The government’s demand for intensification relies on funding and financing tools that are no longer fit for purpose
The new “permissive” planning environment requires an overhaul of the system for financing and funding infrastructure to be followed through on equitably, Auckland Council says.
Government development mandates have outlined a massive job for councils nationwide – they just don’t how they’re going to pay for it all. And without certainty around the enabling works, developers are far less likely to commit to building the housing the country needs.
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Auckland likely has the most work to ahead of it (around 320,000 more dwellings needed by 2050) and is already in a difficult position financially.
An Auckland Council spokesperson warned the mandated intensification would result in under-serviced communities or steep rates bills if funding arrangements aren’t figured out with the Government.
The National Policy Statement on Urban Development and Medium Density Residential Standards, and the Auckland Council’s proposed unitary plan in response, better known for outrage over the rezoning of historic villas in rich areas like Ponsonby and Grey Lynn, will allow for much denser housing.
The changes require councils to enable the development of buildings six stories or more within walking distance of the city and other metropolitan centres, as well as rapid transit stops, and three-storey housing around much of the residential city.
The needs
With great intensification comes great cost in the enabling infrastructure to support the increased population, including public transport, roading, retail, workplaces, healthcare, schools and water.
Auckland Council spokesperson said the creation of a “more permissive planning environment” would increase the pace and scale of development to support the delivery of housing and employment areas – things the current legislation for dealing with infrastructure costs aren’t cut out for.
“This is not possible in the new, more flexible environment.” – Auckland Council
“The current legislation for financing and funding infrastructure was designed for an environment where the council could determine where growth occurred through planning rules. This allowed the council to identify the infrastructure required, commit to a timeframe for its delivery, and set development contribution charges to recover a fair share of the cost attributable to growth from developers.
“This is not possible in the new, more flexible environment.”
Existing sources of revenue for growth infrastructure include rates, development contributions, government grants (including transport investment subsidiaries), and the potential for levies under the Infrastructure Funding and Financing Act (IFF) arrangements.
The council said it was doing what it could with its existing set of tools, including creating priority zones, but there were limitations and constraints in all of the tools.
“Now that the government has completed its package of reforms to the planning system it’s time for the council and government to work together to reform our system for financing and funding infrastructure to fit with the new environment.”
Unfunded mandate
A lot of the work, including three waters, will fall under the responsibility of central government, but enabling works falling under local government‘s remit with no plans in place for how to fund them, is nothing new according to the Future for Local Government Review.
The NPS changes have been or will be imposed in all of the country’s ‘Tier 1’ territorial authorities, being Wellington, Christchurch, Hamilton, Auckland and Tauranga, though Christchurch voted against the directive.
In its draft report, Future for Local Government said the number of roles and responsibilities placed on local government by central government had increased over the last decade with limited considerations on how councils can fund the activity, singling out the NSP.
“Often, when new responsibilities are added, Ministers and central government agencies make the assumption that councils can recover the costs of these types of requirements from rates,” the report said.
“However limited consideration is usually given about the ability and/or willingness of communities to pay for these activities. This is particularly an issue where local government bears the costs to achieve national objectives.”
