Saturday, March 8, 2014

Frank Newman: Rotorua Mayor abolishes impact development fees

Not surprisingly the proposal in the Auckland draft unitary plan requiring Auckland property owners to seek iwi approval to work on what is a vast area covering some 3600 sites of "value to mana whenua" has come under a lot of criticism, from private property owners. Most landowners can see the proposal for what it is: yet another money making scheme based on Maori privilege.

In reply to that attention the Maori Party put out a press release which included this comment from Co-leader Tariana Turia, “this is also a Treaty issue. It's about tangata whenua having a right to participate in decision making over our natural resources…
For too long local Councils have denied, avoided and side stepped their obligations under Te Tiriti o Waitangi. Well it is time to step up. It's time to challenge the status quo and make it more inclusive of tangata whenua and our rights as indigenous people of Aotearoa, and we commend Auckland Council for their courage in taking this step on behalf of the nation…We welcome the inclusion of cultural considerations in Auckland's Draft Unitary Plan and the input of the Independent Maori Statutory Board in this debate. We also acknowledge the long history that hapu and iwi have in managing our resources and the vital role they play as tangata tiaki”.

I agree with Ms Turia; it is time for local council’s to either step up as Ms Turia would wish, or stand up on behalf of private landowners and say No to Ms Turia and the many others making a fine living out of the treaty gravy train.

Local councils are about to release their annual plans for public comment. Not only do those plans include the financial budgets and rates, they outline the collective vision of councillors.
There are many ways councillors can be visionary and they don’t even need to be creative, they merely need to copy the good things others are doing. Here’s an extract from March 2014 issue of NZ Property Investor about Rotorua.

“New mayor Steve Chadwick [a former Labour Party MP] seems to have injected fresh enthusiasm into many residents – she is working to encourage new builds [by] making Rotorua the country’s first district council to scrap developer contribution fees – an estimated saving of $8000 on the average cost of building a house. Chadwick says the contributions were ‘a barrier and disincentive to investment, something which we were no longer prepared to tolerate. This stand has received widespread support, and investment interest in Rotorua is already showing positive trends as a result’.”

Our local council charges between $20,000 and $40,000 per new household unit created. If a commercial development is assessed to have say 10 times the impact of a household, the fees would rise by a factor of 10.

As Rotorua’s new mayor has quite rightly stated, not only do those fees make housing less affordable, but it’s a disincentive for new business (and jobs and money) to come to a district.
Putting aside the dubious assumptions the WDC makes when calculating their extortionate levies, the fees collected only $1.3m in the 2013 financial year, less than 1% of its total revenue of $140m (and that’s before deducting the scheme’s administration costs).

If other councilors elsewhere had any sense of vision they would follow Rotorua and scrap these fees in their councils. Creating a vibrant local economy is actually easier than most politicians realise. They need to stop pretending they create wealth – they don’t, businesses do – and remove some of the bureaucratic barriers that they have put up. Abolishing development impact fees would be a good start and the impact on prosperity in a region is likely to be immediate and substantial.


Anonymous said...

Surprised you would fall for that line. Rotorua already has some of the cheapest housing in NZ and if you checked with the rental companies you would find that there is plenty of housing to rent. The issue for Rotorua is jobs,(like so many other places of course.) The previous Mayor hired some has been from Brirley's days to do something about this. Wrong person as far as I could see.

Rotorua also has high rates now as well. We still pay for water and rubbish in the rate bill, which to us investors amount to us paying the tenants grocery bill.

Now we will subsidize new home owners as well. Totally stupid.

paul scott said...

that is we a Maori own New Zealand as long as your weak suckling politicians let us.

Hugh said...

It is short sighted by politically attractive no doubt. The cold reality is, the more houses you load onto the infrastructure, the more the Council has to spend in the longer term to upgrade the services. More toilets, bigger pipes, bigger sewerage treatment plants. So you either pay upfront, or everyone pays more longer term!

M Bailey said...

Anonymous and Hugh you both miss the point that both rates and "contribution fees" (taxes) are used by Councils to fund activities that often have nothing to do with those being forced to pay them. If you want to be logically consistent and avoid the subsidy problem then the users of the services should pay for them directly. I agree with Anonymous that property owners should not have to pay for tenants' water consumption and this should extend to other consumption activities as well.
The Councils have progressively arrogated more power to themselves and now grope about for more ways to increase taxes to fund their empire building. Rates and "fees" will continue to rise until their hopelessly inefficient compulsory monopolies on services are curtailed.

jh said...

Anonymous and Hugh you both miss the point that both rates and "contribution fees" (taxes) are used by Councils to fund activities that often have nothing to do with those being forced to pay the
I've heard this argument back and forth but we need to see more data (spreadsheet) on how much that extra household costs by it's additional share of infrastructure. howmuch is borne by taxpayers and how much by ratepayers.