HOT TOPICS:   Election 2014  |    China   |  Peer-to-peer lending                                        RESOURCES:    Economic calendar   |  Median multiples

The comment stream

Reader poll

About the same.
24% (54 votes)
Better off.
21% (48 votes)
Much worse off.
20% (44 votes)
Much better off.
19% (42 votes)
Worse off.
16% (37 votes)
Total voters: 225

Older polls

Bruce Wills says the passing of Local Government Act Amendment Bill is a good first step, but funding issues now need addressing. Your view?

Posted in Rural News

By Bruce Wills

There is a famous psychological condition called the Stockholm syndrome that we probably know it better by the popular expression, “going native”.

You see, in the 1970’s bank workers and customers were taken hostage in a failed bank robbery. Somehow, within days, the captives started to see things through the eyes of their captors. Unbelievably when it all finished up, several of the captors refused point blank to give testimony against those who had taken them hostage.

Ever since, it has provided fertile material for psychologists trying to figure out why people in fear of their lives, could bond with the people holding the trigger.

I don’t wish local government people to read this the wrong way but there is a degree of the Stockholm Syndrome applying when some are elected to office.

Councillors are there to represent their constituents and be a democratic check on the vast powers and trust devolved to local government officers. With local government spending increasing 119 percent in less than ten years, Federated Farmers' policy staff this year submitted on local and regional plans in 68 out of New Zealand's 78 councils.

You can say we are local government experts, because outside of Government and the sector itself, no other professional body has such an intimate association and understanding of the sector.

It also means we possess a lot of folk knowledge. We have seen anti-council firebrands tamed by process.

Conversely, meek councillors have turned into fierce protectors of constituent rights.

As the former United States President Lyndon Johnson ‘subtly’ observed, it may be better to have people inside the tent pissing out, than those outside pissing in. Whatever the cause, we have seen a tendency for some councillors to only remember who put them there once every three-year’s.

There are a great many who work tirelessly so I don’t wish this to become a gross generalisation.

Yet councillors are not elected to be PR machines for council staff, council policies or council processes.

They ought to be asking questions, tough searching questions, to ensure delivery for the people a council serves.

In the United Kingdom, councils are generally divided by those that are seen to be ‘officer led’ or ‘member led’. There is a power dynamic and I see in our stronger councils, a degree of member leadership; where their vision is imparted upon officers to deliver. The reverse applies in weaker led councils.

This all explains why we welcome passage of the Local Government Act Amendment Bill late this week.

The Bill’s passage is good news for ratepayers.

Since 2002 rates have increased an average seven percent each year; massively above inflation. This growth is unsustainable and if it is to be reined-in, councils and communities need better guidance and clarity on what the priorities for local government spending should be. This is what the amending Bill does.

It changes the purpose of local government away from an activist, open-ended job description, towards something more like what most people think local government should be. In other words, a focus on local infrastructure, local public services and local regulation.

Damien O'Connor, Labour's primary industries spokesman, is right when he says the public needed to be more aware that city and district councils' wastewater treatment plants were more detrimental to the health of rivers than farmers.

Quoted in the Nelson Mail, he said, "In the past few years farmers have cleaned up their act incredibly. Now it's time for the rest of the country to do the same”.

Here, here. Yet we only give the Bill a B- because it continues to tinker at the margin; only going part way to containing and reducing the rates burden we all face. As Katie Milne, our Local Government spokesperson observed, “What‘s needed now is something bolder and to us that’s funding reform, which so far has been the missing element of the Government’s work.”

What is perhaps less well understood is that funding policy affects a councils’ regulatory performance. Most obvious when central government makes laws for councils to enforce, but doesn’t provide the means to do it.

Limited funding options is also a factor in housing affordability, for example, councils imposing stiff development contributions that push up the costs of sections. The fact remains we are still living in 17th century England when it comes to an overreliance on property ownership as a major means to fund local government.

The burden of funding local government must be spread more equitably.

We are operating in the 21st century after all. So the Bill is a start but for far too long have we seen Ministers think it is job done. It is not. Getting local government funding right should have been the first port of call, so it is incumbent on us to keep it first and foremost.

-------------------------------------------------------------

Bruce Wills is the President of Federated Farmers. You can contact him here »

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment in the box on the right or click on the "'Register" link at the bottom of the comments.

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.

63 Comments

It changes the purpose of

It changes the purpose of local government away from an activist, open-ended job description, towards something more like what most people think local government should be. In other words, a focus on local infrastructure, local public services and local regulation.
 
Yes, and exclude capital/civil works not used by an individual ratepayer -  my financial arrangements are predicated upon the principle that users pay. Dams, irrigation projects,  stadiums, let those that use them pay by patronage or private capital expenditure.

A good article. Thankyou.  I

A good article. Thankyou.  I think that much of what you say could also be applied to central government.
I think that the trend toward larger and amalgamated local bodies enhances the power of the unelected council executive and it would not surprise me if they were the people pushing this trend.  Look what is happening in Auckland.  How much say do the elected councilors have? 
Both central and local government are behaving in a manner where they apear less and less concerned about the comunity who elect and employ them.  The only counter that I can see is to introduce referenda in respect of significant central and local body actions.   The increasing growth and sophistication of the internet makes this a very easily and inexpensive initiative.   You can bet your bottom dollar that the 'authorities' would resist it tooth and nail. 

What about a referendum on

What about a referendum on the council CEO's pay?

Bruce says "They ought to be

Bruce says "They ought to be asking questions, tough searching questions, to ensure delivery for the people a council serves".
 
OK, Bruce, here's the big question.
 
Oil was $30 a barrel, 10 years ago. It's currently $110 a barrel. Tell me one thing Local Government does, not using oil?
 
This trend will continue.
 
I used to slag off at my Local Authority too - but I was young, call it immature. I know better now; I put my money where my mouth was, got on one, and realised that you have to do things, deliver things, meet your obligations (health regs, etc).
 
I grew up. Time some other folk did too. LG costs aren't the problem, permanently escalating energy costs are, and they in turn reflect scarcity - which no industry including yours, has an answer for. It's the elephant in the room.
 
Oh - and there's another famous psychological condition: putting your head in the sand. I guess it helps if you're worried about the encroaching tide.....

PDK - What proportion of

PDK - What proportion of Council spending is on oil or oil related products?  I would suggest it is fairly small.  The biggest single item of Council expenditure is Labour costs and it is approx, 70% of the total.  I have worked for L.A's in NZ and I can tell you there is plenty of scope to cut non-essential expenditures drastically.   The main reason that I left L.A. employment was boredom, which the vast majority of my colleauges were quite happy to put up with.  

What proportion of things

What proportion of things that we pay for do not rely on oil or oil related products?  Labour costs provide the $ for individuals to pay for oil or oil related products, so I suggest that most iof not all coucnil spending is ultimately oil related.

Good reply - couldn't have

Good reply - couldn't have put it better myself.
 
Every bridge, culvert, footpath, road, water-pipe, sewer-pipe, cable - is made with direct-component content of oil, often 100% component.
 
Every physical activity is done by oil too - trucks, diggers etc.
 
Then there's the correlation that all those who get 'paid', have to have done something too, and expect to be able to buy something. Almost all in both cases involve oil  content and oil-delivery.
 
 

Technically has not been true

Technically has not been true for about ten years or so. Almost all public works including maintenance work is contracted out. The Council I used to work for only spent 20% of its budget on direct salaries.
 
Our budget got a thorough going over from Councillors - not the budget you see published in the Long Term Plan but the 400 page version that details everything down to the line item. The chair of the budget committee in particular would have loved to have "drastically" cut the "non-essentials" but she could never find any - not in seven years of trying. PDK is absolutely right - get involved and find what really goes on.

PDK - The elephant in the

PDK - The elephant in the room is the elected Councillors who are too lazy to read the LGA and other appropriate legislation instead taking all their advice from the Council staff.
 
Council staff mainly write reports and push policy which is favourable to their job positions and expanding their departments. There are some good employees but generally the culture within the Council will have these quality employees leaving.
 
The only obligations that any Councillor has to meet are those as defined in any legislation and ensure that all policy and services are practical, efficient and effective for the ratepayers.  It will end up a case of Yes Minister manipulation otherwise.
 
All Council staff and any Government Employees should have time restrictions on their employment positions. Generally the longer they are employed the more manipulating their behaviour becomes.
 

True and not true. Yes,

True and not true. Yes, councillors tend to get and follow advice that is often a bit one-sided in its presentation. Not true that it is an 'elephant in the room'. It doesn't tend to make that much difference. 
 
70% of Council expenditure is on the 5 major infrastructure activities and 95-99% of the "decisions" councillors make in those areas is really replacement and maintenance not new stuff. 
 
There is no elephant in the room. Once you own a road this is how much it costs to keep it working. As I have said before on many occasions, if you want to lower rates get onto your council and demand narrower, unsealed roads with plenty of potholes in them. That will definitely cut costs out of the budget.

Kumbel - You cannot assume

Kumbel - You cannot assume that Council staff deliver efficient and effective services within the major areas because they throw a budget in front of you. There are enormous problems within senior management who make decisions and give directive as they have poor skills in actual service delivery. Often those who are undertaking the actual work could implement significant cost savings as they know the systems are inefficient. There is a lack of co-ordination between the various Council departments which doesn't allow for stream-lining work or cost sharing in service delivery.
 
I would guarantee that I could walk into any Council in NZ and spend a small amount of time  and identify several key areas where significant savings can be made and provide a better service. People become blind to the systems they use and then keep using that system on an annual basis, this has a compound effect which adds detrimentally to the rates costs annually. Management does not get hit in their pocket for poor decisions or incompetence, the ratepayer does.
 
Councils are definately the elephant in the room and it is high time the issues were addressed. 
 
 
 
 
 

Feel free. I would be

Feel free. I would be delighted if someone would actually identify where councils are routinely wasting money. It would make a pleasant change from the fact-free waffle that eminates continuously from Parliament.
 
I cannot think of a single council CEO of those I have talked to who would not welcome someone who could really help them get rates down.

Would happily do so, if I

Would happily do so, if I could.
Problem is the absence of antiseptic sunlight.
Tell me when (the year) Councils began charging all these extraordinary consent and contribution fees.
Then tell me what they are now doing with all the additional money that they weren't doing before that date.

Consent fees pay for

Consent fees pay for planning/building staff time so less rates are charged to cover those functions.
Development contributions are a capital charge that in theory must be applied to public projects that offset the effects of a new development. They are tagged to specific developments and must be applied to relevant mediation projects (better roading, water/sewer network upgrades, new neighbourhood parks etc). If they are not applied within five years they must be returned. Audit NZ regularly checks on the status of development contributions.

I was interested in the

I was interested in the Year
When I built my first house, in Auckland, the only council fees were a footpath crossing damage deposit and some other fee of $50 which was refunded on completion. Sewers and Parks and libraries and all that were contained in the local rates. Now-a-days council fees seem to add up to nearly 25% of the cost of building a house
 
So, to repeat my question. What's new that's being done that justifies those fees.

Reorganisation of Local

  • Reorganisation of Local Government 1989
  • Resource Management Act 1991
  • Local Government Finances Act 1996
  • Local Government Act 2002
  • Building Act 2004 (especially this one!)

and various versions of the Rating Powers Act

Oh deary me.   The point at

Oh deary me.
 
The point at which the Councils of this Fair Land started charging like wounded bulls was 2002, immediately after the passing of the 2002 LG Amendment Act which instituted the Four Well-beings.    I seem to have covered this before....
 
And if'n yer do an old-fashioned Source and Application of Funds statement for these contributions (ye'll haveta dig around in the Financials and mebbe do the odd OIA request or two) you will find that the two bottomless pits (Social'n'Cultural Wellbeing) take quite a chunk of these Fees, Levies Contributions and Extortions.
 
My submission to the 2010 Christchurch Draft Annual Plan did exactly this:  here's the damage:  (SL = Service Level, DC = Development Contributions).  For the year in question, the DC's totalled 10% of Rates take....so not peanuts.
 

Capital Expenses and Funding by Functional Category

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs

 

 

Funding

 

 

 

Activity

Improved SL's

Inc demand

Total Costs

Loans

DC

Other

Total Funding

Water Supply

1,928

2,614

4,542

1,355

2,410

777

4,542

Waste Water

37,693

11,407

49,100

41,655

7,445

 

49,100

Streets

25,424

7,120

32,544

17,719

3,393

11,432

32,544

Refuse

741

 

741

741

 

 

741

Recreation/Leisure

3,277

 

3,277

1,815

1,462

 

3,277

Parks

4,709

20,853

25,562

14,821

10,741

 

25,562

Cultural

4,104

273

4,377

3,637

740

 

4,377

Comm. Support

1,363

 

1,363

1,363

 

 

1,363

Planning/Dev

 

246

246

246

 

 

246

Corporate

27,904

3,489

31,393

26,990

 

4,403

31,393

Totals

107,143

46,002

153,145

110,342

26,191

16,612

153,145

 
This table reveals some significant patterns.
 

  • Water, Waste and Streets have fully 62% ($13,248,000 of $21,141,000) of Increased Demand met by DC alone. 
  • Streets length for the whole City is around 2,280 km[1], and it appears that almost 50% of increased demand across all those streets is funded solely via DC.
  • Recreation and Leisure, despite zero Increased Demand, is funded $1,462,000 from DC.
  • Parks activity increased demand at $20,853,000 across the entire city, is funded 50% by DC.
  • Cultural, with increased demand at a mere $273,000, is funded $740,000 from DC.

[1] in 07/08, source transport.govt.nz

 
 
So folks as you may be able to divine from this lone example, these non-Rates revenue streams are NOT regarded as being 'tagged' in any way......and only those pure of heart and soul would ever trust Auditors to pick up anything out of the ordinary in here.
 
After all, what possible human activity can NOT fit within the Four Wellbeings???
 
So it's all legit.  Geddit?
 
But just because ya Can, doesn't mean ya Should.
 
(oh darn, BH, the Edit and Post functions show a pretty HTML Table, but the displayed Comments page shows an Untabularised Mess).  Must Do Better.

Wasn't intending to dragged

Wasn't intending to dragged into this. 
 
1. 2003/4 council budgets barely shifted compared to previous year (see Nick Smith's propaganda on DIA website). Significant lifts happened 2004/5 budget year as effects of LGA 2002 kicked in. Nothing to do with well-beings and everythingto do with Audit NZ being required to tick off budgets before they were put out for consultation. Out of the blue Audit NZ required solid asset management plans to support budgets and, combined with a frenzy of central government construction that drove contracting costs through the roof, a perfect storm.
 
2. DC's have a historical flavour - don't know but suspect CCC cleaning out the cupboard before they expire.

Hi Kumbel – The intent of any

Hi Kumbel – The intent of any legislation is hugely different from how councils interpret and carry it out. Most development levy charges have nothing to do with the development they are being charged against; - in short they are made up. Yes there are formulas they show how they come up with that figure but they have no empirical justification. As far as councils wanting to voluntary reduce costs, yes many do BUT not if it is going to reduce their power of influence eg no IT manager will implement a system that would half the number of his staff as this influences how much he gets paid. Part of the justification these CEO trot out about why they deserve their latest pay increase is ‘look at the number of people they employ’ (are responsible for). The system is designed to get bigger and therefore less efficient, not smaller. If you really want to see how to make councils more efficient you should read the methodology and case studies of Professor John Seddon  http://www.thesystemsthinkingreview.com/  . There is one council in NZ that has used his systems thinking methodology in processing building consents and their turn around has been reduced to 12 days, and this is from the customers’ perspective, not the councils, council costs are far lower, customers are happier and staff morale is greatly improved. Professor Seddon also has some interesting commentary about how Audits push the price up, in short, as soon as Auditors are put in, it becomes a ‘catch me if you can’. The councils focus is now on how to game the system to satisfy the auditor’s measures. Of course the auditors could be trying to measure the wrong thing so it’s not always councils fault, but the point is the focus is now even less on the customer.

Won't argue with most of your

Won't argue with most of your comments. I am no fan of councils as they stand today and if I had the magic wand I would abolish local government tomorrow. Where I part company with most commenters is that I don't buy the stupidity or ineptitude or corruption arguments to explain the general rises in rates.
 
I have observed at first hand from inside mahogany row the implementation of LGA 2002. I was a senior manager working with the rest of the executive team and councilllors struggling to both maintain services and still restrain rate increases. The 2000's were a time when central government imposed significant costs on local government, restricted real local democracy and pretended they had nothing to do with it. Labour and National are both equally culpable but now local government has become so toothless that we might as well put them out of their misery and wind them up.
 
 

Great to see the Federated

Great to see the Federated Farmers guys participating in the public conversation on Local Government issues.
 
Of all the industry / professional groups throughout the country, Federated Farmers is by far the most competent.
 
Ones such as the Real Estate Institute, Master Builders and the Property Council (just 3 examples of many) are a complete waste of time. Just go to the Property Councils website to see what I mean – and draw your own conclusions...
 
http://www.propertynz.co.nz/
 
These guys got a serve from me Friday, which you can read at Cantabrians Unite facebook ...
 
http://www.facebook.com/CantabriansUnite
 
Too many of these outfits simply haven’t got a clue about the wider public interest.
 
They are too stupid to realize the great damage they do to the public perception of business generally, by seeing their organisations primary role as colluding to screw the wider public for all its worth.
 
With all due respect to Bruce Will, the worse thing we could do is thinking in terms of adding Central Government subsidies fuel to already highly dysfunctional Councils. Generally, the larger they are the worse they are. Once you bureaucratize them, you bugger them.
 
There are two types of Local Government in this world – the small and the bad.
 
We outline the solutions with respect to Christchurch within Cantabrians Unite CHRISTCHURCH: THE WAY FORWARD ...
 
http://www.scoop.co.nz/stories/AK1206/S00251/christchurch-the-way-forward.htm
 
...with further information on the CANTABRIANS UNITE website...
 
http://www.cantabriansunite.co.nz/
 
Hugh Pavletich
 

Hugh I am a big fan of yours.

Hugh I am a big fan of yours. But surely the easiest way of getting councils on board re housing affordability is to take off their abilty to charge development taxes and replace it with another more equitable tax. In this matter I agree with the Federated Farmers.

Brendon...Good point.   It

Brendon...Good point.
 
It was with respect to Bruce, somewhat unclear what he was driving at these on the LG fundung front. I would be concerned to see the :G sector looking to Central Government to subsidize their dysfunctional organisations...in the main the larger ones..
 
Im also keen to see them restricted as much as possible to property related services with property related financing for these services - clearly broken out within  itemised Rates Demands.
 
Likely we are all pretty much on the same page on these issues.
 
Thank you for the contributions you are making to the discussion - both here on Interest Co NZ and elsewhere.
 
Hugh Pavletich

Hugh It seems to me that

Hugh
It seems to me that reforming local governments ristrictive zoning policies and excessive development taxes are the key issues. While reducing wasteful council bureaucracies is desirable it is not the main problem. I would deal with the key reforms first and let the rate payers and new council tax payers gradually deal to council waste.

Brendon... it needs to be

Brendon... it needs to be recognised the housing problem is at its core a Local Government costs out of control problem, as Bruce illustrates very well within the article above. Then there is the debt explosion problem as well. I touched on these issues back last November in how this “costs out of control” problem played out with HOW HOUSING BUBBLES ARE TRIGGERED....
 
http://www.scoop.co.nz/stories/HL1111/S00011/how-housing-bubbles-are-triggered.htm
 
The changes of course need to be systemic - as we set out within CHRISTCHURCH: THE WAY FORWARD...
 
http://www.scoop.co.nz/stories/AK1206/S00251/christchurch-the-way-forward.htm
 
On housing affordability, I am very pleased with the focused approach the Government is taking – land supply, infrastructure financing, process and construction costs.
 
Focusing on making the major systemic changes, so they are forced to perform to an acceptable standard, is the only way to go. The last thing we need is Central Government hack oversight, with the shallow bureaucratic / academic research.
 
There is nothing at all complex about these issues. But it will take grounded people with a solid track record and deep tacit knowledge of the LG sector, to sort these guys out properly.
 
It reminds me of the words of the late great Sir Wilson Whineray, when asked what leadership and performance is all about. He responded by saying “The capacity to simplify things – and do the simple things well”.
 
The Government has no option other than to properly sort out this LG shambles. It is all way too serious now. They should have been on to it out of the starting blocks following the 08 election. Better late than never I suppose.
 
This is their last chance. And New Zealands.
 
Hugh Pavletich

Hugh   Economists like to use

Hugh
 
Economists like to use incentives to change  behaviour. So what incentives can we put in place to stop local government from getting their costs out of control and going through the cycle of strangling their own cities, as you clearly outlined in your "How housing bubbles are triggered" article?
 
A more balanced tax system for local government might help. For instance if local government received a small proportion of local paye tax then they might have second thoughts about rating the hell out of businesses and driving away workers with unaffordable housing.
 
In the US it was the independent state system that allowed Texas to survive the GFC because it did not buy into the new age hippie claptrap of smart growth, urban planning ideology that took hold in California etc. Whereas look at Britain, buggered nationally since the 1947 Town and Country Act. Allowing different parts of your country to do different things has its advantages. The closest thing we have to that is our city and regional councils.
 
Regards and keep up the good work
 

Brendon...good on you for

Brendon...good on you for thinking through solutions. I suppose all I can say is that mine are outlined within Cantabrians Unite "Chrischurch; The way forward'.
 
The urban property related issues are massive for the Government. Lets just skip through them quickly -
 
(1) Housing bubble - $300 billion problem. It shouldnt exced 3 times annual gousehold incomes or 1.5 times GDP. The USA and Houston for example are about 1.2 times GDP / GMP,.
(2) Leaky homes a $15 - $20 billion problem.
(3) Finance Companies property  sector losses $5 billion plus ?
(4) Christchurch earthquakes $30 billion
(5) Broad commercial property sector seismic assessment costs estimate of $100 billion, as reported in the NZ Herald earlier in the week by Anne Gibson.
 
Pretty heavy duty srtuff in a weak $200 billion ($US125 GDP PPP) economy I would say.
 
So when considering all the above, I think it would be fair to say the Government does not intend to stand idly by (it simply cant afford to), allowing the housing bubble to inflate by another $100 through $200 billion of bubble value, partially fueled (it takes anout 25% of mortgage debt overall to pump it) by $25 through $50 billion of further bubble mortgage debt. Thats on top of the approximately $75 billion of bubble mortgage debt already in there.
 
Expressed another way - as you and Interest Co NZ readers will be well aware, in normal affordable housing markets initial household mortgage loads should be in the order of 2.5 times annual household income - they are currently here 6 plus  times - and if the bubble is alloed to inflate further, wil push this north of 8. Lending Multiples must reflect of couse the Median Multiples of specific markets. California hit 11 times as Herb Greenberg explained within MORTGAGE MESS for MarketWatch late 2007...
 
http://blogs.marketwatch.com/greenberg/2007/12/straight-talk-on-the-mortgage-mess-from-an-insider/
 
So with all due respect to you Brendon and other nice economists out there,, I think we are outside the incentives thinking to more the heavy duty approach with Local Government. In highly technical developer terms, Im thinking more in terms of "a great flushing"! And there is truly enormous scope for this in the seriously bloated and out of control Local Government sector.
 
In conclusion...following Thatchers Poll Tax experience, I doubt they will be in a hurry to repeat that or some varient of it here.
 
Hugh Pavletich
 

Following the NZ Herald

Following the NZ Herald article by Anne Gibson early in the week on the commercial property $100 billion seismic assessment circus, I am most surprised the media nationally are not all over this huge issue.
 
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10850094
 
The whole thing is just all over the place. A complete circus.
 
Hugh Pavletich

Hugh, In light of that

Hugh,
In light of that article the government actually held a press conference to announce what they will do about the problem. Here is Gerry Brownlee:
http://www.youtube.com/watch?v=DVG1q49yPaY&t=3
 

Hugh   I quite agree the

Hugh
 
I quite agree the numbers are horrible and we need serious changes along the lines that you have consistently argued. I do not think you should change your argument. It exposes the stupidity of our current system.
 
But I can be more flexible, reasonable even in my approach to the problem.
 
So given that I would like to put out there another way of looking at this housing issue. The left have created the housing affordability problem by promoting all this claptrap about smart growth, urban concentration, identifying urban growth areas etc. And then when housing became too expensive they implemented central government policies to solve the 'problem', ever rising accomadation grants for beneficiaries, working for families subsidies for low and medium income workers, more state housing and now kiwi homes.
 
In a way it is communism-lite, citizens are made dependent on central government to get their basic needs met. It is a very centralised way of running the country.  And it could be successful, see this article on the political analysis of Labour's housing policy http://www.nzherald.co.nz/john-armstrong-on-politics/news/article.cfm?c_id=1502865&objectid=10851136
 
The right need to promote a more decentralised way of living, where citizens can provide for themselves without recourse to central government. But to do that they need to either get local government on board to reverse all the smart growth claptrap that started to the problem in the first place. Or they bypass local government by legislating and protecting an alternative. Such as new housing developments being provided by Municipal Utilty Districts (Texas style MUDs), who are free to buy land at rural prices and do not incur council development fees because they provide their own infrastructure, which is funded by long term bonds and ultimately taxes on the MUD residents. 
 
In summary you could characterise the choice as between a centralised communist-lite vision of New Zealand versus a decentralised self sufficient view of our future.

Hugh   I quite agree the

Hugh
 
I quite agree the numbers are horrible and we need serious changes along the lines that you have consistently argued. I do not think you should change your argument. It exposes the stupidity of our current system.
 
But I can be more flexible, reasonable even in my approach to the problem.
 
So given that I would like to put out there another way of looking at this housing issue. The left have created the housing affordability problem by promoting all this claptrap about smart growth, urban concentration, identifying urban growth areas etc. And then when housing became too expensive they implemented central government policies to solve the 'problem', ever rising accomadation grants for beneficiaries, working for families subsidies for low and medium income workers, more state housing and now kiwi homes.
 
In a way it is communism-lite, citizens are made dependent on central government to get their basic needs met. It is a very centralised way of running the country.  And it could be successful, see this article on the political analysis of Labour's housing policy http://www.nzherald.co.nz/john-armstrong-on-politics/news/article.cfm?c_id=1502865&objectid=10851136
 
The right need to promote a more decentralised way of living, where citizens can provide for themselves without recourse to central government. But to do that they need to either get local government on board to reverse all the smart growth claptrap that started to the problem in the first place. Or they bypass local government by legislating and protecting an alternative. Such as new housing developments being provided by Municipal Utilty Districts (Texas style MUDs), who are free to buy land at rural prices and do not incur council development fees because they provide their own infrastructure, which is funded by long term bonds and ultimately taxes on the MUD residents. 
 
In summary you could characterise the choice as between a centralised communist-lite vision of New Zealand versus a decentralised self sufficient view of our future.

Do these MUDs pay for extra

Do these MUDs pay for extra lanes to be added to the motorway? Or for new train lines?  I can't see how the transport cost of a new major subdivision on the outskirts of Auckland could be any less than 3 billion

That subdivision if it is so

That subdivision if it is so big it needs a new motorway lane all to itself will be many thousands of people paying tens of millions in tax forever.

A better way to answer your

A better way to answer your question Jimbo is to ask what proportion of a countries/cities public capital should new comers have to pay upfront versus ongoing payments through the tax system. 
 
I think that it is unfair and inefficient to change any more than the direct infrastructure costs of the subdivision as upfront charges.
 

Brendon...good

Brendon...good point.
 
Imagine if you had a 2000 lot residential subdivision in a rural area....and that it had the scope to be incorporaed within one of three nearby urban Councils and they had to tender for it.
 
Say this hyperthetical 2,000 lot subdivision was generating $3,000 per lot in Rates Income per year for each lot....$6,000,000 a year in Rates income.
 
If these 3 Councils were (dont laugh) efficient and could provide all services required within a comprehensive cost of $2,000 per lot with an annual surplus of $1,000 per lot, how much would the winning Council likely pay the subdivider to incorporate the subdivision?
 
If it was the 3 Councils of Christchurch, Waimakariri and Selwyn, we can be sure Christchurch wouldn't even bother tendering. After all, with its bloated bureaucracy at the Holiday Inn  in Hereford Street, its cost structures and operational ineffiviencies mean that it's serving costs for this new subvivision are in the order of $3,500 per lot.
 
The commercially astute subdivider, being aware roughly what the winning Council was prepared to pay for the right to incorporate the new subdivision, would deduct this from the price per lot, to head off his competitors.
 
In reality, this plays out in a similar way with new commercial / industrial subdivisions, where Councils know they have more scope to rock in the Rates for this sector, while it is a lot tougher for them to do this with residential ratepayers for political reasons.
 
We shouldn't be surprised that Councils are generally far more "welcoming" of commercial / industrial subdivisions than they are of residential.
 
Growth too is generally more welcome with smaller more efficient units of Local Government....where it is seen as a benefit. But alas....growth is seen as a cost to larger bloated Councils where there cost structures are out of control.
 
Hugh Pavleich

now....wouldn't it be nice to

now....wouldn't it be nice to think there are Cebreal Government politicans with the "nous" able to tell the Local Government guys that this is how things work  in the real world....where businesses are willing to pay for profutable cash flow. And Rates income is pretty secure xash flow.
 
Hugh Pavletich

No argument from me that the

No argument from me that the councils are way too inefficient - but I do think we need urban limits. Yes that does push up land prices, but letting a city grow outwards forever is a recipe for disaster, and Auckland is already seeing the problems it causes in terms of traffic and infrastructure costs

They could live in apartments

They could live in apartments in mt Eden and still pay the tens of millions in tax

Hi JimboJones – Since much of

Hi JimboJones – Since much of highway and rail funding, and rail subsidy comes from fuel tax, anyone who drives helps pay for that. But MUD style systems do benefit highways and public transport. MUDs are just a more efficient (less wasteful) way of development, whether it is low density or high density, whether it be inner city or on the fringe. One of the benefits of more efficient development is that it leaves more disposable income in the hands of the homeowner or renter, and if a more targeted tax needs to be levied then they can more easily afford it eg if you can buy your apartment at ½ price, then if you need to use public transport, you can more easily afford to pay the higher non subsidised fare.

But if new dwellings were

But if new dwellings were built in the existing city boundaries, preferably close to rail or the city, then the transport cost would be much less. I just don't think it s feasible for Auckland to keep expanding outwards, the motorways are at capacity and the cost of expanding them would be insane. If it costs 2 billion for the 4 km water view motorway, imagine how much it would cost to add a new lane to both sides of the southern motorway for example. Would the rest of nz be prepared to pay for that? Also Your cheap section starts to look a lot more expensive when you have to pay for 3hours driving each day to get to work and back.

You make the assumption,

You make the assumption, which is wrong, that people on the fringe always want to drive into the CBD. To make rail have any hope of being efficient, you have to get to the size and densities of Manhattan, which is why forced high density urbanisation is required, but this forces up housing prices, which happily for the smart growth devotees, means people can only afford smaller houses, so they can now get even higher densities. It has to be remembered only about 20% of employment is located in the CBD, most of the rest of the city goes about its business quite happily, without the need or desire to go into the CBD. CHCH is a classic example that answers that previous theoretical question, “I wonder what would happen if we had no CBD?” In short, nothing much. One of the biggest MUDs in Texas has about 70,000 residents and has the entire supporting infrastructure for employment, and high density and low density areas. And even though I have already covered this in other posts, since there is a direct link between prices on the fringe and the CBD, it benefits all property purchasers (inner city or fringe) if housing is less costly to develop.
 

'you on the other hand only

'you on the other hand only see black and white.....while not always, its substantial....
You also ignore energy cost and scarcity......hence as in the USA fringe becomes or will become almost worthless....
CBD, just about evey city has one, can you show a major cty that doesnt?
 
regards

Good summary Brendon. I think

Good summary Brendon. I think it should also be pointed out, for the benefit of some others, that densification is not the opposite of MUD style developments. Texas, or Houston in particular, are given as examples of successful affordable housing systems, but it has to be remembered that they also have high density living, townhouses, apartments, skyscrapers etc. Dallas and Houston also have rapid transit services.
The main difference is that you can purchase in the suburbs, or inner city, single level homes or apartments, at median multiples of 3x income. In Texas, you have more choice of where you live and what you want to live in, for your money.
Our present system based on smart growth philosophies forces you do drive further to qualify than you would need to in Texas, which is exactly the opposite of what smart growth is trying to achieve. And as it has been pointed out, the only way they can overcome this is to subsidize it anyway, which of course makes housing less affordable for those that have to pay for the subsidy. This is part of the downward spiral we are seeing with housing affordability under the present system.  

Surely if you got rid of the

Surely if you got rid of the urban limits there would be much more development on the outskirts and much less intensive development. The main thing that drives intensive development is high land prices. Although with petrol becoming so expensive it may be possible to ease up on the limits without creating too much more sprawl.

High land prices (and the

High land prices (and the other reasons of council bureaucratic costs and time delays) is the driver of lots of things including people having to purchase smaller houses than they would like, and further away from the CBD (ironically), the reason two incomes are needed due to high housing costs, NZ having high child poverty, high childhood illness, lower business productivity etc.
Yes you would get an initial expansion outwards (but is still happening begrudgingly under smart growth), but then over time prices going in would become relatively cheaper which would mean  those that like higher density living could move closer in than they previously would have been able to under the present system.
 
 
 
 

The problem is not just

The problem is not just expensive but maybe even scarce/rationed.....in effect the price model is how it is/will be rationed....
The advantage of density is its more energy efficient......the Question is, whats the end game.....'
If its business as normal but with petrol at $3 a litre ie expensive but things get no "rougher" then density....  I think its Georfery ward on TED talks about city super-scaling....
If energy becomes cripplingly expensive then de-centralisation will happen with satellittes....
The thing is things have to change its to what  and how fast, because the change also takes energy so we may only have the once to do it.
regards
 
 

Jimbo... you may find an

Jimbo... you may find an article I wrote way back in 2007 helpful ... New Zealand Lifestyle Block Mythology .

 
Only about 0,70% of our toal land area os urbanised... less than 2,000 square kilometres of it. We couldn’t urbanise a further 0.50% of our land area over the next 50 years if we tried.

 
Strangling cities only forces people out to lifestyle blocks and outlying towns as the Landcare Research reported by Tony Chaston here on Interrest Co NZ back January illustrated.

 
It reported these has been an explosion of lifestyle blocks these past 13 years from 100k to 165k...now consuming some 8,700 square kilometres of our land area – at least 4.3 times our urban areas.

 
Strangling cities because Local Government has lost control of its costs and the ability to meet its infrastructure responsibilities to its communities, is the REAL REASON for the garbage “sun rises in the west” research these losers inflict us with.

 
The Planning Schools today are bureaucratic fodder factories, where the naive are indoctrinated in Luddite Malthusian eyewash, to wreck havoc in Local and Central Government employment generating policy rubbish. Larger Local Authorities are infested with these clowns...and the sooner they are cleaned out the better.

 
It is well past time we stopped “wet nursing” these hugely destructive clowns in the Local Government sector.

 
Dr Snlomo Angels latest book Planet of Cities is a “must read” on these issues.

 
Hugh Pavletich

And a most fasciniating

And a most fasciniating question is where, exactly, did these schoolteachers come from, and why and how? Why did half the world decide to all join hands together and start believeing in fairies?
No serious researcher can believe in the forced urban intensification game, in time, because the facts ultimately speak for themselves. 

Houston...helpful links...to

Houston...helpful links...to get a sense of pricing and quality in a normal / affordable housing market If land is priced at its true value, all forms of development benefit...whether its fringe suburban or central...
 
Houston Association of Realtors website
 
Latest monthly report
 
Houston new homes source ... add 6x6=36 square metres for double garage (Americans building area only includes  living area). Divide by 10.764 to convert from square feet to square metres...to work out what they are paying ALL UP per square metre for housing. Compare this with your local area here in New Zealand........then weep....
 
Hugh Pavletich
 
 

-

-

Just think a little further,

Just think a little further, 7% per year, or doubling every ten years....congrats, now apply it to farming, energy, population, food output etc not just rates....
regards
 
 

Steven - thinking a little

Steven - thinking a little further may well be the problem.....  :)
 
HughP said somewhere that a Prof suggested the urban coverage was a miniscule %.
 
You have to count the service area too, or you're cherry-picking in cloud-cuckoo land. Those houses need food delivered, services and marterials mined and supplied. You have to apportion the footpring of the whole, or your appraisal is meaningless.
 
www.jayhanson.us/page40.htm
 
Housing crashing into farming is the classic - and inevitable that both would look to 'lifestyle blocks' as the scapegoat. They merely represent the no-mans-land interface, not the macro problem.

Actually Im pretty sure quite

Actually Im pretty sure quite a few have indeed started to think a little further then rejected the output once they realised where it was taking them.
hence why Hugh calls us luddites.....which is funny, because strategically a luddite rejected a tactical change in the form of a machine.....
Which is where hugh falls flat on his face....he wont think macro/strategically....because when he does then his tactics are a failure.
regards
 
 

Steven and PDK... you two

Steven and PDK... you two really do need to come up to speed with Julian Simons The Ultomate Resource . He buried Paul Erhlich of “The Population Bomb” infamy over 40 years ago now. The Luddite Malthusians have been seen as a joke ever since.
 
 
The only reason the Luddite Malthusians have any “political traction” still, is because they are useful “props” (with the likes such as the protectionist Property Council out on the right - the unholy alliances) to out of control public bureaucracies.
 
In essence – they provide a saleable narrative making Government (mainly Local Government) failures.

 
It is a great shame these hacks and their PR flunkies, the Luddite Malthusians don’t realize the great harm they are doing in condemning so many people to poverty and lower standards of living.

 
Indeed the only reason we hear from the Luffite Malthusians today is in the main because of the bureaucratic financial support they get for their activities.

 
It was only a few decades ago, when one would see these poor scared clowns in the street with their “The End Is Nigh” sandwich boards, rabbiting the Luddite Malthusian rubbish. One would give the poor souls $5, kick them up the arse and tell them to go and get a life.

 
I respectfully suggest we need to do the same with these clowns in Local Government ... and of course to give them the opportunity to contribute constructively to the community in real jobs. Picking vegetables....milking cows (not us)...whatever...

 
Hugh Pavletich

Hugh - you seem to lack

Hugh - you seem to lack logic.
 
You also seem not to listen too well - you've been requested to shove the denigration in the past.
 
You've also had it explained to you - in such simple terms I felt I was in danger of sounding condescentding - that just because something hasn't happened yet (your 100% certain death, for instance) is no guarantee it won't.
 
The joke is folk who 'think' you can grow forever within a finite sphere of operations. The joke is folk who count the housing footprint alone, ignoring the support-acreage. The joke is folk who fail completely, to understand what 'wealth' is.
 
Simon was wrong for the same reason that Rumplestiltskin remains a fable. He was also wrong because his hypothesis was just plain stupid.
 
I repeat this graph - it's the 'disproved one' from '72. What part of that can be described as 'disproved' yet? Which one of the 'actual tracks' do you suggest is erroneous?
 
http://www.smithsonianmag.com/science-nature/Looking-Back-on-the-Limits-of-Growth.html
 
 

Back on topic, chaps and

Back on topic, chaps and chapesses:  LG spend is limited only by empowering legislation, which is precisely where Labour went horribly wrong in the 2002 LG Act, by allowing (full text of the relevant section - 10):
 
"10 Purpose of local government

  • The purpose of local government is—

    • (a) to enable democratic local decision-making and action by, and on behalf of, communities; and
    • (b) to promote the social, economic, environmental, and cultural well-being of communities, in the present and for the future."

     
    The astute will notice that literally any human activity, whether powered by Oil, Coal, Sun, Falling Water or Peanut Butter and Jelly Sandwiches, is thereby covered.
     
    So altering the empowering legislation is the only way to 'disincentivise' this crew, which is the very point BW is making.
     
    Arguments about the percentage of Peak Oil being consumed by such essential positions as Community Devcelopment Advisors and Diversity Coordinators, are quite beside the point.
     
    Once the legislation seizes hold and these positions are disestablished by lack of funding, the people involved can revert to older, safer and cheaper forms of employment such as peasantry.  With possibly positive effects on Peak Electrons...

 

Let's avoid the fear-driven

Let's avoid the fear-driven put-down bit, and have a look at the rest.
 
First, the "social, economic, environmental, and cultural well-being of communities, in the present and for the future."
 
If you leave it to the profit-the-only-motive 'free market', you fail the 'for the future' yardrstick. Not good enough to let them 'fend for themselves', and using that to justify avoiding remedying or mitigating, or to justify outright depletion.
 
You can't leave it to the uncontrolled commons approach either - as Garrett Hardin pointed out.
 
So you need governance/rules/regulation, and it has to be with an eye on the future. I'd suggest that a Community Development Officer could well fit that need, depending on the astuteness with which the job description was penned.
 
Given the Peak Oil problem (nothing scales or replaces, and the lead-time is gone now) I'd suggest that diversity - in a food-supply and community resilience sense - would be appropriate too.
 
Your comment reminded me of the folk who decry 'money' (actually, it's energy) spent on something they themselves don't indulge in, and do the decrying for that reason alone.
 
For instance: I made representations that the Dunedin Stadium shouldn't have been done, but I quite like watching rugby, and indulge in 3 sports myself to quite a degree. My concern was the debt, and the timing thereof. Peak Oil says it can't/won't be repaid, and that if the effort was to be made, it'd have been better made putting the city on a more resilient footing.
 
Oh - and no governance, anywhere, anytime, should commit to a course of action relying on yet-to-be proven or yet-to-be-developed or yet-to-be-discovered sources of anything. No exceptions.
 
 

LGA Amendment Act is a

LGA Amendment Act is a solution looking for a problem. B- is very generous given that this act will do nothing for rates reduction.
 
I have commented previously on the deficiencies of the Act and unless the bill changed markedly in select committee since I last read it then my comments stand.
 
Two points for the hand-wringing public who listen to the demagogery of politicians like Rodney Hide and Nick Smith:
 
1. Relative costs in Councils. When Bruce Wills says "Since 2002 rates have increased an average seven percent each year; massively above inflation" I presume he means CPI which is only one of the many measures of price levels. This statement would mean something if Councils toddled down to the supermarket like the rest of us to buy a few beers some bread and a flat-screen TV - but they don't. They buy electricity, insurance, petrol, bitumen and contractor services. Oil alone has gone up 300% in the last ten years. Insurance has doubled etc etc
 
2. Defining the role of Councils in terms of core services will also make no difference. In my experieince since 2002 when COuncils got  the power of general competence and the 4 well-beings were defined Councils have carried on doing exactly what they have always done. For almost all Councils in the country the Act, as written will not change their scope of activity one whit.

So we are knackered as 7%

So we are knackered as 7% increases in annual rates bills are unpayable by poorly paid NZers in the short run.  

Not wrong. I haven't looked

Not wrong. I haven't looked at the figures lately but the rises were easing off a bit over the last couple of years. Oil dropped in price which helped but one of the big factors was that many of the government-mandated capital projects (especially around sewer and water) had been completed.
 
You have identified the nub of the matter which is not councillor irresponsibility or wasted spending on non-core activities. The real issue is that, in a world that demands higher environmental standards, higher standards of safety and well-being and in which access to cheap commodities and resources like water no longer exists, it costs real money to have it all.
 
Today it's either suck it up or lower your standards.

Also increasing

Also increasing population...
regards

Today it's either suck it up

Today it's either suck it up or lower your standards.
 
Or move to a country offering more -courtesy ZH

Depends on "short run"  7% is

Depends on "short run"  7% is doubling in 10 years, also its not net inflation....so allow 2% mind you do the poorly paid get 2%? per annum?  Also the poorly paid are in cheaper accomodation which rises slower than the better stuff....
Anyway I'd suggest thats achievable for many but not in the medium term and certianly not in the long term. So my rates are $1800, in ten years $3600, in another 10, $7200....now thats a serious issue....in 30 years $14400, I cant pay that....At that rate most of the pension is gone on rates alone.
Oh and bear in mind that 7% is also "softerned" by increased debt being taken on....so its going to want to rise faster....
regards