Productivity Commission report provides timely call to action

Local Government New Zealand (LGNZ) has welcomed the Productivity Commission’s report into the availability of land for new housing, with President Lawrence Yule describing aspects of it as “challenging central and local government’s current thinking”.

Mr Yule said the Using Land for Housing report provides a timely call to action, aligning with many of local government’s approaches including the need for new tools for councils to respond to changes in housing demand, and for a joint local and central government approach to urban planning.

“One barrier for councils in building new housing is the impact on existing ratepayers so we are pleased to see the Commission highlighting the need for councils to be provided with the right tools and incentives to respond to changes in demand for housing and fund the infrastructure to support that. The current incentives do not encourage growth,” said Mr Yule.

“We also agree strongly with the report’s finding that creating successful cities requires well-aligned planning frameworks. The current framework is fragmented and the legislation needs to be better co-ordinated. These are key foundations that underpin successful cities.”

Mr Yule said the current range of funding instruments available to local government limits its ability to respond quickly to challenges including the need to realise more land and infrastructure for housing.

LGNZ’s Local Government Funding Review, released earlier this year, provided a 10-point plan for incentivising economic growth and strong local communities. This included additional options, such as road user charges, to fund infrastructure development – a recommendation which also features in the Commission’s report.

“We are well aligned in our views that councils need more options for funding, including providing infrastructure. Our 10-point plan also proposed an agreed priority and action plan to advance “special zones” for growth to test new ideas and drive economic prosperity. These would be an ideal way to trial the Commission’s recommendations, ” said Mr Yule.

Mr Yule also welcomed the Commission highlighting a greater role for debt as a way of paying for vital infrastructure in growth areas. LGNZ supports a review of the debt-servicing benchmark for growth councils, set in 2014.

“We are concerned it is set too low and could constrain the ability of councils, in growth areas in particular to meet future infrastructure demands. Councils are prudent bodies and, by and large have levels of conservative debt. Intergenerational debt can play an important role in funding essential growth of communities.”

However, Mr Yule said that if land for housing is to be prioritised, that will need to be reflected in the Resource Management Act otherwise councils will not be able to make the decisions the Commission is calling for.

“It’s clear current systems aren’t working well in places with growth challenges. We need a planning system that’s responsive and enables plans to be made in a timely way and better information on factors likely to influence the pace and nature of growth.”

“The Commission urges better coordination amongst central government agencies with regard to urban affairs. That’s a challenge local government across New Zealand is keen to take up – we look forward to a future where we have a close partnership with central government to determine the priorities which are vital to all New Zealanders,” said Mr Yule.

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