The Local Government and Environment Committee has examined the Affordable Housing: Enabling Territorial Authorities Bill and recommends by majority that it be passed with the amendments shown.
Introduction
The Affordable Housing: Enabling Territorial Authorities Bill provides territorial authorities who wish to address problems of housing affordability in their districts with the regulatory tools for this purpose. The bill enables territorial authorities to assess the amount of affordable housing in their districts, in order to develop affordable housing policies.
Affordable housing policies are those that promote the provision of housing that can be afforded by low- and moderate-income-earners, taking account of the need for a variety of housing sizes, tenures, and costs. The bill provides for public participation in the development of affordable housing policies. It includes rights of objection and appeal for affected parties, and, in the case of a conflict between a district plan and an affordable housing policy, allows a wider right of appeal for parties with a public interest.
We recommend a number of changes to the bill as introduced. This commentary addresses the major issues considered and recommended amendments. It does not discuss minor and technical amendments.
Submissions received
We received 78 submissions on the bill representing a range of interests, including councils, developers, and industry stakeholders, health providers, and not-for-profit organisations. The majority of submitters supported the introduction of enabling legislation for territorial authorities that wish to address housing affordability in their districts.
Local Government New Zealand and the 12 territorial authorities that made submissions were broadly in favour of the intent of the bill, but did not support the bill as drafted. Their main concerns were that the bill as introduced was overly complex and prescriptive regarding the processes for undertaking a housing needs assessment or developing an affordable housing policy, and that councils would incur significant costs as a result. As the bill’s policy objective is to provide a workable tool for territorial authorities electing to develop affordable housing policies, we have tried to ensure that the concerns of local government are reflected in our suggested amendments to the bill.
Submitters also raised a number of matters regarding technical and logistical aspects of implementing the legislation. In addition, certain issues recurred in many submissions:
proposals for the amendment of existing Acts to effect the bill’s purpose, or ensure closer alignment with existing Acts
perceived disruption of existing resource consents
the appropriate court to hear appeals and the right of access to this court
central Government support for territorial authorities in implementing the bill
the view that the bill’s provisions should be mandatory
clarification of tax rules.
Amendments to the Resource Management Act to provide for affordable housing
Some submitters proposed that the policy intent of this bill would be better achieved by amending existing legislation, particularly the Resource Management Act 1991 (RMA). The principles of the RMA make reference to enabling people and communities to provide for their well-being. This appears to offer scope for the development of affordable housing initiatives through the Act.
However, we were advised that at present the RMA provides no weighting in favour of social initiatives, and that substantial changes would be required to the mechanisms and philosophy of the Act in order to use it to implement the purposes of this bill. These changes would be likely to cause confusion as to the intended administration of the Act, particularly in relation to district plans and consenting, and would have potentially problematic implications for RMA case law.
Special purpose legislation, such as this bill provides, is considered a preferable way of giving local authorities a clear mandate and direction on the delivery of affordable housing.
Alignment with the Local Government Act
Some submitters argued that the development of affordable housing policies by territorial authorities could be incorporated into the Local Government Act 2002 (LGA).
Again, we were advised that special purpose legislation is the preferred option. The bill provides detailed guidance to councils on the development of an affordable housing policy. While the LGA specifies various policies that local authorities must develop, it does not provide a similar level of detail, meaning that affordable housing would appear disproportionately important if it were included in the Act. Further problems of interpretation might arise because the bill’s appeals and objections process is drawn from the RMA, and does not apply to any other policies developed under the LGA; and affordable housing principles would not fit within the structure of the Act, which has been designed to help territorial authorities understand their legal duties.
However, we recognise that the bill as introduced does not align with the LGA as effectively as it could, and recommend a number of changes to improve this alignment.
Definition of affordable housing
“Affordable housing” is defined in clause 4 of the bill in terms of its occupants and price. The bill states that affordable housing is for people on low to moderate incomes, who have no, low, or moderate legal or beneficial interest in property. Such housing is priced so that the occupants can meet their housing costs and other essential living costs.
We received a significant number of submissions on the definition of “affordable housing”, with many submitters proposing changes to add detail to the definition or recommending that it be more specific in terms of income-to-housing-costs ratios. Others were of the view that the definition could be broadened to include matters such as the safety and sustainability of housing, its accessibility, and surrounding amenities.
We recommend that there be no substantial change to the definition of “affordable housing” in the bill. It has been kept deliberately broad to enable territorial authorities to develop their own definitions to respond to the circumstances of their particular housing markets. Specific concerns about affordable housing should be established through the housing needs assessment and incorporated subsequently into an authority’s policy.
We recommend the insertion of a new paragraph (c) in the definition to provide scope for future amendment to the definition. Under new clause 36(1)(aa), an Order in Council may be made to set criteria for determining what constitutes affordable housing, for the purposes of the definition in clause 4. The new paragraph (c) in the definition states that “affordable housing” must be within these regulatory criteria, should relevant regulations exist.
Collaboration between local authorities
Clause 6 establishes what the bill does about affordable housing and social housing. Territorial authorities acting under any provisions in the bill are required to observe all the principles in section 14 of the Local Government Act 2002; but the bill as introduced requires them to give first priority to section 14(1)(e), which states that a local authority should collaborate and co-operate with others when appropriate to achieve desired outcomes and use resources efficiently.
The bill as introduced gives this priority to section 14(1)(e) to expressly allow territorial authorities to work together on affordable housing if necessary, because housing markets may cut across territorial authority boundaries, and some authorities may wish to develop joint housing needs assessments and housing policies. We believe that giving priority to the collaboration principle in the bill is not necessary and may cause unintended confusion. Accordingly, we recommend that the reference to section 14(1)(e) be deleted.
Housing needs assessment
The bill enables a territorial authority to assess the need for affordable housing in its district at any time. Consistent with the view of a number of submitters that the bill should be less prescriptive, we recommend a number of deletions from clauses 7 and 8, which refer to housing needs assessments. Some submitters argued that the needs assessment should be mandatory.
We recognise that different communities have different housing needs and the criteria employed should be robust and specific for each community. While territorial authorities may incorporate wider criteria into their methods of assessment, we believe that it is important that clause 8 include the following essential principles regarding what should be covered by an authority’s method for assessing housing needs:
a description of the current balance between supply and demand in the housing market generally and, if it is relevant, in different sectors
the identification of the land available for housing development
an estimate of the number of households that need more affordable housing and the number that are likely to need it in the reasonably foreseeable future.
We note that Housing New Zealand intends to develop guidance material for territorial authorities intending to carry out a needs assessment and develop an affordable housing policy.
Matters to be covered in an affordable housing policy
Clauses 9 to 15 address the matters that a territorial authority should include in its affordable housing policy. We mainly recommend that these clauses be shortened to include only key provisions, making them less prescriptive. The changes we recommend should simplify the process for territorial authorities that decide to use the bill, and offer them more flexibility. In addition, the work they are required to do to establish a policy would be supported by detailed guidance material that central Government intends to develop in support of the bill.
Criteria for application of policy to development
Under clause 10, a territorial authority must include in its policy the criteria that determine to which housing developments the policy will apply. Territorial authorities may adopt wider criteria if they wish, but we recommend the deletion of clauses 10(2)(c), 10(2)(d), and 10(2)(e), so that the criteria that must be considered regarding inclusion are as follows:
the proposed location of the development
the kind of development proposed
the potential of the development to generate a need for affordable housing
the desirability of the community having a variety of housing sizes, tenures, and costs.
We also recommend the deletion of clauses 10(3), 10(4), 10(5), and 10(6). We consider these subclauses unnecessary as the matters they provide for, such as specifying any type of development excluded from the policy, how the policy applies to redevelopments, and what information must be contained in the policy, are likely to occur anyway, and do not need to be included in primary legislation.
Actions required of persons doing developments
We recommend that clauses 11(4) and 11(5) be deleted and new clause 11(3)(d) be inserted. The effect of these amendments is that if the affordable housing policy required a person undertaking a development to give the territorial authority an amount of money, the policy would need to state only how the amount is calculated and when it must be paid.
Criteria for allocation and methods of retention
We recommend that clauses 13(2), 13(3), and 13(4) be deleted. The policy would then need to state only the criteria to be applied to decide who is to be allocated affordable housing.
Clause 14 is intended to ensure that an affordable housing policy contains provisions so that affordable housing created under the policy remains affordable. Accordingly, we recommend the insertion of new clauses 14(2)(aa) and 14(2)(ab), so that a person doing a development would have to sell or rent the housing to a person who met the criteria required by clause 13, and a territorial authority, council-controlled organisation, council organisation, or trust that bought the housing could sell it only to a person who met the same criteria.
Process for making and updating affordable housing policy
The bill as introduced contains a large amount of detail on how territorial authorities should develop a draft policy, consult on and adopt it, and amend it. We recommend that these clauses, 16, 17, 18, 19, 32, and 33, be deleted and the requirements to make, review, and amend a policy be consolidated into a single new clause 15A.
As well as simplifying the bill, we believe that these amendments would align the bill more closely to the LGA. Under clause 15A(2) a territorial authority must use the special consultative procedure to adopt an affordable housing policy. Clause 15A(4) requires that the policy be reviewed after the section 91 process of the LGA, which identifies community outcomes. Substantial amendments to the policy must follow the processes set out in clauses 15A(1), 15(A)(2), and 15(A)(3), while minor amendments must follow section 156(2) of the LGA, as if the policy were a bylaw.
Informing affected persons about decisions made under policy
When a territorial authority made a decision under any of the provisions in its policy that reflected clauses 11 to 14, it would be required to give written or electronic notice to a person affected by the decision. We recommend the insertion of new clause 23(4) to clarify the intent of this clause. It provides an example for each of clauses 11 to 14 of the type of decision that would require notifying an affected person.
Objections and appeals
Under clause 24(1) of the bill as introduced, any person could object to a provision in a territorial authority’s affordable housing policy on any ground. We recommend that this clause be deleted. Instead we recommend that clause 24 be amended to preserve the right to object to a provision on any grounds, but to specify that the right to object would be held by a narrowly defined group of people. We therefore recommend that only persons who are entitled to object to a decision made under the policy be permitted to object to any provision in the policy on any grounds. This would mean that only a person doing a development, the owner of the land on which a person proposed a development, the owner of land bordering the land on which the person proposed the development, or a person affected by a decision and notified under clause 23, could object to any policy provision.
We recommend amendments to clause 25 to give territorial authorities flexibility in responding to objections. The bill as introduced specifies timeframes within which an authority would have to inform a person making an objection of the time, date, and place of the hearing of the objection, and whether it upheld, partly upheld or dismissed the objection. We recommend that these timeframes be deleted from the bill.
The persons listed in clause 25 as those who may object to a decision could also make an appeal to the Environment Court under clause 26, unless they were affected by decisions of territorial authorities on the authorities’ own contributions or on allocation. The Environment Court is also the appropriate court, under clause 34, regarding conflict between a territorial authority’s affordable housing policy and its district plan. We recommend the insertion of new clauses 34(2A), (2B), and (2C) to clarify that a person must draw any potential conflict to the attention of the territorial authority and that the authority must take all reasonable steps to resolve the matter, before the conflict is referred to the Environment Court. We recommend that clause 34(5) be amended in order that a person would not be able to appeal to the territorial authority and Environment Court concurrently. Under this clause, a person would have to wait for 90 days after giving notice to a territorial authority about a conflict before being able to go to the Environment Court. We recommend the insertion of new clause 34(7) to require that if the Environment Court decides that there is a conflict, it must amend the policy, amend the district plan, or both.
Some submitters opposed the Environment Court provisions in the bill and argued that it would be more appropriate to rely on judicial reviews by the High Court. We were advised that using the Environment Court rather than the High Court would result in more expedient decision-making and lower costs for parties making appeals for the following reasons:
the specialist expertise of the Environment Court
the fact that judges in the High Court have differing legal experience, which might initially result in differing judgements
the Environment Court’s use of technical expertise on its bench to assist with complex matters
the Environment Court’s capacity to undertake this work and deal with cases more quickly than the High Court.
Covenants
Clause 35 of the bill would void some covenants that are expressly designed to restrict the availability of affordable housing. We recommend that clause 35(1) be amended to read, “A covenant over land is void if one of its purposes is to stop the provision of affordable housing or social housing on the land.” We believe this recommendation widens the range of covenants that might be captured by the bill.
We also recommend amendments to clauses 35(2)(a), (b), and (c) to make it clear that covenants would be voided if they prevented land being transferred to a private body that might facilitate the occupation of housing on the land by persons they select, provide housing to tenants on a subsidised basis, or establish public or institutional housing. This amendment would ensure that organisations such as IHC, community housing groups, and the Women’s Refuge were covered by the bill.
Regulations
We recommend the insertion of new clauses 36(1A) and (1B) to strengthen the consultation process for proposed regulations. Under these clauses, the Minister of Housing would be required to consult any persons he or she considered able to give helpful advice on the content of the regulations, and then take the results of this consultation into account when recommending that the regulations be made.
Having received advice to this effect from the Regulations Review Committee, we recommend that clauses 36(1)(a) and (b) be deleted, because it is undesirable to allow regulations to be made that could amend the primary legislation.
Amendments to Goods and Services Tax Act
We recommend the insertion of new clause 40A, which would make consequential changes to the Goods and Services Tax Act 1985. There are two main effects of the amendments we recommend. Under new clause 40A(2), when a person undertaking a development made an affordable housing contribution payable to the territorial authority, the authority would be deemed to supply goods and services to the developer. Under 40A(3), when a contribution from a person doing a development was in the form of land, both sides of the arrangement would be charged at a rate of zero percent. These amendments should reduce compliance costs for all parties.
Amendment to the Local Government Act 2002
We recommend an amendment to clause 42 of the Bill which would address concern as to how the affordable housing policy would link to the long term council community plan.
The proposed amendment would allow a high-level summary of the affordable housing policy to be included in the long term council community plan, and would not trigger the requirement of special consultation under the long term council community plan every time a minor amendment was made to the affordable housing policy.
National Party Minority view
National is supportive of initiatives that will clearly result in housing being more affordable, particularly for those on low to moderate incomes.
We recognise that New Zealand has become one of the least affordable places in the world to buy, build, or rent a home. Even as house prices begin to stabilise nationally, in most centres they are settling at values well over and above the servicing ability of the average household income. The pressures for those seeking quality housing continue to mount, with increasing mortgage repayments and rents leading to difficult trade-offs for families.
We acknowledge that it is the supply of housing that has driven up property prices just as it has driven up rents. National is concerned that the Affordable Housing: Enabling Territorial Authorities Bill does not meet this supply-side concern and will, in fact, provide disincentives for the provision of affordable housing.
Local authorities, particularly smaller ones, have told us that they are already struggling with their current statutory responsibilities and do not have the capacity or resources to undertake a housing needs assessment. Such a process imposes yet another layer of expectation and responsibility on them, another compliance cost, and another opportunity for delay in processing positive housing development opportunities. Council costs will simply flow through to ratepayers.
Builders and developers will inevitably recover any costs from being forced to provide a percentage of cheaper houses in their developments, or cash or land in lieu, from the other houses in the development. There will be no overall benefit to average housing costs. Worse still, this will add another area of dispute and contention in progressing subdivision approval. One way or another, costs will be passed right back to the first-home buyer.
National does support the intent in the legislation to void covenants that restrict the provision of affordable, public or institutional housing within a residential development. We do note, however, that exceptionally large-scale or high-density social housing developments require local community support to succeed. Therefore, community consultation and buy-in is essential.
This legislation does not address the real cost drivers of housing supply. Better meeting residential land needs, beating back over-regulation and compliance costs faced by builders, improving infrastructure provision, and streamlining the planning and consenting process are key. Attention also needs to be given to the high cost of borrowing money and the improvement of take-home pay which services mortgages and rents.
Appendix
Committee process
The Affordable Housing: Enabling Territorial Authorities Bill was referred to the committee on 11 December 2007. The closing date for submissions was 29 February 2008. We received and considered 78 submissions from interested groups and individuals. We heard 33 submissions, which included holding hearings in Auckland.
We received advice from The Housing New Zealand Corporation. The Regulations Review Committee reported to the committee on the powers contained in clauses 36(a) and 36(b).
Commentary
Recommendation
The Local Government and Environment Committee has examined the Affordable Housing: Enabling Territorial Authorities Bill and recommends by majority that it be passed with the amendments shown.
Introduction
The Affordable Housing: Enabling Territorial Authorities Bill provides territorial authorities who wish to address problems of housing affordability in their districts with the regulatory tools for this purpose. The bill enables territorial authorities to assess the amount of affordable housing in their districts, in order to develop affordable housing policies.
Affordable housing policies are those that promote the provision of housing that can be afforded by low- and moderate-income-earners, taking account of the need for a variety of housing sizes, tenures, and costs. The bill provides for public participation in the development of affordable housing policies. It includes rights of objection and appeal for affected parties, and, in the case of a conflict between a district plan and an affordable housing policy, allows a wider right of appeal for parties with a public interest.
We recommend a number of changes to the bill as introduced. This commentary addresses the major issues considered and recommended amendments. It does not discuss minor and technical amendments.
Submissions received
We received 78 submissions on the bill representing a range of interests, including councils, developers, and industry stakeholders, health providers, and not-for-profit organisations. The majority of submitters supported the introduction of enabling legislation for territorial authorities that wish to address housing affordability in their districts.
Local Government New Zealand and the 12 territorial authorities that made submissions were broadly in favour of the intent of the bill, but did not support the bill as drafted. Their main concerns were that the bill as introduced was overly complex and prescriptive regarding the processes for undertaking a housing needs assessment or developing an affordable housing policy, and that councils would incur significant costs as a result. As the bill’s policy objective is to provide a workable tool for territorial authorities electing to develop affordable housing policies, we have tried to ensure that the concerns of local government are reflected in our suggested amendments to the bill.
Submitters also raised a number of matters regarding technical and logistical aspects of implementing the legislation. In addition, certain issues recurred in many submissions:
proposals for the amendment of existing Acts to effect the bill’s purpose, or ensure closer alignment with existing Acts
perceived disruption of existing resource consents
the appropriate court to hear appeals and the right of access to this court
central Government support for territorial authorities in implementing the bill
the view that the bill’s provisions should be mandatory
clarification of tax rules.
Amendments to the Resource Management Act to provide for affordable housing
Some submitters proposed that the policy intent of this bill would be better achieved by amending existing legislation, particularly the Resource Management Act 1991 (RMA). The principles of the RMA make reference to enabling people and communities to provide for their well-being. This appears to offer scope for the development of affordable housing initiatives through the Act.
However, we were advised that at present the RMA provides no weighting in favour of social initiatives, and that substantial changes would be required to the mechanisms and philosophy of the Act in order to use it to implement the purposes of this bill. These changes would be likely to cause confusion as to the intended administration of the Act, particularly in relation to district plans and consenting, and would have potentially problematic implications for RMA case law.
Special purpose legislation, such as this bill provides, is considered a preferable way of giving local authorities a clear mandate and direction on the delivery of affordable housing.
Alignment with the Local Government Act
Some submitters argued that the development of affordable housing policies by territorial authorities could be incorporated into the Local Government Act 2002 (LGA).
Again, we were advised that special purpose legislation is the preferred option. The bill provides detailed guidance to councils on the development of an affordable housing policy. While the LGA specifies various policies that local authorities must develop, it does not provide a similar level of detail, meaning that affordable housing would appear disproportionately important if it were included in the Act. Further problems of interpretation might arise because the bill’s appeals and objections process is drawn from the RMA, and does not apply to any other policies developed under the LGA; and affordable housing principles would not fit within the structure of the Act, which has been designed to help territorial authorities understand their legal duties.
However, we recognise that the bill as introduced does not align with the LGA as effectively as it could, and recommend a number of changes to improve this alignment.
Definition of affordable housing
“Affordable housing” is defined in clause 4 of the bill in terms of its occupants and price. The bill states that affordable housing is for people on low to moderate incomes, who have no, low, or moderate legal or beneficial interest in property. Such housing is priced so that the occupants can meet their housing costs and other essential living costs.
We received a significant number of submissions on the definition of “affordable housing”, with many submitters proposing changes to add detail to the definition or recommending that it be more specific in terms of income-to-housing-costs ratios. Others were of the view that the definition could be broadened to include matters such as the safety and sustainability of housing, its accessibility, and surrounding amenities.
We recommend that there be no substantial change to the definition of “affordable housing” in the bill. It has been kept deliberately broad to enable territorial authorities to develop their own definitions to respond to the circumstances of their particular housing markets. Specific concerns about affordable housing should be established through the housing needs assessment and incorporated subsequently into an authority’s policy.
We recommend the insertion of a new paragraph (c) in the definition to provide scope for future amendment to the definition. Under new clause 36(1)(aa), an Order in Council may be made to set criteria for determining what constitutes affordable housing, for the purposes of the definition in clause 4. The new paragraph (c) in the definition states that “affordable housing” must be within these regulatory criteria, should relevant regulations exist.
Collaboration between local authorities
Clause 6 establishes what the bill does about affordable housing and social housing. Territorial authorities acting under any provisions in the bill are required to observe all the principles in section 14 of the Local Government Act 2002; but the bill as introduced requires them to give first priority to section 14(1)(e), which states that a local authority should collaborate and co-operate with others when appropriate to achieve desired outcomes and use resources efficiently.
The bill as introduced gives this priority to section 14(1)(e) to expressly allow territorial authorities to work together on affordable housing if necessary, because housing markets may cut across territorial authority boundaries, and some authorities may wish to develop joint housing needs assessments and housing policies. We believe that giving priority to the collaboration principle in the bill is not necessary and may cause unintended confusion. Accordingly, we recommend that the reference to section 14(1)(e) be deleted.
Housing needs assessment
The bill enables a territorial authority to assess the need for affordable housing in its district at any time. Consistent with the view of a number of submitters that the bill should be less prescriptive, we recommend a number of deletions from clauses 7 and 8, which refer to housing needs assessments. Some submitters argued that the needs assessment should be mandatory.
We recognise that different communities have different housing needs and the criteria employed should be robust and specific for each community. While territorial authorities may incorporate wider criteria into their methods of assessment, we believe that it is important that clause 8 include the following essential principles regarding what should be covered by an authority’s method for assessing housing needs:
a description of the current balance between supply and demand in the housing market generally and, if it is relevant, in different sectors
the identification of the land available for housing development
an estimate of the number of households that need more affordable housing and the number that are likely to need it in the reasonably foreseeable future.
We note that Housing New Zealand intends to develop guidance material for territorial authorities intending to carry out a needs assessment and develop an affordable housing policy.
Matters to be covered in an affordable housing policy
Clauses 9 to 15 address the matters that a territorial authority should include in its affordable housing policy. We mainly recommend that these clauses be shortened to include only key provisions, making them less prescriptive. The changes we recommend should simplify the process for territorial authorities that decide to use the bill, and offer them more flexibility. In addition, the work they are required to do to establish a policy would be supported by detailed guidance material that central Government intends to develop in support of the bill.
Criteria for application of policy to development
Under clause 10, a territorial authority must include in its policy the criteria that determine to which housing developments the policy will apply. Territorial authorities may adopt wider criteria if they wish, but we recommend the deletion of clauses 10(2)(c), 10(2)(d), and 10(2)(e), so that the criteria that must be considered regarding inclusion are as follows:
the proposed location of the development
the kind of development proposed
the potential of the development to generate a need for affordable housing
the desirability of the community having a variety of housing sizes, tenures, and costs.
We also recommend the deletion of clauses 10(3), 10(4), 10(5), and 10(6). We consider these subclauses unnecessary as the matters they provide for, such as specifying any type of development excluded from the policy, how the policy applies to redevelopments, and what information must be contained in the policy, are likely to occur anyway, and do not need to be included in primary legislation.
Actions required of persons doing developments
We recommend that clauses 11(4) and 11(5) be deleted and new clause 11(3)(d) be inserted. The effect of these amendments is that if the affordable housing policy required a person undertaking a development to give the territorial authority an amount of money, the policy would need to state only how the amount is calculated and when it must be paid.
Criteria for allocation and methods of retention
We recommend that clauses 13(2), 13(3), and 13(4) be deleted. The policy would then need to state only the criteria to be applied to decide who is to be allocated affordable housing.
Clause 14 is intended to ensure that an affordable housing policy contains provisions so that affordable housing created under the policy remains affordable. Accordingly, we recommend the insertion of new clauses 14(2)(aa) and 14(2)(ab), so that a person doing a development would have to sell or rent the housing to a person who met the criteria required by clause 13, and a territorial authority, council-controlled organisation, council organisation, or trust that bought the housing could sell it only to a person who met the same criteria.
Process for making and updating affordable housing policy
The bill as introduced contains a large amount of detail on how territorial authorities should develop a draft policy, consult on and adopt it, and amend it. We recommend that these clauses, 16, 17, 18, 19, 32, and 33, be deleted and the requirements to make, review, and amend a policy be consolidated into a single new clause 15A.
As well as simplifying the bill, we believe that these amendments would align the bill more closely to the LGA. Under clause 15A(2) a territorial authority must use the special consultative procedure to adopt an affordable housing policy. Clause 15A(4) requires that the policy be reviewed after the section 91 process of the LGA, which identifies community outcomes. Substantial amendments to the policy must follow the processes set out in clauses 15A(1), 15(A)(2), and 15(A)(3), while minor amendments must follow section 156(2) of the LGA, as if the policy were a bylaw.
Informing affected persons about decisions made under policy
When a territorial authority made a decision under any of the provisions in its policy that reflected clauses 11 to 14, it would be required to give written or electronic notice to a person affected by the decision. We recommend the insertion of new clause 23(4) to clarify the intent of this clause. It provides an example for each of clauses 11 to 14 of the type of decision that would require notifying an affected person.
Objections and appeals
Under clause 24(1) of the bill as introduced, any person could object to a provision in a territorial authority’s affordable housing policy on any ground. We recommend that this clause be deleted. Instead we recommend that clause 24 be amended to preserve the right to object to a provision on any grounds, but to specify that the right to object would be held by a narrowly defined group of people. We therefore recommend that only persons who are entitled to object to a decision made under the policy be permitted to object to any provision in the policy on any grounds. This would mean that only a person doing a development, the owner of the land on which a person proposed a development, the owner of land bordering the land on which the person proposed the development, or a person affected by a decision and notified under clause 23, could object to any policy provision.
We recommend amendments to clause 25 to give territorial authorities flexibility in responding to objections. The bill as introduced specifies timeframes within which an authority would have to inform a person making an objection of the time, date, and place of the hearing of the objection, and whether it upheld, partly upheld or dismissed the objection. We recommend that these timeframes be deleted from the bill.
The persons listed in clause 25 as those who may object to a decision could also make an appeal to the Environment Court under clause 26, unless they were affected by decisions of territorial authorities on the authorities’ own contributions or on allocation. The Environment Court is also the appropriate court, under clause 34, regarding conflict between a territorial authority’s affordable housing policy and its district plan. We recommend the insertion of new clauses 34(2A), (2B), and (2C) to clarify that a person must draw any potential conflict to the attention of the territorial authority and that the authority must take all reasonable steps to resolve the matter, before the conflict is referred to the Environment Court. We recommend that clause 34(5) be amended in order that a person would not be able to appeal to the territorial authority and Environment Court concurrently. Under this clause, a person would have to wait for 90 days after giving notice to a territorial authority about a conflict before being able to go to the Environment Court. We recommend the insertion of new clause 34(7) to require that if the Environment Court decides that there is a conflict, it must amend the policy, amend the district plan, or both.
Some submitters opposed the Environment Court provisions in the bill and argued that it would be more appropriate to rely on judicial reviews by the High Court. We were advised that using the Environment Court rather than the High Court would result in more expedient decision-making and lower costs for parties making appeals for the following reasons:
the specialist expertise of the Environment Court
the fact that judges in the High Court have differing legal experience, which might initially result in differing judgements
the Environment Court’s use of technical expertise on its bench to assist with complex matters
the Environment Court’s capacity to undertake this work and deal with cases more quickly than the High Court.
Covenants
Clause 35 of the bill would void some covenants that are expressly designed to restrict the availability of affordable housing. We recommend that clause 35(1) be amended to read, “A covenant over land is void if one of its purposes is to stop the provision of affordable housing or social housing on the land.” We believe this recommendation widens the range of covenants that might be captured by the bill.
We also recommend amendments to clauses 35(2)(a), (b), and (c) to make it clear that covenants would be voided if they prevented land being transferred to a private body that might facilitate the occupation of housing on the land by persons they select, provide housing to tenants on a subsidised basis, or establish public or institutional housing. This amendment would ensure that organisations such as IHC, community housing groups, and the Women’s Refuge were covered by the bill.
Regulations
We recommend the insertion of new clauses 36(1A) and (1B) to strengthen the consultation process for proposed regulations. Under these clauses, the Minister of Housing would be required to consult any persons he or she considered able to give helpful advice on the content of the regulations, and then take the results of this consultation into account when recommending that the regulations be made.
Having received advice to this effect from the Regulations Review Committee, we recommend that clauses 36(1)(a) and (b) be deleted, because it is undesirable to allow regulations to be made that could amend the primary legislation.
Amendments to Goods and Services Tax Act
We recommend the insertion of new clause 40A, which would make consequential changes to the Goods and Services Tax Act 1985. There are two main effects of the amendments we recommend. Under new clause 40A(2), when a person undertaking a development made an affordable housing contribution payable to the territorial authority, the authority would be deemed to supply goods and services to the developer. Under 40A(3), when a contribution from a person doing a development was in the form of land, both sides of the arrangement would be charged at a rate of zero percent. These amendments should reduce compliance costs for all parties.
Amendment to the Local Government Act 2002
We recommend an amendment to clause 42 of the Bill which would address concern as to how the affordable housing policy would link to the long term council community plan.
The proposed amendment would allow a high-level summary of the affordable housing policy to be included in the long term council community plan, and would not trigger the requirement of special consultation under the long term council community plan every time a minor amendment was made to the affordable housing policy.
National Party Minority view
National is supportive of initiatives that will clearly result in housing being more affordable, particularly for those on low to moderate incomes.
We recognise that New Zealand has become one of the least affordable places in the world to buy, build, or rent a home. Even as house prices begin to stabilise nationally, in most centres they are settling at values well over and above the servicing ability of the average household income. The pressures for those seeking quality housing continue to mount, with increasing mortgage repayments and rents leading to difficult trade-offs for families.
We acknowledge that it is the supply of housing that has driven up property prices just as it has driven up rents. National is concerned that the Affordable Housing: Enabling Territorial Authorities Bill does not meet this supply-side concern and will, in fact, provide disincentives for the provision of affordable housing.
Local authorities, particularly smaller ones, have told us that they are already struggling with their current statutory responsibilities and do not have the capacity or resources to undertake a housing needs assessment. Such a process imposes yet another layer of expectation and responsibility on them, another compliance cost, and another opportunity for delay in processing positive housing development opportunities. Council costs will simply flow through to ratepayers.
Builders and developers will inevitably recover any costs from being forced to provide a percentage of cheaper houses in their developments, or cash or land in lieu, from the other houses in the development. There will be no overall benefit to average housing costs. Worse still, this will add another area of dispute and contention in progressing subdivision approval. One way or another, costs will be passed right back to the first-home buyer.
National does support the intent in the legislation to void covenants that restrict the provision of affordable, public or institutional housing within a residential development. We do note, however, that exceptionally large-scale or high-density social housing developments require local community support to succeed. Therefore, community consultation and buy-in is essential.
This legislation does not address the real cost drivers of housing supply. Better meeting residential land needs, beating back over-regulation and compliance costs faced by builders, improving infrastructure provision, and streamlining the planning and consenting process are key. Attention also needs to be given to the high cost of borrowing money and the improvement of take-home pay which services mortgages and rents.
Appendix
Committee process
The Affordable Housing: Enabling Territorial Authorities Bill was referred to the committee on 11 December 2007. The closing date for submissions was 29 February 2008. We received and considered 78 submissions from interested groups and individuals. We heard 33 submissions, which included holding hearings in Auckland.
We received advice from The Housing New Zealand Corporation. The Regulations Review Committee reported to the committee on the powers contained in clauses 36(a) and 36(b).
Committee membership
Moana Mackey (Chairperson)
John Carter (Deputy Chairperson)
Hon David Benson-Pope
Mark Blumsky
Hon Mark Burton (until 2 April 2008)
Jacqui Dean
Hon Marian Hobbs
Dr Russel Norman (from 1 July 2008)
Su’a William Sio (from 2 April 2008)
Hon Dr Nick Smith
Mētīria Turei (until 1 July 2008)