Taituarā has welcomed the Government’s proposed development levies system as a step toward a more effective way of funding growth infrastructure, while recommending a number of changes to ensure the model is workable for all councils and aligned with wider reform.
The submission supports the overall intent to improve cost recovery for growth and provide clearer pricing signals in a more permissive planning environment. However, it notes that several aspects of the draft legislation and policy settings require clarification or amendment to avoid unintended consequences for local authorities and ratepayers.
Key recommendations
Provide certainty on the transition from existing tools
Taituarā recommends the legislation explicitly repeal development contributions from 1 July 2030 to avoid parallel systems continuing. It also calls for transitional arrangements for councils that currently use financial contributions, noting the cost and complexity of moving through multiple funding regimes. In addition, it seeks the inclusion of previously signalled targeted rating powers to support smaller or lower-growth councils that may not have the scale to implement a full levies framework.
Apply levies to Crown developments
The submission does not support the proposed exemption for the Crown. The submission suggests that development levies are cost-recovery charges rather than taxes, and that exempting one of the country’s largest developers shifts costs to ratepayers and other developers while weakening the pricing signals the new system is intended to create.
Expand the scope of leviable infrastructure
Taituarā recommends that passenger transport infrastructure, flood protection and land drainage be included within the definition of leviable services, as these are critical to enabling urban development and intensification but are currently excluded from growth funding tools.
Strengthen alignment with planning and water reform
The submission identifies a number of technical amendments to ensure development levies can be used to fund growth-related water infrastructure and to better link levies policies with infrastructure and financial strategies. It also recommends requiring clearer explanation where forecasting assumptions differ from those used in long-term planning documents, and limiting the requirement for multiple levy areas to Auckland Council as intended by Cabinet decisions.
Taituarā further recommends that development levies policies explicitly reflect the principles in the preamble to Te Ture Whenua Māori Act 1993, consistent with existing requirements for development contributions policies.
Confirm the economic regulator
Taituarā supports the proposed role of the Commerce Commission as the economic regulator, noting this builds on existing capability and avoids the cost and duplication of establishing a new entity.
Supporting a system that enables growth
Overall, Taituarā says the proposed development levies model has the potential to reduce the current under-recovery of growth costs and remove the disincentive for councils to invest in growth-supporting infrastructure.
The recommended changes are intended to ensure the system is clear, consistent with other reforms, and workable for councils of all sizes while delivering the infrastructure needed to support housing and thriving communities.
