Archive | Forward thinking

Pt England reserve law passed, but still rankles with mayor & board chair

The Point England Development Enabling Bill became law on Wednesday after a 7-month jaunt through the parliamentary process, enabling the Government to complete a Treaty of Waitangi settlement with Ngati Paoa.

The bill was introduced to Parliament on 7 December, passed its first reading 6 days later, its second reading on 23 May and committee stage on 21 June. It returned for its third reading on Tuesday and was given royal assent on Wednesday.

Auckland mayor Phil Goff and Maungakiekie-Tamaki Local Board chair Josephine Bartley said they accepted Parliament had a sovereign right to dispose of the land and they didn’t oppose the treaty settlement, but they remained concerned about the use of special legislation to lift reserve status outside normal statutory processes.

The new law allows for largescale housing development on 11.7ha of the reserve, enabling Ngati Paoa to build 300 houses on the reserve land as part of its treaty settlement.

Mr Goff said: “While the council is supportive of action to accelerate house building in Auckland, this bill raises a number of issues. This legislation prescribes to Auckland Council what it must do with land vested in & administered by the council under the Reserves Act. This prescription circumvents the statutory powers of a local authority responsible for public reserve land under the act.

“That the minister [Nick Smith, former housing minister and now Minister of Building & Construction] intends to micro-manage Auckland’s future rather than give residents the opportunity to have their say sets a worrying precedent. Going forward, the minister needs to promise Auckland that he will consult the council & Aucklanders on matters that affect their future.

“Auckland Council will now engage with the Government to ensure the loss of reserve land is properly managed and that decisions are made by locally elected representatives with public consultation.”

Ms Bartley said: “Our community has been denied the right to shape its own future. There is nothing more that residents can do now. Sadly this bill may further endanger wildlife and reduce green space in Maungakiekie-Tamaki & Auckland.”

Attribution: Parliament, council releases.

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Last-ditch attempt to derail Pt England bill questions super-city rationale

As the Point England Development Enabling Bill heads to its third reading in Parliament tomorrow – and therefore enactment – Maungakiekie-Tamaki Local Board chair Josephine Bartley posed a last-minute question about the rationale for governance changes made in 2010.

It’s not likely to change the course of the legislation, which will turn 11.7ha of the 48ha Point England Reserve over to housing, 2ha for a marae, as part of a Treaty of Waitangi settlement with Ngati Paoa.

But, in an era of carefully ensuring all those who ought to be consulted are consulted before decisions are made, Ms Bartley has asked why Building, Construction & former Housing Minister Nick Smith has usurped powers the Government gave local boards when they were established as part of the super-city governance structure.

She wrote to Dr Smith on Friday: “With the change in Local Government in Auckland in 2010, the Maungakiekie-Tamaki Local Board is responsible for local parks & reserves in our area.

“We aim to make decisions & plans for our parks & reserves based on community engagement. The minister, Dr Nick Smith, in his supplementary order paper [for the bill] circumvents this by stating that no grazing & farming will take place on Point England Reserve, and that Auckland Council must provide sportsfields on the headland where the dotterels & other shore birds are.

“As a local board, we opposed the Point England Development Enabling Bill because of the lack of consultation by the Government with our community and the dangerous precedent it sets of circumventing legislation that protects reserves.

”Again we are being stood on by Government and are being told what to do in our local reserve. If this is the case, then what was the point of the Auckland super-city structure put in place by Government to empower local decision-making?

“I have asked the minister for a meeting to remind him of the issues with this bill and his supplementary order paper on behalf of our local board & Tamaki community.”

Earlier stories:
26 May 2017: Pt England housing development bill passes second reading
19 December 2016: Bill to enable housing on Pt England Reserve passes first reading
7 December 2016: Ngati Paoa to build 300 homes on Pt England Reserve, talks continue on reserve upgrade

Attribution: Board release.

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Bob Dey Property Report diary, week 26 June-2 July 2017

The diary lists council meetings & agendas, hearings & submissions, economic release dates, events, Parliament order paper items and securities.

Council links

All Auckland Council agendas can be reached via http://infocouncil.aucklandcouncil.govt.nz/. The council livestreams (and archives) Town Hall meetings and some other meetings. You can check those at http://councillive.aucklandcouncil.govt.nz/.

Environmental Protection Authority

Board of inquiry hearing:

East-West link, hearing opens Tuesday 27 June at 9am, Ellerslie recourse, Ascot stand, and is scheduled to run for 8-10 weeks (sitting 9-5, Tuesday-Friday the first week, Monday-Thursday thereafter)
Link: Hearing index

Auckland Council

Governing body:

Thursday 29 June at 9.30am, Town Hall:
Summary of the Tupuna Maunga Authority operational plan 2017-18
Final Tupuna Maunga Authority operational plan 2017-18
10, Annual budget 2017-18 (annual plan), for adoption (detailed governing body plan & local body agreements still to come)
Revenue & financing policy
11, Rates setting 2017-18 
12, City Rail Link agreements, for approval (first in public meeting, then in confidential)

Committees:

Forums, panels & boards:

You can check council meeting agendas through this link: http://infocouncil.aucklandcouncil.govt.nz/

In this round of local board meetings, they’re considering relationship agreements with mana whenua, Auckland Transport monthly reports, local grant applications, environment work programmes (including many small projects by locals), and park, reserve, community facility & library work programmes, refreshes of the Auckland Plan maintenance contracts that start on 1 July (Project 17), and Panuku Development Auckland 6-monthly reports at some boards.

Auckland city centre advisory board, Wednesday 28 June at 3pm, 135 Albert St

Papakura Local Board, Wednesday 28 June at 4.30pm, Papakura, council service centre, 35 Coles Crescent:
14, Leona McKenzie memorial seat, Short St, Opaheke
Recommendation
Attachments
Auckland Transport processes to install a memorial seat on a street berm
Auckland Transport application for encroachment form
Information relating to applying for a corridor access request
Auckland Transport fee schedule – corridor access requests
Information from the Ministry of Education website regarding community-funded property
Maps illustrating the distance of parks to the Opaheke School 
Leona McKenzie memorial seat report considered at 26 April 2017 Papakura Local Board meeting
Local board agenda, April 2017, item 22 (pages 81-96)
Related story, 25 June 2017: Take a rest after reading this one – but not on a memorial bench

Hearings:

Meadowbank, 6-14 Meadowbank Rd, application by Meadowbank Developments Ltd (Chris Jones – Southside Group Ltd, Arcus Property Ltd – Arrow International Group Ltd, Cary Bowkett, Alistair & Warren Dryden – Dryden Developments Ltd) for 65-unit residential development comprising a 6-storey apartment building & 3-storey terrace building; council planner Catherine Raeburn has recommended consent; hearing Monday 26 June at 9.30am, Town Hall

Parnell, 24 York St, application by NYS Developments Ltd (Colin & Jan Pauling) to build 6 new residential units through the addition of 3 storeys to the existing building to create a 6-storey building with a communal rooftop area, hearing Thursday 6 July at 9.30am, Town Hall

Submissions:

Dairy Flat, 244 Postman Rd & Wilks Rd, application by Sunrise 9 Trustees Ltd (John Hamilton) for combined subdivision & land use consent for a 43-lot rural residential development, a utility lot & taxi way, including area to site hangars; submissions close Tuesday 11 July

Highbrook, 11 Cryers Rd, application by Establish ECE Ltd (Logan Whitelaw & Paul Rodgers) for a mixed use development comprising 2 buildings – Building C containing a purpose-built childcare centre  providing for 107 children and a 24/7 gym, Building B a 1402m² double-storey retail, commercial & office building; submissions close Wednesday 19 July

Whenuapai, 106 Totara Rd & 50-52 Brigham Creek Rd, application by Whenuapai Land Co Ltd (Cameron Wilson – Oyster Capital Ltd) to build Z service station; submissions close Thursday 20 July

Auctions:

Barfoot & Thompson, apartments & commercial Thursdays at 10am, residential Tuesday-Friday at 10am & 1.30pm, 34 Shortland St
Bayleys, Total Property commercial, Wednesday 28 June at 11am, residential Wednesdays at 2pm, Bayleys House, Wynyard Quarter, 30 Gaunt St
City Sales, apartments, Wednesday 5 July at 12.30pm, 445 Karangahape Rd
Colliers, commercial, Wednesday 12 July at 11am, SAP House, 151 Queen St
NAI Harcourts, Tuesday 27 June at 1pm, Takapuna, 128 Hurstmere Rd
Ray White City Apartments, Thursdays at 12.30pm, 2 Lorne St

Economy:

June

Building consents, May, Friday 30 June
Trade – overseas merchandise, May, Tuesday 27 June

July

Accommodation survey, May, Wednesday 12 July
Building consents, June, Monday 31 July
Consumers price index, June quarter, Tuesday 18 July
Dwelling & household estimates, June quarter – tables, Friday 7 July
Electronic card transactions, June, Tuesday 11 July
Household living-costs price indexes, June quarter, Thursday 27 July
Migration, international travel, June, Friday 21 July
QV house price index, Wednesday 5 July
Trade – overseas merchandise, June, Wednesday 26 July
US Federal Reserve, open market committee, Tuesday-Wednesday 25-26 July

Events:

Waterview Connection, now scheduled to open to traffic in early July

Property Council, Thursday 6 July at 7.15-9am, The infrastructure issue: holding Auckland back, Grand Millennium, 71 Mayoral Drive

HotelsWorld, Tuesday-Thursday 25-27 July, Sydney, 4 consecutive events for hotel, resort & serviced apartment operators, investors, developers, lenders & industry professionals

Facilities Integrate 2017, Wednesday-Thursday 27-28 September at 10am-5pm, Greenlane, ASB Showgrounds

Third tripartite economic summit between Auckland, Guangzhou & Los Angeles, Wednesday-Friday 27-29 September (to be confirmed), Guangzhou
Link: Auckland Council update on the tripartite economic alliance between Auckland, Guangzhou & Los Angeles

Building for better lives, Australian national housing conference hosted by Australian Housing & Research Institute, 29 November-1 December, Sydney, International Convention Centre

Parliament:

Provisional order paper, Tuesday 27 June

Government orders of the day:

1, Appropriation (2016/17 Supplementary Estimates) Bill, second reading (introduced 25 May)
2, Energy Innovation (Electric Vehicles & Other Matters) Amendment Bill, third reading
3, Point England Development Enabling Bill, third reading
4, Land Transfer Bill, third reading
6, Local Government Act 2002 Amendment Bill (No 2), second reading (report of the Local Government & Environment Committee presented 15 June)
10, Te Ture Whenua Maori Bill, committee stage
12, Appropriation (2017/18 Estimates) Bill, committee stage, estimates debate
13, Maritime Crimes Amendment Bill, committee stage
16, Rangitane Tu Mai Ra (Wairarapa Tamaki nui-a-Rua) Claims Settlement Bill, second reading (report of the Maori Affairs Committee presented 20 March)
17, Ngati Pukenga Claims Settlement Bill, second reading (report of the Maori Affairs Committee presented 3 March)
18, Ngatikahu ki Whangaroa Claims Settlement Bill, third reading
19, Ngai Te Rangi & Nga Potiki Claims Settlement Bill, second reading (report of the Maori Affairs Committee presented 21 November 2016)
21, Tauranga Moana Iwi Collective Redress & Nga Hapu o Ngati Ranginui Claims Settlement Bill, second reading (report of the Maori Affairs Committee presented 3 March)
25, Residential Tenancies Amendment Bill (No 2), first reading (introduced 23 May)
29, Ngati Tamaoho Claims Settlement Bill, first reading (introduced 22 June)
32, Commerce (Cartels & Other Matters) Amendment Bill, committee stage
33, Taxation (Income-sharing Tax Credit) Bill, second reading (report of the Finance & Expenditure Committee presented 21 March 2011)
34, Insolvency Practitioners Bill, committee stage
35, Regulatory Standards Bill, second reading (report of the Commerce Committee presented 8 May 2015)
36, Nga Rohe Moana o Nga Hapu o Ngati Porou Bill, first reading (introduced 29 September 2008)

Members’ orders of the day:

2, Private International Law (Choice of Law in Tort) Bill, Sarah Dowie, second reading (report of the Justice & Electoral Committee presented 7 June)
3, Local Electoral (Equitable Process for Establishing Maori Wards & Maori Constituencies) Amendment Bill, Marama Davidson, first reading (introduced 11 May)

Extended sittings:

Wednesday 5 July (effective Thursday 6 July from 9am):
Rangitane Tu Mai Ra (Wairarapa Tamaki nui-a-Rua) Claims Settlement Bill, second reading (report of the Maori Affairs Committee presented 20 March)
Ngati Pukenga Claims Settlement Bill, second reading (report of the Maori Affairs Committee presented 3 March)
Ngati Tamaoho Claims Settlement Bill, first reading (introduced 22 June)

Wednesday 9 August (effective Thursday 10 August from 9am):
Rangitane Tu Mai Ra (Wairarapa Tamaki nui-a-Rua) Claims Settlement Bill, committee stage, third reading
Ngati Pukenga Claims Settlement Bill, committee stage, third reading

Submissions

Friendly Societies & Credit Unions (Regulatory Improvements) Amendment Bill, submissions close Thursday 20 July
Inquiry into 2016 local authority elections, submissions close Tuesday 22 August

Submissions to MBIE on fire safety regulations

MBIE (the Ministry of Business, Innovation & Employment) began a review in 2014 of fire regulation changes made in 2012 and has developed 4 proposals to improve clauses & compliance documents; submissions opened on 15 May and close on Friday 14 July
Link: Fire programme

Securities – NZ

Arvida Group Ltd, annual meeting, Friday 7 July at 10.30am, Christchurch, The Piano, 156 Armagh St
Goodman Property Trust, annual meeting, Wednesday 2 August at 1.30pm, SkyCity Convention Centre
Kiwi Property Group Ltd, annual meeting, Friday 28 July at 10am, Christchurch, Hagley Oval Pavilion
Ryman Healthcare Ltd, annual meeting, Thursday 27 July at 10am, Rangiora, Charles Upham retirement village

You can help fill in the gaps – Got an event you want to tell the world about? Click the email tab – [email protected].

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Take a rest after reading this one – but not on a memorial bench

The family of a woman who made crossing the street to & from Opaheke School, Papakura, a safer exercise for 27 years decided to offer a seat outside the school in her memory. It turns out you could dig a rail tunnel through the middle of the city centre more easily.

Leona McKenzie died in February last year aged 82. Her family’s gift of a seat went before the local board in April and was deferred to May, but only made it back on to the board’s agenda for this week’s meeting, on Wednesday evening.

From what I can see in the many pages of documents about what you might think is a simple gift to remember a very special “lollipop lady”, everything has been done by the book. What the record to this point shows, however, is an extraordinary volume of bureaucratic input – not to mention cost to the donor.

People give to their community. Once upon a time Leona McKenzie’s family might have told the school they’d like to see a seat with a plaque on it at the school gate, the school would have thought it was a good idea and it would have been done.

Now, it’s been past the school, Auckland Transport ($1000 non-refundable deposit required for an application for an encroachment licence or lease of airspace, subsoil or road surface), Education Ministry information has been added, a map showing the distance to nearby parks & reserves has been included, mana whenua haven’t yet been consulted.

One part of this intrigues me: the Auckland Transport documentation refers to “Auckland Transport land”. So you’d be wrong in thinking Auckland Transport maintains land on behalf of its owners, the ratepayers of Auckland – or would you? The semantics can make a difference to people’s thinking & actions.

If the local board decides to fund the memorial seat from the locally driven initiatives capex budget, it runs into another problem. As the comprehensive staff report says, “There is no department to drive the project.”

The super-city was formed for the whole Auckland region in 2010 to improve the provision of services and to streamline how things are done compared to the disconnects between the previous 7 territorial councils and the regional council.

And there do need to be checks & balances. But along the journey we’ve lost our way.

Below, the document trail:
Papakura Local Board, Wednesday 28 June at 4.30pm, Papakura, council service centre, 35 Coles Crescent:
14, Leona McKenzie memorial seat, Short St, Opaheke
Recommendation
Attachments
Auckland Transport processes to install a memorial seat on a street berm    
Auckland Transport application for encroachment form   
Information relating to applying for a corridor access request    
Auckland Transport fee schedule – corridor access requests    
Information from the Ministry of Education website regarding community-funded property    
Maps illustrating the distance of parks to the Opaheke School    
Leona McKenzie memorial seat report considered at 26 April 2017 Papakura Local Board meeting   
Local board agenda, April 2017, item 22 (pages 81-96)

Attribution: Local board agendas.

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Council agrees to sell rest of its financial asset portfolio

Auckland Council’s finance & performance committee agreed yesterday to sell the final $130 million in its diversified financial asset portfolio, but it’s a decision with potential adverse consequences.

The council sold $100 million of the portfolio in May 2016, will sell a further $100 million by the end of the June 2018 financial year and agreed yesterday to sell the balance by June 2018.

The council intends to use the proceeds solely to fund public transport & stormwater infrastructure.

However, turning liquidity to use in developing hard assets could take the council closer to a net debt:total revenue ratio of 270%, and at that point the council would face a ratings downgrade.

Council treasurer John Bishop said in his report a one-notch downgrade would cost $12 million/year in extra interest costs.

Committee chair Ross Clow said the decision to divest the portfolio would help tackle Auckland’s growth: “The fund was originally set up with the express purpose of funding infrastructure across the region when needed. Given the unprecedented challenges Auckland faces, divesting of the remainder of the portfolio and using it to help fund our infrastructure programme is a prudent & sensible financial decision.”

Mr Bishop said in his report the investment fund wasn’t regarded as a strategic asset, and divesting it would give the council the opportunity to repay debt to enable additional investment in infrastructure. “However, replacement liquidity may be required to meet treasury operating limits.”

The Auckland Regional Council established the portfolio, which originally contained its stakes in Ports of Auckland Ltd & Auckland International Airport Ltd, along with an investment portfolio of New Zealand & global equities, bonds & cash. It was used it to establish Infrastructure Auckland, providing seed funds for projects that included the Britomart Transport Centre and the Northern Busway.

It’s been managed recently by 8 external fund managers, with oversight from National Australia Bank subsidiary JANA Investment Advisers Pty Ltd.

Mr Bishop said in his report: “If the portfolio was liquidated to fund a wider Auckland or New Zealand event, it is likely that financial markets would also be negatively impacted. Therefore, when the funds are needed the most, there would be likely downward pressure on the value of the portfolio, meaning the portfolio is a less preferred form of liquidity when compared to cash or committed bank lines.

“Its specific investment objective was to achieve a net return exceeding the consumer price index plus 4% over rolling 10-year periods. JANA estimates an average annual 7% return over rolling 10-year periods. The portfolio has returned 9.1%/year since November 2010, in line with benchmark & ‘market’ returns. The return for the financial year to 31 March 2017 is 5.8%.”

Both EY & Cameron Partners identified the portfolio in their reviews of council funding in 2015 as a commercial rather than strategic asset, meaning continued ownership wasn’t required to ensure delivery of key services or outcomes.

“It was noted that the rationale for holding the portfolio is weak, and it is unusual for an organisation with the objectives of Auckland Council to hold such an asset.”

Mr Bishop said alternative uses for the portfolio funds included repaying debt and accelerating infrastructure investment. However, additional liquidity support might also be required if the portfolio was divested.

“Selling it to repay debt will reduce the risk of a downgrade to the council’s credit rating profile. Under the council’s long-term plan, the ne,t debt:total revenue ratio reaches 265%, meaning little available capacity to undertake further capital investment other than what is already in the long-term plan without breaching this ratio.

“The council’s credit rating agencies have indicated downward ratings pressure if this ratio approaches 270%. Therefore any unforeseen changes to planned operating results, such as a reduction in revenue or increase in debt, could lead to a lower credit rating.

“A one-notch downgrade is estimated to cost the council a minimum 0.15% in higher interest costs, while a bigger downgrade will result in a greater increase. On the council’s current debt portfolio of $8 billion, this results in an additional $12 million/year expense once existing debt is refinanced, more than offsetting the positive return from the portfolio over time.”

Mr Bishop said that as the investment portfolio was reduced, the overhead costs (both internal & external) of administering it became more significant: “Current external overhead costs are about $1.5 million, largely represented by fees paid to JANA & the fund managers. The refined responsible investment policy also requires significantly more oversight of the portfolio, adding additional cost and diverting council staff focus away from more material matters such as managing the council’s debt portfolio, interest rate expense & credit rating profile.”

Earlier stories:
4 April 2008: Auckland Regional Holdings’ “satisfactory” half sees revenue up 45%, profit up 55% to unstated figure
2 March 2004: Auckland gets Infrastructure Auckland $45 million for interchange

Attribution: Council committee agenda & release.

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Council 2.5% rates rise & tourist-targeted rate pass

Auckland mayor won approval yesterday for a 2.5% overall lift in the rates bill for the financial year starting on 1 July, got support for the council to pay staff the “living wage” at a minimum and won what could have been a tight vote on a version of bed tax.

The bed tax will actually be a targeted rate on certain accommodation – large hotels in particular. Against claims that it might be challenged as unlawful, Mr Goff said the council had been advised that the targeted rate was a legitimate device and that it could be passed on to customers.

I’ve long questioned a bed tax as a measure of charging visitors – who you want to like you – fees on top of their already very large input into Auckland’s income, and pouring billions of dollars into Government coffers through gst.

That’s the nub of the split between supporters of a charge on tourists and opponents: the Government takes tax without having to lift a finger, but has been loathe to redistribute it – until pre-election time.

The tourist accommodation targeted rate is intended to support operation of council organisation Ateed (Auckland Tourism, Events & Economic Development Ltd), which many condemn as an unnecessary & extravagant addition to council costs. I’ll come back to that issue another day, but for the moment argue that it has value in raising the region’s economic output.

For a long time council & government talked past each other on funding, but that changed when they jointly worked on the Auckland transport alignment project last year. Although improved funding mechanisms appear to be some way off, the 2 organisations are at least still talking about it.

The budget – the council’s annual plan – returns to the council chamber on Thursday 29 June for endorsement once staff have worked through all the decisions made yesterday.

Links:
12, Final annual budget 2017-18 – Mayoral proposal   
Attachments:
Annual budget 2017-18 – Key budget & rating issues
Other rates policy issues
Implementing a living wage

Attribution: Council meetings.

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The budget (for what it’s worth)

Government budgets used to be about micro-managing things like tax hikes increasing the prices of cigarettes & beer & petrol. They’re still about micro-managing, with some subtle touches.

One of those subtleties is that the spends are announced as totals but the sums coming from the Government coffers are trickled out. The new trick is the 4-year spread, through 2 election campaigns.

Yesterday’s election-year budget was very much about reducing the opportunities for the Opposition to campaign, and the Government’s done this with social welfare handouts & investments.

It’s a slow awakening for a government which has been reactive through its 3 terms, and it’s a questionable one.

Many of the measures announced yesterday & through preceding months increase dependency on the state, and not just for poorer citizens. Business, innovators, exporters – everybody has a potential handout to stretch their fingers out for. Ironically, socialism creep from a supposedly capitalism-supporting government.

If you think about why dependency is increased, you’ll find 2 reasons. One is that management of basics like housing construction and the control of economic inputs like migration has been abysmal, hurting those at the bottom of the pile but also causing widespread damage for everyone trying to go about their business.

The answer is to pay handouts, when for a government of this one’s ideology it should be about creating the basis for a thriving private sector, which would reduce the need for handouts.

The other reason is that support for private enterprises has been structured as handouts, instead of being in the form of facilitation. There’s a small but essential difference, partly due to the control factor but, more importantly, due to the inability to understand how to lift an economy.

One potential beneficiary has fared less well, and that’s Auckland. The Government didn’t trumpet too loudly that it’s finally paid the entry fee to Auckland’s city rail link project, but it did state once more that roads are the way ahead.

Every Aucklander knows that alternatives are imperative before the region is consumed by total gridlock, but roads are where the big infrastructure money has been directed.

In summary:

It’s a budget which displays largesse, which will be lapped up by a nation of beneficiaries.

It’s a budget aimed at winning an election through the offer of small individual gains, not at demonstrating what it could have been used for: demonstrating prowess at advancing the nation economically.

Links:
Treasury, Budget 2017
Labour on budget
Greens on budget
NZ First: Budget a ploy to hide crises

Attribution: Budget documents, my comment.

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New bill deals with meth, damage liability & unsuitable rental tenancies

The Government introduced a bill to Parliament yesterday aimed at better managing methamphetamine contamination, liability for careless damage and the tenancy of unsuitable properties.

Building & Construction Minister Nick Smith said the Residential Tenancies Amendment Bill (No 2) would provide better protections & clarity for tenants & landlords: “It builds on the changes we made last year requiring smoke alarms & insulation, and establishing a tenancy compliance & investigations team.

“This bill recognises that meth contamination of properties has become a significant issue that needs clearer direction. We want homes to be safe but we also don’t want properties being vacated when the risks are low.

“Landlords will have easier access to test for meth and tenants will be able to terminate their tenancy if it presents at unsafe levels. Standards NZ is working on appropriate contamination thresholds and the bill will enable these to be legally recognised & enforceable before the Tenancy Tribunal.

“The bill also implements changes in respect of liability for careless damage arising from the Osaki decision last year. This court ruling means landlords cannot recover the costs of damage, including the excess charge on any insurance policy. The changes are needed to ensure tenants have an incentive to take good care of a property, and for the landlord to have appropriate insurance.

“Under the bill, tenants will be liable for the cost of their landlord’s insurance excess up to a maximum of 4 weeks’ rent for each incident of damage caused by carelessness. A tenant remains fully liable where the damage is deliberate or a criminal act, and the landlord liable for fair wear & tear and damage beyond the control of the tenant, like a natural disaster.

“It also strengthens the law for prosecuting landlords who tenant unsuitable properties. The current jurisdiction of the Tenancy Tribunal is limited to residential buildings, meaning those who rent out unlawfully converted garages, warehouses or industrial buildings as living spaces can avoid accountability.”

Attribution: Ministerial release.

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National promise of 34,000 houses/decade for Auckland may add 2000/year

The headline is what matters in an election campaign, and the headline is that National is promising that, as the government, it will build 34,000 new houses on Crown land in Auckland over the next 10 years.

New Zealand has a record of not electing governments beyond 3 terms and National is ending its third term as the majority in a coalition, which jeopardises the chances of it being in a position to carry out the promise.

Social Housing Minister Amy Adams.

Amy Adams, Social Housing Minister and Minister Responsible for Housing NZ, revealed the figure in a speech at the Property Institute in Auckland yesterday. And then she proceeded to whittle it down.

The 34,000 is made up of 13,500 new social houses & 20,600 affordable & market homes.

Under the Crown Building Project, the Government will take down 8300 old, rundown houses.

Ms Adams said Housing NZ alone had over 50 housing developments under way in Auckland. The forward programme includes other housing projects already announced & underway:

  • Northcote, where 300 state houses will be replaced by 1200 new homes
  • Hobsonville Point, where the Government-owned Hobsonville Land Co Ltd (now HLC (2017) Ltd) is about to deliver the 1000th house in a programme to deliver 4500 homes
  • Tamaki, where the government-council regeneration project has a programme to develop 7500 new homes over the next 15 years, replacing the houses on 2800 Housing NZ properties
  • Other existing projects include 2700 new homes already announced under the Crown land programme, 580 houses under the Ministry of Social Development’s social housing reform programmes, and new homes for emergency & transitional housing.

By Ms Adams’ calculation, the Government would add 24,000 new – not previously announced – houses over a decade, though on the figures above the actual total might be less, perhaps down at 20,000, or an average 2000/year.

Comparing promises

Andrew Little.

That compares with Labour leader Andrew Little’s proposal last year for 100,000 new affordable houses nationally over 10 years, half of them in Auckland, which would include partnerships with private developers.

So, on top of existing projects, Labour has promised 5000 and National 2400 extra houses/year for Auckland.

Labour also promoted a dole for apprenticeships policy which would subsidise employers to take on around 4000 young people for on-the-job training in fields including building & construction.

Phase one of National’s Auckland housing programme, which covers the next 4 years, would cost $2.23 billion and be funded through Housing NZ’s balance sheet and $1.1 billion of new borrowing that the Government has approved as part of the business case.

Phase 2 in the latter years would be funded through the market housing development part of the programme & rental returns.

Ms Adams said ministers had also agreed that Housing NZ would retain dividends & proceeds from state house transfers, to help fund the building programme.

A glance at reality

The promises come after a period of extremely high immigration – a net inflow of 228,000 nationally over the last 4 years, 108,000 of those in Auckland, requiring 40,000 homes at an average 2.7 persons/household.

Building consents in Auckland over those 4 years started low, 6500 for the March 2014 year as the country was still gradually easing out of the global financial crisis, and totalled 34,200 for the 4 years.

Assuming 100% construction of consented homes (which is not normal, but I don’t have the exact figure), Auckland fell short of housing the net migrant inflow by almost 6000 homes over those 4 years. That housing requirement ignores, completely, the net flow of people within the country.

The National proposal might fill the gap if immigration eases, but on the slim information from the minister it would encourage pricing to stay high. On my calculation in February, consents for new homes nationally (excluding land) have risen 34% in value over the last 5 years – after a slow shift from the bottom of the market, between 6-7.7%/year for the last 4 years.

The land price equation in Auckland can be partly met by intensification throughout suburbia, land prices falling because of the freer availability of sites under the new unitary plan, and section sizes being reduced.

That doesn’t require tampering with rural:urban boundaries, which Labour has said it will eliminate. Those boundaries have a role in protecting non-urban land and in directing development into more efficient parcels.

Auckland also needs more infrastructure for housing development, but it needs to be in well devised communities with a supply of jobs nearby, not on the basis of rural carpetlaying. The local job requirement is fundamental but has been ignored as Auckland has spilled out along motorway corridors.

To catch up, New Zealand needs more builders with a longer future in the trade than the typical construction cycle allows. To do that, either the Government or some other industry supporter needs to ensure trade skills are being taught to enough people before a boom gets underway, and it makes sense to reduce booms, and therefore busts, with some smoothing of economic cycles (but not the total smoothing the US tragically & farcically tried in its attempt to avoid what became the global financial crisis).

As a cyclical high recedes, the building force needs attractive alternatives other than leaving for Australia. Some of that can come through infrastructure projects, which ideally should be separated in time from highs in house & commercial construction, thus reducing cost pressures as well.

Link:
Full Adams speech, 16 May 2017: Launch of Crown Building Project

Earlier stories:
16 May 2017: Little calls for end to negative gearing, and Property Institute calls it “cynical ploy”
6 March 2017: Auckland above 10,000 home consents/year again
10 February 2017: Smith exultant about figures that are plainly inflated
19 January 2017: Building consent highs still don’t match migrant demand
11 July 2016: Little sets out 8 planks to remedy housing issues
19 November 2012: Shearer proposes Government scheme to build 100,000 “entry-level” houses over 10 years

Attribution: Ministerial speechnotes & release, Statistics NZ tables, Labour releases, own articles.

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Little calls for end to negative gearing, and Property Institute calls it “cynical ploy”

Labour Party leader Andrew Little renewed the party’s call to eliminate negative gearing on residential property investments yesterday, and was promptly accused by Property Institute chief executive Ashley Church of making “a cynical electoral ploy [that] risks making the country’s housing crisis significantly worse”.

The party campaigned to end negative gearing in 2011. This time, Mr Little proposed reducing negative gearing by 20%/year over 5 years and spending the estimated $150 million saved on $2000 grants to 600,000 homeowners to insulate their homes.

Mr Little’s call was to “crack down on speculators”, which included banning foreign speculators from buying existing homes: “This will remove from the market foreign speculators who are pushing prices out of reach of first-homebuyers.”

He said Labour would tax property speculators who flick houses within 5 years, and end their ability to use tax losses on their rental properties to offset their tax on other income, “which gives them an unfair advantage over people looking to buy their first home”.

Expanding his point, Mr Little said: “Homebuyers are being locked out of the market by speculators. Losses from rental property investments will be ring-fenced. Speculators will no longer be able to use tax losses on their rental properties to offset their tax on other income, a practice called negative gearing. This move has been recommended by the IMF & the Reserve Bank.

“The biggest users of this loophole are largescale speculators who own multiple rentals and use losses on new acquisitions to continually reduce their tax. The speculators’ tax loophole helps them outbid homebuyers for properties because the taxpayer effectively subsidises part of their cost of servicing mortgages.

“Ending this loophole will not affect most people who have bought a single rental as a long-term investment because most of them are not using it. Those [small investors] that do use this loophole generally only do so for a few years after purchase.”

Church calls it envy politics

Mr Church said the suite of housing proposals Labour announced last year was smart, but on this one he accused the party of “resorting to a form of envy politics designed to set one section of New Zealand society off against another. The policy is a direct attack on mums & dads who are trying to provide for themselves in retirement and be less of a burden on the state.

“Mr Little’s use of the word ‘speculators’ to describe property investors is mischievous. Speculators are people who buy & sell property very quickly in the hope of making a quick buck – whereas investors are people who buy for the long haul – providing housing to thousands of New Zealanders in the process.”

Mr Church said the policy, if implemented, would have a dramatic & rapid effect on the supply of private rental accommodation, creating a problem which would ultimately fall back on the Government: “Your typical property investors are average mums & dads – not wealthy cigar-smoking fat cats – and their ability to purchase an investment property is usually leveraged against the equity in their home & their ability to claim losses in the early years, like any other business does. This move would certainly stop them investing – but in the process it would quickly lead to a shortage in rental housing which would fall back on the Government – so it would end up costing the taxpayer a lot more in the long run”.

Mr Church noted that negative gearing is only a factor in the early years of a property investment: “Over time, rents rise and properties become ‘positively geared’ – at which point the additional income becomes taxable. Is Labour suggesting that they will forgo this tax income – or that they’ll make property investors pay tax on profits while removing the ability to claim losses?”

Need is “to harness family investment”, not to discourage it

He said his biggest concern was that Labour was proposing a policy to reduce private investment in property at a time when private investment in new houses “is probably more important than at any other time in the nation’s history – the Government, and parties who want to be in government, should be proposing policies that increase private investment in the construction of new dwellings as quickly as possible – exactly the opposite of what Labour is proposing.

Instead, Mr Church said there was “a need for smart & innovative solutions that harness the power of mum & dad investment to get those houses built quickly. That might include giving preferential tax treatment to investors who build, or buy, new homes – not punishing them for doing so”.

And he questioned Mr Little’s level playing field: “That’s absolute nonsense. Homebuyers & families aren’t being closed out of the market by investors – they’re being closed out by loan:value restrictions that require them to have a 20% deposit at a time when house prices are at historically high levels. The best way to fix that is to remove those restrictions on first-homebuyers – not blame those who are providing rental accommodation to those who choose not to own.”

Labour plan includes big build, training programme & elimination of Auckland urban boundaries

Labour does have a development plan, announced last year, to get 100,000 houses built quickly under its KiwiBuild programme, which would include partnerships with private developers.

Mr Little said Labour would establish an affordable housing authority to work with the private sector to cut through red tape and get new homes built fast. “It will partner with private developers, councils & iwi to undertake major greenfields & revitalisation projects, building affordable homes with KiwiBuild & the private market [but the company names Kiwibuild Ltd & Kiwibuild.nz Ltd have already been registered by private company owners]. These homes will be part of great communities built around parks, shopping centres & transport links.

“Labour’s KiwiBuild programme will build 100,000 high quality, affordable homes over 10 years, with 50% of them in Auckland. Standalone houses in Auckland will cost $5-600,000, with apartments & townhouses under $500,000. Outside Auckland, houses will range from $3-500,000.

“Increased house-building will require a larger workforce. Labour’s dole for apprenticeships policy will subsidise employers to take on around 4000 young people for on-the-job training in fields including building & construction. Labour’s policy of 3 years’ free post-school education will see tens of thousands more people study in all fields, including building & construction. KiwiBuild is projected to create 5000 new jobs at its peak.

“Labour will remove the Auckland urban growth boundary and free up density controls. This will give Auckland more options to grow, as well as stopping landbankers profiteering & holding up development. New developments, both in Auckland & the rest of New Zealand, will be funded through innovative infrastructure bonds.”

Link: Labour policy, Levelling the playing field for first-homebuyers

Attribution: Party & institute releases.

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