New legislation will give Government power to over-rule local authorities on the development of land and housing

New legislation will give Government power to over-rule local authorities on the development of land and housing

The Government's playing tough with local councils on housing, saying that the special legislation it is implementing will give it the power to over-ride councils and go ahead itself to issue consents for housing developments.

In the wake of its announcement last Friday of an accord with the Auckland council to allow for a targeted extra 39,000 houses to be built in the Auckland area, the Government said today it was extending the accord concept to other areas around the country.

The special legislation, which will enable councils and the Government to streamline new housing developments in areas where housing is least affordable, will be introduced to Parliament today.

Housing Minister Nick Smith said the Government's "first preference" was to partner with councils to improve housing affordability.

However, Smith went on to say: “If an accord cannot be reached in an area of severe housing unaffordability, the Government can intervene by establishing special housing areas and issuing consents for developments.”

Auckland Mayor Len Brown said he would be seeking clarification "on a number of points" to ensure the Government's final legislation was consistent with the draft Auckland Housing Accord.

“There are clauses in the bill introduced today that appear to be inconsistent with the Auckland Housing Accord,” he said.

“My expectation is that the Select Committee process will provide an opportunity to clear up these inconsistencies."

The Auckland accord has still to be agreed to by the full council.

"Before we can do this we need to be certain that the legislation is consistent with the agreements in the accord," Brown said.

Smith said housing supply constraints were causing widespread concern about financial stability, with potentially negative impacts on interest rates and the exchange rate.

The legislation will apply for three years and allows special housing areas to be designated under accords between the Government and councils. Council approvals for new housing in those areas can then be managed under a streamlined process.

The first special housing areas under the Auckland accord are  to be designated later this year.

“The developments need to be predominantly residential, in greenfields or brownfields areas adequately supported by infrastructure, limited to low-rise construction, and in areas of high housing demand,” Dr Smith says.

Budget 2013 includes NZ$7.2 million over four years to help the Ministry of Business, Innovation and Employment fund the initiative.

The legislation will go through its first reading as part of Budget 2013 before being sent to a select committee for a shortened six-week timetable for urgent consideration and progress.

“This legislation is an immediate and short-term response to housing pressures in areas facing severe housing affordability problems,” Smith said.

“This provides time for the Government’s substantive changes to resource management reforms and the subsequent council planning processes to bear fruit and address these land and housing supply issues in the longer term.”

Smith later announced the bill passed its first reading.

He said developments within the qualifying areas would be able to be approved on a streamlined basis.

“This will see consenting decisions made within six months for greenfield developments, as to the current average of three years, and three months for brownfield development, as to the current average of one year."

Smith said there would be no appeals on developments up to three storeys high and special limited appeals on those between four and six storeys. High rise developments were excluded.

“The bill requires Government to work in good faith with councils to secure housing accords, like the one announced last week with Auckland. However, if an accord cannot be reached in an area of severe housing unaffordability, the Government can intervene directly by establishing special housing areas and issuing consents for developments.

“I’m pleased several councils outside of Auckland have expressed their interest in using this legislation in their regions and I look forward to continuing this dialogue with them. “This bill is a core part of the Government’s work on housing affordability. It confronts the reality that homeownership rates have been in decline for a quarter of a century, that house prices have soared unsustainably over the past decade, and that for too many families, buying or renting a home is unaffordable. "

The bill passed its first reading with the support of the Labour Party, United Future, the Māori Party, New Zealand First, Act and Brendan Horan. It has been sent to the Social Services Select Committee to report back to Parliament by 26 July 2013.

(Updated with detail from 1st reading)

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Looks like election fever has finally taken over and the National is in a panic not to lose the housing battle to the Labour/Greens.....But knowing what Goverments tend to do....always overkill ....wait for the coming housing disaster in auckland ....

That goes some way to address the rigged land supply market.  (if they ever chose to use the power, or is it just window dressing to appease the plebs).  But what are they doing about the  rigged building materials supply market.  Bet that they will never touch that.  Too many powerful mates breathing down their necks.

Looks to me like they want to be able to provide windfall gains to their land-banking financiers.
 
Smashing the whole of an MUL is quite a different thing to poking a few holes through it in places where your mates will benefit.  They are 'talking it up' as if the former, and doing it as per the latter.
 
 

Well p'raps better read that in conjunction with the IRD's new funding to hunt down and tax CG.....left hand, meet right hand, may actually be happening a litlle....
 
After all, the Productivity Commish did note the 10x MUL multiple and it is a Tempting Tax Target to newly funded taxerators....baiscally pinning a nice big TAX ME notice on the back of them Awful Land Bankers....

What a load of codswallop.
 
If the government wanted to tax landbanking the instrument would be a land tax.
 
This extra money for IRD is to chase down the little guy who can't afford to employ the bluechip accounting firm and doesn't have enough assets to make use of sophisticated corporate and accounting structures.
 
I thought you were an accountant? Surely you understand such money will chase the low-hanging fruit. I can assure you, your mates at Ngai Tahu need not lose any sleep over it :-).
 
 

 I already pay $30,000 in rates to Auckland Council(a form of land tax) which is more than most people pay. Since it is just land it does not use any council infrastructure.
 
Rates are not a land tax - they pay for services - that's why you pay GST on them - they pay for the provision of Goods and Services.  You don't pay GST on top of income tax, or land tax, or capital gains tax. Quite a different beast altogether.
 
If your vacant land is in a residential area where services already exist (i.e. roads, reticulated water, sewerage, street lighting etc.) - it matters not that you haven't hooked in to them (your land value reflects the fact that the services have been provided). Indeed in not developing the land you are a fiscal drag on all other properties which have - as they pay a higher overall level of rates for the same amount of land given they have made improvements to that land.
 
You are exactly the target for such a land tax - as it is cheaper for society-at-large that those parcels of land that already have services to the curb are developed.  So, yes, the intent of such a tax is to tax undeveloped land at a higher rate for failing to develop.
 
This forces the landholder to develop or sell. If the cost to develop is higher than most sections, then that just means the land value is lower on a m2 basis.
 
Sounds like a bit of a dog to hold onto.  Why don't you sell it?
 

Kate, you are onto it, great comments.

Cheers.  

Oh, Kate, never assume.  It makes an Ass of U and Me.....

yeah, yeah, yeah - waymad, I heard that one at the obligatory 'Management By Objectives' course back in the 80s as well.

If only people could see that the new game in town is the battle for first dibs at unearned income. Central Government vs Local in this instance and my money is on central. Might take a while yet to play out though.

Don't choke on yer grits, S, but I'm inclined to agree. 
 
Gubmints are faced on the revenue side with a static tax base (consumption and VAT's), a globalised business ecosystem that can arb tax down to the lowest level, a high and rising black economy which is by definition untraceable and untaxable except in the grossest cases, and this just leaves the poor ol' PAYE slave.
 
On the expenditure side, they are faced with an aging population with high expectations, a large dependent population who votes but is economically inactive as a wealth producer, and a welfare/education/health system that is highly dependent as to cost on the quality of the customers who walk through the door, and demographics that are at barely replacement level.
 
So finding new activities to tax, tax angles to exploit, closing loopholes and generally gee'ing up the taxerating effort, is gonna become a reg'lar thing.....
 
And the MUL multiple is a classic intentional, unearned CG.  The fact of the conversion to Urban zoning is a solid Intention, which is, Ah do b'lieve, all the taxman needs to have a Leetle Dig/Audit/Snoop.....I can hear the snapping of them Rubber Gloves already.

Great to see such insight and appropriate cynicism from more and more people on this forum......

No, no, no. This legislation is the government identifying a scape goat for a complete lack of policy to deal with the property bubble, nothing more. The government wants as much rates as possible to pay for the councils but it also wants to put the boot into them when its politically expedient!
There were probably 100 sections sold, somewhere is the vicinity of Hamilton last month, and yet still the property price in Auckland keeps ramping up. Nobody can explain this mystery? Only a council bureaucrat wields such power and influence!