David Farrar: Bishop on infrastructure funding

An important speech by Chris Bishop:

He announced:

• The first is replacing DCs with a Development Levy System,
• The second is establishing regulatory oversight of Development Levies to ensure charges are fair and appropriate,
• The third is increasing the flexibility of targeted rates,
• The fourth is improving the Infrastructure Funding and Financing Act, and
• The fifth is broadening existing tools to support value capture.

These changes are very important. Councils have slow walked developments because they often leave them with costs that all ratepayers must fund. These changes will fix that problem.

So how does each work:

1. Under this new system, councils and other infrastructure providers will be able to charge developers for their share of aggregate infrastructure growth costs across an urban area over the long-term.
2. But it is important that prices are fair and appropriate, so we will also establish regulatory oversight of Development Levies, which will be integrated with the regulatory oversight of water services and rates.
3. We will allow councils to set targeted rates that apply when a rating unit is created at the subdivision stage. This will enable councils to set targeted rates that only apply to new developments.
4. The IFF Act was passed in 2020 so that developers could freely arrange private funding and financing solutions for enabling infrastructure. It was supposed to allow developers to bypass the issue of relying on councils for the timely provision of infrastructure. But at a high-level, the Government has agreed to make several remedial amendments to improve the effectiveness of the Act, particularly for developer-led projects. These changes will remove unnecessary barriers and make the overall process simpler.
5. We will enable IFF Act levies to be charged for major transport projects, e.g., projects delivered by NZTA. This change has the potential to kickstart our embrace of Transit Oriented Development or TOD. TOD promotes compact, mixed-use, pedestrian friendly cities, with development clustered around, and integrated with, mass transit. The idea is to have as many jobs, houses, services and amenities as possible around public transport stations.

So great to finally have a Government comprehensively tackle the barriers to housing.

David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders.