade.

Thursday however the plunge into depression was saved by good old Nick Smith and his buddy Chris Tremain announcing wide sweeping reforms to be added to the revised LGA later this year.

And they have delivered the king blow. Happy much.

Housing Minister Nick Smith and Local Government Minister Chris Tremain said they would restrict the charges developers paid to councils in a bid to lower costs passed on to home buyers.

“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,” they said.

About time too. Local Government has rorted the system and charged fees to developers that have no direct link to where they are being spent. 

Local Government NZ and Councils around NZ will today be very pissed off. With contributions shaved back substantially Councils will now have to deal with angry rate payers who will wake up in the next 24 months to the reality that many a Council have been running an effective Ponzi scheme – spending money generated by rates and filling the pot back up with development contributions – effectively meaning the replacement costs are collected twice.

Now that is about to stop. Developers can challenge the fees and Councils will have to prove a direct link between the fees charged and specific infrastructure. That alone will sheet back contributions to localised works and will make it much more transparent.

To help you understand the issue – developers have always been dark about the charging of expensive fees for ‘development contributions’. It is an effective tax on new dwellings and at times it can kill the financial viability of a development. Councils charge this for ‘growth’ which is a nice way of saying ‘replacement infrastructure’ which itself is a nice way of saying ‘replacing the shitty old pipes in neighbourhoods when they are stuffed’.

Council’s are naughty rabbits because they are supposed to do this through rates. They do collect the cash for this work in rates but instead of saving it up they blow it on nonsense. When the time comes to replace the pipes they scam developers for the cash. The core of the issue is found in financial mismanagement and reveals’ its head in inappropriately charged fees to people who have nothing to do with the cause or effect.

With the right to challenge – the development community can now expect to have the opportunity to savage a few well deserved blows on local authorities around New Zealand – none less deserving than Auckland Council.

This Parrot is gleefully happy. I  will give a wedgie to the contributions officer at Auckland Council next week just to remind him how pleased one is (he’s such a wanker).

Now  I am off to Soul bar to celebrate.


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  • philbest

    Excellent. Parrot, you are simply one of the best sources of analysis on this issue, that there is. The lamestream media is just nowhere. One suspects that there is far too much of a cosy relationship between Council bureaucrats and journalists generally.

    The LGA 2002 did say there is meant to be a connection between development contributions and NEW infrastructure provision, but it has taken a number of legal cases to establish the precedent definitely and even then, Councils thumb their nose at the law. They have far too much power over developers, if developers insist on their rights, petty bureaucrats can literally ruin them.

    Of course any costs are borne by ratepayers and no bureaucrat suffers any consequences for either incompetence or abuse of power.

    I hope the amendments give the right principles some teeth, and empower developers to get their rights without any risk of bureaucratic tinpot Napoleon pushback.

    • David

      You are right about bureaucratic incompetence and a perfect illustration of it is here in Christchurch. The Christchurch City Council has made a series of cock-ups and yet not one senior manager has taken responsibility or resigned. CEO Marryatt is on permanent paid leave as some sort of punishment, but this does not seem like too much of an imposition to me.

      Following the local body elections in October there will be many new faces on the council but the same bungling bureaucrats will remain and things will carry on as usual.

      Council senior management need to be held accountable for their blunders.

  • philbest

    There is one unfortunate problem that few people understand, regarding the relationship between supply and demand for land, and development contributions.

    If “supply” is distorted and equilibrium prices are too high, abolishing “fees” like development contributions won’t bring the prices to the end user down. The fees were merely a “share” of the distorted prices, that went to local government. Abolish “fees”, and the original land vendors and developers will capture more of the “gain”, with the original land vendors gaining the most.

    This is very obvious in the UK after 6 decades of working experiment with growth containment urban planning. It is also basic economic supply and demand and “economic rent” theory.

  • Cadwallader

    The LGA 2002 was Clark’s taxation by stealth device…nothing more!

  • Mr_Blobby

    The devil will be in the details, Councils especially Auckland will not go quietly.

  • cows4me

    Oh dear this will go down like a shower of shit, the sheriffs of Nottingham will be busy in their war rooms, this will be war. The next move will be a PR campaign against central government along the lines of central government interfering against the kindly, meek, democratically elected councils. I hope the bastards have server withdraw symptoms.