Affordable Housing: Enabling Territorial Authorities Bill

The gate is open but the stock is quiet! I want to specifically address Barbara Stewart, Keith Locke, and Te Ururoa Flavell—and any of the Labour members who may care to listen—and to talk about clause 6. I do so from the point of view of saying that although the intention of this bill is to provide more affordable housing to low-income people, if we look specifically at clause 6, we see that it fails. It fails because all that clause 6 does—and the other clauses—is say that local government bodies will find out whether there is affordable housing in their districts, provide a needs assessment, etc. What that means is that local government bodies will end up having to employ people to go through the steps of producing the reports required. They will probably come out with a report that says there is not enough affordable housing in their districts.

That is the nub and the problem of this legislation. The sad fact is that this bill merely provides for local government bodies to write reports. It actually requires local government bodies to go out and make assessments. What it does not do—and what I thought was the intent of the bill—is ensure that we end up with more affordable housing. Nowhere in this bill, as members will see if they read it carefully, does it say that the end result of the local authorities’ endeavours, of their assessments, will be that we have more affordable housing.

I say to the representatives of those three parties here tonight that National members oppose this bill because it is back to front in addressing housing need. The sad and unfortunate fact in this country at the moment is that the expectation of the starting step for house ownership is too high. We would have done better to work with the building industry and with local authorities together to ensure that there are lower-level homes—still of good quality, still secure, still safe, and still watertight—at a lesser cost that people on lower incomes can afford. That is the dilemma we face in this country today. For most people, the price of a first home is out of their reach. Yet we have the ability in this country to provide lower-cost homes. I am not saying they are cheap homes; I am not suggesting that for a minute. What I am suggesting is lower-cost homes.

When the likes of Trevor Mallard and I were starting off in this country as young men, we had expectations of stepping into a home that was of a smaller size but still adequate for us to start our families. Unfortunately, today all of us have an expectation of being able to step into a more expansive home. Quite honestly, we need to change that attitude. We need to accept that a first home can be a small 3-bedroomed home that does not necessarily have all the bells and whistles, but is adequate. It can house our children—

Some of them have two bedrooms.

Maybe it has only two bedrooms. The point is that the home does not have to be a great big expansive palace. It can be a first-step house. It can be something we can turn into a home. It might have only two bedrooms, one for mum and dad, and one for the first child, maybe.

I can remember when kids shared bedrooms.

Of course; we all did that. The point I am making is that our expectations are now above the level that we should reasonably expect.

I say to the members of the smaller parties here, and, indeed, to the Government members, that we should have said we will work with local government and we will work with industry, and the whole focus will be on ensuring that we have an adequate supply of lower-priced homes of good standard that allow families in New Zealand to get a start. That is where this bill fails. In fact, it actually adds to the cost. I say to the Government and I say to this Parliament tonight that what disappoints me about the smaller parties, which I know genuinely want affordable housing—as do we—is that their supporting this bill in the manner in which it has been put forward will make it harder for young people to reach that first step. That is most unfortunate, and I say that genuinely. This is one of the times in this House when we really need to reflect on what we are doing. We are not achieving what we set out to do as a Parliament. This body has a responsibility to the people of this country, and tonight I say that, unfortunately, rather than achieve what we set out to achieve, which is a laudable goal, we will push it further out. I say to Parliament that it is sad and unfortunate that we are doing that this evening. Thank you.

Goudie SANDRA GOUDIE (National—Coromandel) Link to this

I fully concur with my most eminent colleague John Carter. He is absolutely right. He has said the very things that needed to be said about the fact that this Government should have taken a step back and should have done the work necessary so that we would not find ourselves in this very unfortunate position in respect of considering the Affordable Housing: Enabling Territorial Authorities Bill. The first definition in clause 4 covers affordable housing, which “means housing that—(a) is for persons living in households that—(i) have low to moderate income; and (ii) have no, low, or moderate legal or beneficial interests in property; and (b) is priced so that the persons are able to meet—(i) their housing costs; and (ii) their other essential basic living costs; and (c) is within the regulatory criteria for determining what affordable housing is, if regulations setting criteria exist”.

I am blowed if I know what that means, and I am sure it is a lot of gobbledegook for most people. But when we look at moderate incomes, I am concerned. The average income of the majority of people in my electorate is around $26,000 a year. That is the average income for the Coromandel electorate. How could anybody afford to own his or her own home on that level of income? We talk about most people now earning around $60,000 a year, but, coming from the Coromandel, I find that very, very hard to believe.

Business is incredibly important in the Coromandel because we need those businesses to provide jobs for the local people, and housing is certainly an issue. We have a very limited land resource and we need to use it to the very best of our ability.

I would like just to pick up on some of the points made by John Carter when talking about affordable housing. He referred to providing housing that can be affordable. If local government and central government are to work together, then they need to look at the cost of building a house. They need to look at the cost of purchasing the land in the first instance, the cost of building the house, and all of the constraints that start to come into play the moment someone takes a step into the council to begin the process. Firstly, there is the resource consent cost, and, secondly, there is the building consent cost. The bill has a definition of affordable housing; paragraph (c) of that definition states: “is within the regulatory criteria for determining what affordable housing is,”. This Government has not done that. Obviously the expectation is that local authorities will do that, and it will place an incredible burden of cost on them because it is not an easy undertaking to start pulling all of that analysis together to determine what affordable housing is.

In the first instance, councils are required to implement legislation passed by the Government, like the Resource Management Act and the Building Act. They have to do that, regardless of how poorly the legislation has been drafted and how it has not been changed to accommodate some movement in the cost of housing. Councils have to work with that. They do not seem to be able to control the costs incurred by people who want to build houses through that process. That is absolutely where it needs to start. When I talked before about a $150,000 development contribution, it was $150,000 after the costs of about $40,000 or $50,000 just for the resource consent and the building consent alone. We are looking at some councils charging up to $1,000 for building a carport.

It is going out of control and is becoming a nonsense. The sooner some rationality is put into the process around how resource consents and building consents are dealt with, the sooner we might be able to have more affordable housing for people in New Zealand. I wish that some sort of sense could be made within the regulatory criteria, as defined in the bill. The purposes clause talks about enabling territorial authorities “in consultation with its community, to require persons doing developments …”. But it is done in consultation with its community. People who know anything about what it is like when someone starts to consult the community, will know this is just another one of those exercises that adds hundreds of thousands of dollars on to the cost of starting an affordable housing scheme.

Hayes JOHN HAYES (National—Wairarapa) Link to this

I would like to begin by speaking to clause 3A, which states: “This Act binds the Crown.” I feel quite sorry for the Minister in the chair, the Hon Trevor Mallard, because this legislation is abysmal. It is on a par with the emissions trading scheme legislation. What I am getting at is that the Act binds the Crown, but this whole bill is concerned with territorial authorities. When the Minister speaks at some point, I will be very interested in his explanation as to why this Act binds the Crown, because clearly it does not. I feel very sorry for the Minister because this legislation is terrible. I do hope the Minister is reading Paul Quinn’s column in the Hutt News, which, I see, he is engrossed in.

Who?

Paul Quinn. He is the fellow who is standing against the Minister.

Is he?

Dean JACQUI DEAN Link to this

Yes.

Clause 4 states: “In this Act, unless the context requires another meaning”—brilliant—“affordable housing means housing that—(a) is for persons living in households that—(i) have low to moderate income;”. This would apply to most people in my electorate in the Wairarapa, who typically earn $12 to $20 an hour. But what is a moderate income in that context? Next, subparagraph (ii) states: “have no, low, or moderate legal or beneficial interests in property;”. That does not stop someone with property held in a trust from being able to make him or herself eligible for affordable housing. Paragraph (b) of the definition goes on: “is priced so that the persons are able to meet—(i) their housing costs;”. Well, that is really wonderful legislation. Why do we need a rule for that? Then, paragraph (c) states: “is within the regulatory criteria for determining what affordable housing is, if regulations setting criteria exist”. This is appalling drafting; it is appalling legislation.

Let us turn to clause 5, “Purposes”. It states: “The purposes of this Act are to—(a) enable a territorial authority, in consultation with its community, to require persons doing developments to facilitate the provision of affordable housing—”. Why do we need legislation to do this? The bill goes on to state in clause 5(a)(i) that it is “for the purpose of meeting a need for it that the authority has identified by doing a housing needs assessment:” That is wonderful! Why do we need central government to waste its time, to waste the time of the Local Government and Environment Committee, and to waste the time of officials by asking them to come up with legislation that states a territorial authority can do a housing needs assessment. We do not need this legislation to do this; this is wasting the taxpayers’ funds.

Then the bill states, in clause 5(a)(ii), that facilitation of housing must be “in a manner that takes account of the desirability of the community having a variety of housing sizes, tenures, and costs:” For heaven’s sake! This is the real world; we do not need legislation that says that. Then clause 5(b) states that the purpose of the Act is to “void covenants that have, as one of their purposes, stopping the provision of affordable housing or social housing.” For goodness’ sake! Who drafted this stuff? This is meaningless arrant nonsense.

This is exactly the theatre that this Government has created around the emissions trading scheme. It is the theatre of appearing to be doing something for a community. But I say that this legislation will do nothing to deliver an affordable house to anybody in this country. It is unnecessary legislation. Clause 6(1) states: “Territorial authorities that want to find out whether there is enough affordable housing in their districts may do housing needs assessments.” What brilliant law! Who was the wizard who thought of this legislation? It is absolute and utter rubbish, and the Government is charging taxpayers to produce this sort of nonsense.

Dean JACQUI DEAN (National—Otago) Link to this

I am very pleased to rise to speak on Part 1 of the Affordable Housing: Enabling Territorial Authorities Bill. I start my contribution this evening by saying I am a little puzzled at Madam Chair’s directing my colleague John Carter—I believe—not to move beyond the scope of Part 1 into providing solutions. I think I have correctly picked up her direction.

Hobbs The CHAIRPERSON (Hon Marian Hobbs) Link to this

This debate is consideration in Committee. That can be done in the second or the third reading, but not in this debate.

Thank you, Madam Chair. I understood, and I thought, and I do believe that this bill is about providing solutions to affordable housing, and it is in that context that I make my comments.

I want to make my contribution very local, and to put the Committee in the hands of a small local authority such as the Waimate District Council, the Mackenzie District Council, the Waitaki District Council, the Timaru District Council, or the Ashburton District Council, all councils in my region that may, or may not—because this is an enabling bill—decide to take a housing needs assessment on behalf of their community. How will that housing needs assessment be generated? It might be generated from a member of the community or a group within the community that feels very strongly about this matter—and there are members of the community who feel very strongly that there is a need to provide community housing within a certain town or district.

That is fine. A letter is written to the mayor and councillors requesting that a housing needs assessment take place. What does that mean for the Waimate District Council, which has got, say, one engineer, one community services officer, and one other officer? There will be a rating officer. Who is going to undertake this work? We can argue—probably quite rightly—that because every council in New Zealand is required to undertake a long-term community council plan, then a housing needs assessment can be undertaken alongside with, or attached to, an annual plan or a long-term community council plan. That is a case that can be argued. But when a council has one engineer, one community services officer, and one rating officer, who also have to deal with the day-to-day business of the Mackenzie District Council or the Waimate District Council, and who also have to deal with accreditation under the Building Act, which is still exercising many small local authorities not just in my corner of the world but throughout New Zealand, who will undertake that study? Who in a small, rural local authority has the expertise to undertake a housing needs assessment?

If we turn to the provisions contained within Part 1, we see that under clause 8, “Method of assessment”, subclause (3)(d) provides for a method that gives “a description of the current balance between supply and demand in the housing market generally and, if relevant, in different sectors:” If, say, the Waimate District Council is going to do that, does it do it just for the Waimate township, or does it also do it for the little villages that are spread around the Waimate District? Where does it end?

I think Part 1’s requirements of small local authorities, of which there are many around New Zealand, will impose an added amount of work, which they may be willing to undertake—this is an enabling bill, and if the community wants a council to do an assessment, then the council may well be willing to do it—but there is the question of their capability to do it. If they have to bring in consultants to undertake the work, who will pay the consultants? The concern I have is not about the willingness of a local authority to do a housing needs assessment; it is about the capability of a local authority to undertake an assessment, and the cost that it will impose on the whole of the community.

Madam Chair, I am concerned at your direction to my colleague not to stray into the realm of finding solutions when debating Part 1, because I think Part 1 is very much about the mechanism of finding solutions. I am very concerned that we have two directions here. On the one hand we are not to try to find solutions, yet we are debating Part 1, which provides the mechanism for finding solutions through a housing needs assessment.

I am concerned that a new industry of housing needs assessors will build up in New Zealand. I am concerned that there will be a number of consultancy firms—they are probably writing their job descriptions even now, and scoping out the type of work they will be doing. These housing needs assessors—I am sure they will find much flasher descriptions of their jobs than that—will offer themselves to local government to undertake housing needs assessments.

The concern I have on behalf of the Waimate District Council and the MacKenzie District Council is that although the aim of this bill is to provide affordable housing to people, the method does not actually follow through on it. This bill does not in any way achieve what it sets out to achieve. What it does is provide an opportunity for housing needs assessors to find a whole new vehicle for earning some jolly good fees from the ratepayer base of small local authorities.

Hobbs The CHAIRPERSON (Hon Marian Hobbs) Link to this

Before I call Tim Groser I just want to make something very clear to the previous speaker, Jacqui Dean, who I think misunderstood what I was saying. I was saying that I wanted her to focus on the wording of the bill, on the intention in this bill, and not to focus on alternatives that are not part of this bill. Speaker’s ruling 104/1 states: “Consideration by the committee of the whole House is the nuts and bolts stage in which a bill is considered [part by part] and detail by detail, …”. It is not the wide things. That speaker did actually deal with that. But that was my warning, before people take off into the wide blue yonder of housing affordability in general.

Groser TIM GROSER (National) Link to this

Had I heard that explanation I possibly would not have risen to take a brief call. I have to be honest: in coming down to the Chamber it was not my intention to take a call on Part 1 of the Affordable Housing: Enabling Territorial Authorities Bill, but merely to enrich my parliamentary experience by listening to my National Party colleagues go through this bill with their customary forensic skills and tear the logic and ambiguities of Part 1 apart.

As members may have noticed, I was sitting next to my parliamentary colleague Mr Keith Locke from the Green Party—a man whom I have known for 40 years. We were discussing the strategic outlook for Hezbollah in the Lebanon, which is probably not quite part of Part 1. But I was forced to rise to my feet by the very observation that you have just made, Madam Chair. I wrote it down as: “Part 1 does not require us to focus on solutions to affordable housing.” I thought that this was very intriguing, given that the immediate description of the title of Part 1 is “Meeting housing needs”. I thought that we can afford to say this—

Hobbs The CHAIRPERSON (Hon Marian Hobbs) Link to this

Could the speaker resume his seat. The directions I give are not debatable. I have given a direction; it is not up for debate now. Please focus on Part 1 of the bill. Thank you.

Groser TIM GROSER Link to this

Thank you; most certainly. The problem is trying to work out what exactly Part 1 is trying to fix. When I started to read this bill in the House just about 10 minutes ago I found the most childish drafting I think I have seen in my brief time in Parliament. Let me give members an example. Clause 6 states: “Territorial authorities that want to find out whether there is enough affordable housing in their districts …”. This sounds like a third-form essay on the issue.

Then when we come across other clauses we find bold declaratory statements. For example, let me take clause 13, “Criteria for allocation”, which states: “An affordable housing policy must state the criteria …”. This sounds bold and decisive, but when we look at the operational clauses dealing with the criteria, which are contained in clause 10, we then find out that the criteria are a purely illustrative list of criteria that have no particular force whatsoever. It states: “(1) An affordable housing policy must state the criteria …”. It then lists a series of criteria such as “(a) the proposed location of the development:” and “(b) the kind of development proposed, …”. But it is quite clear from later parts of Part 1 that this does not exclude the possibility that a local authority may decide on other criteria, which makes a nonsense of omitting paragraphs (c), (d), and (e) from clause 10(2).

The whole bill is a complete artefact. It has no intrinsic content whatsoever. One has to ask oneself why Part 1 is in this bill and what its actual, real purpose is. It seems to me—and no doubt we will come to this in a more complete examination of the bill when we start to look at it in total—that this is essentially a political fig leaf. This bill does not actually do anything. It is permissive of a policy that local authorities may in any event already do. It does not add anything to the sum of human knowledge in our country whatsoever. It is simply a political fig leaf for this Government to cover up 9 years of inaction on affordable housing.

Sio SU’A WILLIAM SIO (Labour) Link to this

I move, That the question be now put.

Link to this

A party vote was called for on the question,

That the question be now put.

Ayes 67

Noes 52

Motion agreed to.

The question was put that the following amendment in the name of the Hon Maryan Street to clause 27 be agreed to:

to insert in subclause (7) “must” after “the territorial authority”.

A party vote was called for on the question,

That the amendment be agreed to.

Ayes 67

Noes 52

Amendment agreed to.

Link to this

A party vote was called for on the question,

That Part 1 as amended be agreed to.

Ayes 67

Noes 52

Part 1 as amended agreed to.

Part 2 Amendments to other enactments

Heatley PHIL HEATLEY (National—Whangarei) Link to this

Madam Chairperson, I am intrigued that, as the Chairperson of the Committee of the whole House, you required members not to talk about solutions for affordable housing—

Hobbs The CHAIRPERSON (Hon Marian Hobbs) Link to this

Please do not trifle with my ruling or discuss it.

I am hoping that in the debate on Part 2 we can canvass solutions regarding affordable housing, given that that is, to all intents and purposes, what the Affordable Housing: Enabling Territorial Authorities Bill is hoping to achieve. I will move through clauses 40, 41, and 42, and will address those particular issues, with that backdrop—without actually mentioning any solutions.

I will first convey my concern to the Committee that although clause 40 does not deal with affordable solutions to housing, it does make a couple of amendments to the Building Act. In fact, it makes three amendments. I have to say that three is too few. I do not know any builder who does not want amendments to the Building Act. Builders across the country will be delighted to see three amendments here. They have another 333 that they would like to introduce, and I am a bit disappointed that the Minister of Housing, in improving the lot of first-home buyers, has not introduced more amendments to the Building Act. It is the Building Act, along with the Resource Management Act and a bunch of other Acts that the Government has forced through this Parliament—while ignoring necessary changes—that has driven up house prices for first-home buyers. Clause 40 was a great opportunity to make amendments to the Building Act, which is making life very difficult for builders right across the country.

A builder who has done the hours and has been in the trade for 20 to 25 years cannot move a window 1 foot to the right—30 centimetres, for those of us born after the change to the metric system—without trotting off to the local district council with a bunch of plans under his or her arm to explain why it has to be done, even though the window does not change the structural strength of the wall. A builder has to down tools, go to the council with a bunch of plans, submit them, wait 5 days for a decision—

Hobbs The CHAIRPERSON (Hon Marian Hobbs) Link to this

Please could you take a seat. I will read to you Speakers’ ruling 44/1 on the question of relevancy: “Because a matter is incidentally mentioned”—namely, the name of the bill that is being amended—“in the course of a debate, … does not justify discussion on the …” Building Act.

I raise a point of order, Madam Chairperson. Clause 40 involves amendments to the Building Act, and I am speaking about amendments to the Building Act.

Hobbs The CHAIRPERSON (Hon Marian Hobbs) Link to this

You are not speaking about the appropriate amendments to the Building Act—the ones in this bill.

Who judges what is appropriate?

Hobbs The CHAIRPERSON (Hon Marian Hobbs) Link to this

It is whether it is written in this bill.

I appreciate that members are not allowed to talk about affordable housing solutions in the debate on the Affordable Housing: Enabling Territorial Authorities Bill, nor about Building Act amendments when the clause is about Building Act amendments. I will move on to clause 41, dealing with amendments to the Housing Corporation Act.

I shall remind members of the Committee of clause 35 in Part 1, to which clause 41, “Amendments to the Housing Corporation Act 1974”, in Part 2 directly relates. Clause 35 refers to covenants being made void. They are covenants across developments that would otherwise restrict social housing from being provided. For instance, a builder with a development of 100 houses might put a covenant across the property to say that no Housing New Zealand Corporation houses may be built there, and none of the houses may be sold to Housing New Zealand Corporation. Certainly National, as we said earlier, supported the intent of the legislation to make such covenants void, but we did mention that there is no doubt that when Housing New Zealand Corporation purchases 100 houses in a subdivision of 200 houses, that is of huge interest to the local community, and it ought to be consulted on and considered. So although National supports the idea of voiding such covenants, we do make that point. A case in point is the Hobsonville subdivision, where 400 to 800 State houses are being built. The local community is very upset about that. There has been no consultation at all, and it has caused a lot of angst in the local community.

I now move to clause 42, which does not address issues to do with the Building Act and does not address issues to do with affordable housing solutions. It is well worth canvassing, because it deals with amendments to the Local Government Act 2002. This clause does not deal with development levies. Development levies are charges to builders and developers that in some cases are spread across property developments throughout the country, driving up the cost of properties and driving up the cost to first-home buyers of building houses, because in the end they pay the development levy through the added cost on to their homes. That is not what this clause is about. This clause is not about the Local Government Act driving up the costs of first-home buyers. This clause is about an amendment to section 102(5) of the Local Government Act by adding the following paragraph, which is a fascinating paragraph indeed: “(c) an affordable housing policy, under the Affordable Housing: Enabling Territorial Authorities Act 2007.” It has no mention of development levies or anything like that; there is just that mention of that amendment.

Dean JACQUI DEAN (National—Otago) Link to this

Earlier in this debate I made a note to myself on the Order Paper—as members do—in response to one of your rulings, Madam Chairperson. The note said that I thought this Affordable Housing: Enabling Territorial Authorities Bill was about providing solutions. I thought Part 2 was about making amendments to other enactments that enhance and underpin the aim of this bill, which is to make housing more affordable for people.

Dean JACQUI DEAN Link to this

Don’t talk about that.

You see, I made a note to myself earlier on in this debate, during the debate on Part 1. As I think about things I like to note them down in case I get an opportunity to speak again. My note was that I thought this bill was about providing solutions. But apparently we are not supposed to talk about that, so I will move on to Part 2, “Amendments to other enactments”, and to the amendments to the Building Act 2004.

I started my contribution to the Committee stage by keeping it local, so I will go local again, and I will go back to the Waimate District Council and its grappling with the Building Act. I had a letter from the chief executive of the Waimate District Council, Tony Alden, outlining the compliance costs that his small rural local authority has to meet in terms of audits, long-term council community plans, and, most specifically, compliance with the Building Act 2004. The Waimate District Council, if it decides—because this is an enabling bill, and is about providing solutions—to undertake a housing needs assessment, will have to apply the consequential amendments to the Local Government Act 2002 and the Building Act 2004, but that will be at a cost, and at a time when councils like Waimate’s are grappling with accreditation and coping with the poaching of their planners and engineers by larger authorities. The Government has created a trade in planners because of the Building Act. There is not only a shortage of planners but a trade in planners. Small, rural local authorities are the very ones that are least able to cope with the requirements of this so-called enabling bill, which has the so-called purpose of providing solutions. National can see only problems and costs with this bill.

The amendments to the Building Act will not just happen by themselves. The Waimate District Council, if it decides to undertake a housing needs assessment, will require a great deal of work from its one planner—if it has a planner. I do not whether it does at the moment, because sometimes in small authorities those positions remain vacant for a time, and they have to bring in consultants. That is life! The Government’s changes in the Building Act have created a market for planners and engineers, and the small local authorities are the ones that miss out. So my Waimate District Council will struggle with these amendments to Building Act 2004, should the council decide to have an assessment—because this is an enabling bill with the aim of providing solutions, which apparently we are not to talk about, but they are there none the less, apparently. It will struggle with these amendments to the Housing Corporation Act 1974 and these amendments to Local Government Act 2002. This bill will come at a cost to the ratepayer.

Carter JOHN CARTER (National—Northland) Link to this

Allow me to beaver away to see whether I can stay within the rules that you have set, Madam Chair.

Hobbs The CHAIRPERSON (Hon Marian Hobbs) Link to this

The rules have been set by the House.

Goudie Sandra Goudie Link to this

Of course they have, Madam Chair, and I will do my very best to comply with them.

I want to talk to clause 42, “Amendment to Local Government Act 2002”, and draw to the Committee’s attention that subclause (2) amends schedule 10 by inserting new clause 7A, which states: “Affordable housing policy—A long-term council community plan must contain a summary of the local authority’s affordable housing policy, if …”. I want to talk about that word “if”.

“Eff”?

Hayes John Hayes Link to this

Call it what you like. However it is pronounced, that is the word I want to focus on. That word is the nub of this whole bill. We are here tonight talking about something that may never happen. This bill, and particularly this subclause, says to local government: “If you want to, then go ahead and do it, if you think it’s important and if you think it’s necessary. If you don’t want to do it, then it does not matter.” Councils do not have to focus on it, or talk about it, or put it into their long-term council community plan—only if they want to make the comment. That word “if” is the nub of this whole debate.

“Eff”?

The Committee should be talking about this word “if”—or “eff”, or however one wants to say it. To me, that one little word makes that clause meaningless. Local government up and down this country is saying to this Parliament, and said so in its submissions: “Not interested, thank you very much. We aren’t interested because we can’t do what this bill asks us to do.” When the bill says “if you want to”, we have had a response from local government right across this nation saying “Nope.”—

Hon Member

“Eff”?

—with rare exceptions; there were one or two. No, we are not saying “eff off”, but the fact is local government has rejected it. We have to ask ourselves why, if we put a bill out before local government and they come back to the select committee and say “No, we don’t want to be involved, and if you give us the option of not being involved, then we’re not going to.”, this Parliament would ignore that advice from local government. There does not seem to be any sense in it.

The problem that local government authorities have, up and down this country, is that they are met with increasing costs. We are going through another ratepayers’ revolt, and one of the issues that local government authorities raised with us is that if this bill gets imposed on them and if they have to follow it and undertake to do the work, then that will add more costs to their ratepayers. They were asking collectively why they should have to be responsible for social housing. They said they think it is a Government responsibility, generally. Certainly, that was the view of the smaller local authorities. They say that if they have the option, then they do not want to have to be responsible, thank you very much. They say they will not put this sort of thing in their long-term council community plans.

I say that is the tragedy of what we are debating tonight. Some people will be listening to the debate on their crystal sets, thinking that this Parliament is going to address the issue of affordable housing, and their expectations will be raised. Unfortunately, they will turn to their local authority and ask whether it is going to do that. The local authority will say: “Nope, the Government said ‘if’ we want to, and we are not going to. We are not interested. You’re not going to get it.” What a shame!

Hayes JOHN HAYES (National—Wairarapa) Link to this

I wish to continue the theme in the speech made by my colleague John Carter, but, first of all, I turn to clause 40, “Amendments to Building Act 2004”, and pick up on the theme in the speech made by my colleague Phil Heatley, our housing spokesman. I support his comments that it is really unfortunate that this legislation does not provide for greater amendments to the Building Act.

Clause 40(2) amends section 49(2)(b) of the Building Act by adding the word “and”. Subclause (3) amends section 49(2) by adding paragraph (c): “if section 28 of the Affordable Housing: Enabling Territorial Authorities Act 2007 applies,”—if it applies—“notification under section 28(6) of that Act.”

I think that a number of other amendments could have been made to the Building Act to help us secure more affordable housing. We could, for example, have amended the Act to reduce the cost of building permit charges applied by territorial authorities. You see, what seems to be happening amongst my five district councils in the Wairarapa electorate is that they are being asked to cover their backsides with such a lot of—

Hon Member

Bumf.

—bumf that they are having to make huge charges and are requiring vast amounts of information that are not necessary for the task of building things. So I feel that this legislation could amend the Building Act in order to reduce the cost of permits by requiring less information.

Secondly, I feel that the legislation could amend the Building Act to reduce the cost of resource consents. In the last year, for example, the South Wairarapa District Council, in my electorate, found fit to charge a constituent in Greytown, where I live, $900 for a resource consent to build a hen house that would take five hens—$900 for a hen house to accommodate five hens. I think members would agree with me that these sorts of charges unnecessarily add to housing construction costs.

The next area where we could ask for an amendment relates to clause 40. The amendment would require that there be less responsibility on the part of councils to collect 20-page and 30-page sets of plans for very simple dwellings. If we are to build affordable housing, we need such an amendment. The planning framework at present requires far too much on the part of builders. I am told that the cost of applying for a building permit in my electorate, from any of the five councils, begins at $7,000 per house.

I move on to clause 40A, “Amendments to Goods and Services Tax Act 1985”, and I pass on the thoughts of many of my constituents that this Act could be amended in such a way as to remove the cost of GST from the purchase of first homes. I am doing that on behalf of my constituents, not on behalf of the National Party or myself. The idea has been suggested to me by constituents, and it could be addressed by an amendment to clause 40A if the Government were serious about reducing the cost of housing.

If we look at clause 41, “Amendments to Housing Corporation Act 1974”, we see that, again, we are not being asked to make any significant amendments at this point in the legislation, except for subclause (3), which amends section 3B of the Act by adding new paragraph (c), which states: “to arrange for territorial authorities applying the Affordable Housing: Enabling Territorial Authorities Act 2007 to receive appropriate advice and information, of a policy or other nature, about housing and services related to housing.”

This legislation is totally unnecessary. That clause delivers absolutely nothing to the people of my electorate. It will make no difference whatsoever to the cost of their housing, except that it will add to construction costs.

Goudie SANDRA GOUDIE (National—Coromandel) Link to this

I would like to follow on from my most eminent colleague John Carter, who spoke about clause 42, “Amendments to Local Government Act 2002”, and particularly about new clause 7A, “Affordable housing policy”, which is to be inserted in schedule 10 of that Act by clause 42. This is Mr Carter’s famous “if clause”, and it states: “A long-term council community plan must contain a summary of the local authority’s affordable housing policy, if it has adopted one under the Affordable Housing: Enabling Territorial Authorities Act 2007.”

What I understand that to mean is that there is no way that a council could actually consult on an affordable housing scheme in conjunction with a long-term council community plan. It would have to run a separate process in time to catch the process of a long-term council community plan if it wants to include a summary of the affordable housing scheme within the long-term council community plan. So in actual fact it will have to either wait for another 3 years before it can do its long-term council community plan or run it in a pretty condensed time frame through a consultative process with its community to try to get it in the next round of a long-term council community plan.

So, in spite of the comment made earlier by a speaker, I do not see that there is any way that an affordable housing scheme could go through a consultative process in tandem with a long-term council community plan. That just adds another cost, because the council would not have that advantage. If it wants a summary, then it will have to do all that work beforehand, and it will not be able to run it concurrently. So there we have that separate cost of consultation and, of course, the hundreds of thousands of dollars that go with that. Councils have already said that there are 60-plus pieces of legislation that already add about 6 percent to the rates bill as it is.

Further, in speaking to Part 2, I am looking at the commentary on the bill with regard to the amendments to the Goods and Services Tax Act 1985. As my learned colleague John Hayes mentioned, there was a recommendation for the inclusion of new clause 40A, which would make consequential changes to that Act. There are two main effects of the recommended amendments. The commentary states: “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.” The commentary goes on to state: “These amendments should”—not “will” but “should”; ever hopeful—“reduce compliance costs for all parties.”

Well, it quite patently will not. It will not do anything in terms of reducing compliance costs. If we look at what compliance costs are, we see that they are the costs of applying for a resource consent and the process that one has to go through to do that, and, hopefully, the consent process is not challenged. That is a compliance cost. Then, the cost of building consents for actually putting any housing on the subdivision, if that is what one is doing, is a compliance cost. So I do not see that having a GST rate of zero percent will do very much at all, because a person is already incurring all those other costs and they are not being changed in any way, shape, or form.

I refer to the comments made earlier by my learned colleague Phil Heatley, who talked about development contributions, which are another compliance cost that will not be addressed by this bill.

Goudie SANDRA GOUDIE Link to this

They listen to me!

Oh, we absolutely do listen. You know, the tragedy of it is that those members on the Government benches are not listening, because they do not understand this stuff. They cannot get their heads around the simple cost of doing business, because all they can see is the profit line, and they hate that. Businesses making a profit is an anathema to them. So we are looking at amendments that “should” reduce compliance costs, and at the word “if”, which John Carter was fixated about in clause 42, “Amendments to Local Government Act 2002”.

Tremain CHRIS TREMAIN (National—Napier) Link to this

I rise to speak to Part 2 of the Affordable Housing: Enabling Territorial Authorities Bill and to address specifically the amendments being made to the Local Government Act 2002 in clause 42. This clause amends the Local Government Act, and I will tell those people who are listening out there to this debate what it does. Clause 7A, “Affordable housing policy”, which is to be inserted in schedule 10 of that Act by clause 42, states: “A long-term council community plan must [now] contain a summary of the local authority’s affordable housing policy, if it has adopted one under the Affordable Housing: Enabling Territorial Authorities Act 2007.”

Government is about providing leadership and about providing the tools to achieve certain goals in that leadership. Clearly the leadership that we are trying to achieve here is to provide and increase the supply of affordable housing. I am guessing that the aim of inserting clause 7A is to help achieve that goal. I have some questions for the Minister in that regard. I ask the Minister in the chair, the Hon Maryan Street, how many councils indicated to us in their submissions that they will be looking to include a piece on affordable housing policy in their long-term council community plan.

Dean Jacqui Dean Link to this

How many? None.

Tremain CHRIS TREMAIN Link to this

None. So here we are, introducing legislation with the aim of increasing the supply of affordable housing by introducing a clause into Part 2 of this legislation and changing the amendments to the Local Government Act, and taking up Parliament’s time to do something that will not achieve the goal that we set out to do. So I ask the Minister a second question. Did we do any analysis of the cost to local councils of doing an affordable housing policy?

Tremain CHRIS TREMAIN Link to this

No, but Local Government New Zealand did.

Did it? And what was the cost there?

Tremain CHRIS TREMAIN Link to this

It blew out in the case of most council’s plans.

OK. I have another question for the Minister in relation to this long-term council community plan policy. If a council already has affordable housing within its boundaries—as the Napier City Council does—but does not intend to expand its affordable housing, will it now have to include a piece in its long-term council community plan about how it manages that affordable housing? That is an interesting question. And I ask the Minister this: in doing this legislation, in the analysis—in the projections that have been done for the cost of implementing this legislation—how many affordable houses are proposed by local governments around New Zealand? Were there indications from those who submitted that they would be going down the track? Maybe there were 150 in Auckland or 60 in Taranaki? I have another question for the Minister in regard to the long-term council community plan and the analysis that was done. How many families will benefit from this?

The point I make—and I will finish on this—is that Government is about leadership. Yes, there is a problem in this country about affordable housing, and we have gone through this legislation with the aim of doing something to improve the lot of people by providing affordable housing. But the clear fact is that there are very few, if any, local governments that will actually do anything about the amendment that we are proposing to the Local Government Act 2002. They will do nothing. This is a complete waste of time. Thank you.

Dyson Hon RUTH DYSON (Minister for Social Development and Employment) Link to this

I move, That the question be now put.

Link to this

A party vote was called for on the question,

That the question be now put.

Ayes 67

Noes 52

Motion agreed to.

Link to this

A party vote was called for on the question,

That Part 2 be agreed to.

Ayes 67

Noes 52

Part 2 agreed to.

Clauses 1 and 2

Heatley PHIL HEATLEY (National—Whangarei) Link to this

Thank you, Madam Chair. You have treated me with an even hand, I very much appreciate that. I am delighted to take the opportunity to speak about solutions to unaffordable housing, having been restricted in doing so—for a very good reason—to this point.

I have been very surprised that the Minister in the chair, Maryan Street, has not made a single contribution this evening, and I query that. She came to Parliament and has been upheld as a politician with a purpose, and I certainly respect that, but she has brought two pieces of legislation to this House. In the first one she wanted landlords to pay the cost of damage caused by tenants’ guests, even though landlords have no control over whether tenants invite guests into the property, and if they do, over who the guests are, when they come, and what they do. She also wanted landlords to pay for accidental damage caused by tenants, even though there is no way of proving whether the tenants did the damage accidentally or deliberately, or of establishing what happened. This Minister brought that legislation to the House, but it did not get the support of this very wise Parliament. Now she brings this Affordable Housing: Enabling Territorial Authorities Bill into the debating chamber, and we have not heard a squeak out of her. I want to know why that is the case. Is she ashamed of the legislation? Has she read the legislation? Does she understand what this legislation does not do?

I put it to the Committee this evening that this bill, rather than giving the opportunity for first-home buyers to get affordable housing when they are under financial pressure or cannot get a deposit together to do so, is about ifs, buts, and maybes. It essentially says that councils may—they do not have to, but they could do so if they want to—provide affordable housing in their districts. If they do decide that they want to provide it, they have to do an affordable housing study. That involves councils possibly going to various community groups, depending on what they want to do or whom they may like talk to, and putting together an affordable housing plan. Then, if they decide that, yes, it is worth going forward, or that maybe it is not worth going forward, or that perhaps it may be worth taking a bit of a punt, they may or may not require developers to set aside 10 percent of their land and put it in a land bank for affordable housing.

But councils may decide they do not want to do that. They may decide get developers instead—perhaps—to write out a cheque in lieu of the land, and put the cheque into a trust for affordable housing. Or—perhaps—councils may change their minds and decide that rather than doing that, an alternative could be to get the developer or builder to build affordable houses in lieu of providing land or cash, and put them into a trust for first-home buyers. Of course, that ignores the fact that builders or developers, if they set aside land or pay cash in lieu or—perhaps—build affordable houses themselves, will take a financial hit and will therefore have to regain the profit or income they have lost because of those additional costs. That will mean putting up the prices of all the other houses in the development. Ninety percent of the buyers will pay more for their houses so that the costs are lower for those who may or may not get the opportunity to buy an affordable home, if a council does or does not decide to have an affordable housing policy.

That is the kind of policy that may be enacted tonight, and, if this legislation is enacted, councils may or may not choose to use its provisions. If they do, developers may or may not set aside land, or provide cash in lieu, or build houses themselves. Builders may or may not choose to do that if a council decides that it will or will not have an affordable housing policy.

The interesting thing in all this sort of “perhaps-ness” is that councils have this wonderful opportunity—and there are two of them in this country that may or may not forge forward and take up the provisions of this legislation.

Hon Member

Who are they?

Hon Clayton Cosgrove Link to this

I do not remember their names, but I do remember that there are over 72 district councils across this country and two of them have said clearly to the Local Government and Environment Committee, and have written to me and said clearly, that they will definitely, maybe, take up this offer and are delighted to have this opportunity. That is good news for first-home buyers!

National, on the other hand, says we definitely will give people tax relief so they will have more money in their back pocket, because we understand that take-home pay is what pays a mortgage. National has said we will get interest rates under control, because we know that even a 1 percent interest rate cut on an average mortgage is worth about $40 extra a week, let alone a 2 percent interest rate drop, which would mean about an extra $80 could go towards a mortgage, so there is no housing pressure. On the one hand we have something that is in the ether and could happen. Some councils might take up the provisions of this legislation; if they do it is good luck to them, and if they change their minds, well, that would be like a lot of things promoted in it. On the one hand there is whole lot of uncertainty, and on the other hand the National Party leader is saying take-home pay matters and interest rates matter, and those are the things we would address first.

First-home buyers, those who are looking for a home, are under pressure. We know that property prices across the country have stabilised recently, and have in fact dropped in many parts of the country. But they are still at a point well above what most young people can afford. That is also true for elderly people who would like to own their own home in their retirement. What is the Minister going to do about that? I do not know. She may speak tonight. She may not speak tonight. She may change her mind after the debate has closed and discover that it is all too late. I do not know what the Minister thinks, and I wish she would take a call this evening. At least John Key says National will address the things that matter—the things that will affect all New Zealanders, whether they want to buy a house or have bought a house, and whether they are young or elderly. John Key will address the issues that matter, and those are ensuring that take-home pay can service a mortgage, and getting interest rates under control.

Of course, there is a bunch of other policies that we will be supporting, but we cannot support this legislation. We actually do not know what use it will be. We do know that it could force up the property price of every other house on a subdivision if a council does take up the provisions of this legislation. We do know that councils right across the country have opposed this legislation because they feel that it will add more costs to their own bureaucracy and therefore to their ratepayer base. We do know that many, many community housing organisations across the country are opposed to this legislation as well, for a variety of reasons. But we do not know whether, if this legislation does pass tonight, any council will take up its provisions and any first-home buyer will get any benefit from that.

In my earlier speech, I did point out one thing, which is that the genesis of this legislation actually came from the Queenstown Lakes District Council, which does this voluntarily. Developers and builders there voluntarily set aside some land or cash or cheap buildings, so that they can house nurses, teachers, police, and hospitality workers, for example, who would otherwise find it very difficult to afford housing in Queenstown. Affordable housing is provided on a voluntary basis down there, and that works very, very well, but the Labour Government feels it needs to legislate. Why does it need to legislate, if Queenstown Lakes District Council is doing it already? That is a question that the Minister could answer. Why legislate, when a council is doing this already on a voluntary basis in order to address a particular problem in a particular community in our country? Why legislate, and why does the legislation give councils so many choices that it means affordable housing may or may not happen? Why legislate on something that is already able to happen under the current law? At the moment we have a situation where, as I said, Queenstown Lakes District Council can provide affordable housing already.

I had an interesting email during the course of the debate, which I would like to read to the Minister. This is from a builder somewhere in New Zealand. He was quite fascinated by the speeches that have been coming forth from this Chamber this evening. I hasten to add that the only party whose members are making any speeches is the National Party. However, this is what this great New Zealander said: “Labour members do not want to acknowledge, or choose to ignore, that if you force developers and builders to provide low-cost sites, it will only force the price of other sites higher, thus reducing the affordability for other buyers. If you force builders to provide low-cost sections, it will only force the price of other sections up, thus reducing the affordability for other buyers.” Well, I could not put the situation more succinctly than that. That is the problem. Essentially, if district councils take up the opportunities available under this legislation—they may choose not to, but if they decide to go forward after, perhaps, doing some consultation with the local community—in fact that may end up driving up house prices in a district, rather than giving opportunities to first-home buyers in that district.

This bill is one of a number of initiatives that appear to have turned to custard when this Government talks about affordable housing. Members will recall the discussions about Hobsonville. This bill came out at the same time as an announcement that about 450 sections in Hobsonville would be available for first-home buyers. Those sections and houses will cost $350,000 to $370,000. People will require a household income of $70,000 to $75,000 in order to be able to purchase one. I remember asking the Minister, Maryan Street, in the debating chamber one day whether she thought that low to middle-income earners would be able to afford one of her so-called cheap homes in Hobsonville, if the home costs $350,000 and it would require a household income of $75,000 to service the mortgage, buy food, fill up one’s petrol tank, and buy a block of cheese. She said of course low-income and middle-income earners would be moving into the houses at Hobsonville. I argued that low to middle-income earners do not earn $75,000 per annum, and that is where the debate was left.

Perhaps the Minister could take a call and address that particular issue, because I am still intrigued as to whether she considers that a low-income earner does earn over $70,000 a year. My understanding is that low-income households earn nothing like $70,000 or $75,000 a year, and low to middle-income earners cannot afford to buy $350,000 houses, even if the Minister puts a sign on the house saying it is a good, cheap deal. Even if the Minister does put a sign on a house saying it costs $350,000, it is cheap, and it is a good deal, I tell the Minister that most New Zealanders will not accept that. They do not believe that. That is far out of reach for them.

So the Minister has a lot to answer for with regard to this legislation. She can tell us, first of all, why so many councils opposed it and why so few are supportive of it. She can tell us why it is voluntary. How is the Queenstown Lakes District Council able to provide affordable housing already? Why do we need legislation if that is, in fact, the case—or is she saying that council is breaking the law? And what is the answer to those builders out there who say, as this gentleman—or woman—so aptly put it: “If you force builders to provide low-cost sections, it will only force the price of other sections up, thus reducing the affordability for other buyers.”? What is the answer to that builder? I would have thought that what that builder says is, in fact, the case. Perhaps the Minister in the chair, Maryan Street, can answer those questions.

Street Hon MARYAN STREET (Minister of Housing) Link to this

I rise to take a short call simply because of the inanity that we have been hearing from members on the other side of the Chamber, which clearly shows that an understanding of the really significant issues around affordable housing seems to elude the Opposition members. John Carter said earlier that the significant word in this bill was “if”. He is absolutely right. The Affordable Housing: Enabling Territorial Authorities Bill is voluntary; it is voluntary for territorial local authorities. If it is not to be voluntary, then I would ask Mr Carter what the alternatives are. If it is not to be voluntary, then would the National prefer that it be compulsory? That is one of the options. The National Party says it would not like to make the legislation compulsory, and certainly we do not wish to make it compulsory, because we know the territorial authorities do not want that.

What other choices are available? If National does not want this legislation to be mandatory and does not want it to be voluntary, the third choice is to do nothing. And that is what I hear coming from the Opposition in every discussion about affordable housing. I hear it say we should do nothing about affordable housing. I hear the Opposition say we should do nothing about the people who, by now, ought to be in a position to be able to afford their first house, except that in the last 5 years the price of houses in the market has escalated by some 80 percent—80 percent. So a number of measures are required in order to make sure first-home buyers once again have a chance to get into the housing market. One of the options that has been put up is this bill. It is a voluntary bill; it does not mean that territorial authorities have to go into anything.

But I can give members a very good example, back—[Interruption] It is clear those members are not interested in answers. Mr Heatley asked a moment ago about whether this bill was relevant to the Queenstown Lakes District Council, which was in fact in the process of putting out affordable houses anyway. Well, I just draw that member’s attention to some current affairs that I would have thought one of his colleagues, the member for that area, could tell him about. However, she has not done so. The fact is that the Queenstown Lakes District Council is currently being taken to court by a developer for trying to do this kind of thing without having the legislative backing to be able to do it. Now let us hear some of the responses on that. Let us hear some of the ignorant comments that have come out from the Opposition be tempered with a little fact. This bill is needed because local authorities are actually being taken to court by developers for trying to provide affordable housing within residential developments.

In the brief time I have left available to me, I will give members a couple of other examples. I understand that Tasman District Council has recently voted against putting together an affordable housing plan, which it had voluntarily decided to put up to its council members. It has chosen to vote against that. Right next door, I understand the Nelson City Council has put aside $40,000 because it wishes to put a plan together. It is allocating some funding in order to put an affordable housing plan together. I would suggest that the Nelson City Council is likely to benefit from having an affordable housing plan, to the detriment of Tasman District Council right next door, which may choose not to have such a plan.

If councils have that opportunity and that choice, then where is the Opposition’s problem? I will tell the Committee what the problem is: we need more affordable housing in this country. And one of the things needed in order for that to happen is this bill. Tax cuts will not do it. The tax cuts proposed by the National Party will be eaten up by Maurice Williamson’s tolls on roading every week.

Bennett DAVID BENNETT (National—Hamilton East) Link to this

When we hear that weak Minister in the chair, the Hon Maryan Street, talking about doing nothing, we can look at this legislation and see that the Labour Government has taken 9 years to put forward legislation on affordable housing. It has taken 9 years, at a time when New Zealanders have had a housing market they have not been able to be in. They have not had the opportunity to buy the Kiwi dream, to set up a family home for their children, and to partake in the capital gains that they would get as members of the home-owning community, and this Minister puts forward this legislation in the last week of a dying Government. Well, that is simply not good enough. If the Minister wanted to help those people, and if she wanted to provide affordable housing, then she should have done it a long time ago. If she had done it a long time ago, the Government would have worked out what actually makes the difference in affordable housing.

The Government does not understand the difference between income and equity. The Government of the day believes that if it gives equity advances, it will assist people into housing. Well, the reality is that the biggest thing dictating whether people can get a loan and, therefore, whether they can get a house is the income ability of the individual or the family. The ability to service a debt is the key ingredient in getting a loan. People can go and borrow 100 percent from a bank if they want to, but the Government of the day believes it is about the equity people put into the purchase of a house, not their income-earning ability and their ability to repay the loan and pay the interest on their debt.

That is the difference between National and Labour. The National Party understands business. We understand that if one has income in the hand, then, as a member of the community with that income, one can go out and buy a house. If a person is just given capital commitments, then to a large extent it will not make any difference to his or her ability to purchase a home in the current environment.

When we look at the current environment, we see that the Labour Government has done one thing to make housing affordable in New Zealand—it has destroyed this economy. It has absolutely and criminally destroyed this economy to make sure that we are in recession at a time when we should be growing. With that recession, the housing market has declined, and it is making houses affordable through its economic mismanagement of the New Zealand economy. That is the reality of what is going on out there.

But the great thing about that from Labour’s point of view is that the Government is also taxing those hard-working New Zealanders who need some income in their hands to take advantage of the lower market. And what is the Government doing? The Government taxes individuals and families, meaning that they cannot go out there and purchase properties, because all their money is going towards paying for the Government’s promises at election time—promises brought in to try to win election after election.

Government members do not care about affordable housing. They do not care about New Zealanders getting in there and buying their first home. They do not care about families having an asset that they can all treasure and build upon. All they care about is promises that they can go out to an election campaign with—false promises based on equity and not the income ability of an individual or family.

That is the point of difference between the parties, and that is why New Zealanders are struggling to get into homeownership. The answer to that problem is to have a strong economy, and only National will deliver that. If we have a strong economy, then we can deliver strong and successful wage increases, and that gives individuals and families the ability to go out and purchase properties. Without a strong economy, individuals and families do not have that ability to purchase. They stagnate, just like their country is stagnating under this Government, and the people of New Zealand find that they cannot access homeownership.

Affordable homeownership is more about how one runs an economy than about how one actually dictates the rules of the game. It is about how one gives New Zealanders who want to purchase their own home a chance to go out and do it themselves. That is the real nub of making housing affordable in this country, as it is in any other country. The Government will not, though the whim of a piece of paper, make housing affordable. That is why this legislation is all a lot of ifs, maybes, buts, whatevers, and whoevers, and nobody is taking it on board, because the reality is that the market, the councils, and the individuals know that they need income streams to have affordable housing.

Carter JOHN CARTER (National—Northland) Link to this

I recently heard somebody say that this Labour Government had done a lot for health. I thought that was an interesting observation, so I asked the person to explain. The reply was: “It has. It has made lots of people sick.” Well, I thought the person had probably got it right.

I heard the Minister in the chair, the Hon Maryan Street, just say that she wants to do something for people so that they can have more affordable housing. Well, the sad thing is that this bill will actually distance people from that objective. That is what is disappointing about this legislation tonight.

Earlier, during the debate on Part 1, we heard a very good dissertation on clause 6, about the fact that what we are doing and what we should be doing is working with industry to see whether we can provide good but small and less costly homes—affordable homes that are not so pretentious but are still secure, dry, safe, warm, and healthy, though maybe of a smaller size. The Minister in the chair at the time suggested that starter homes be two-bedroom homes. There is nothing wrong with that. In our generation a number of us started that way.

There are companies around that are prepared to provide those sorts of homes. In fact, a company up north is starting off with a house that will have three bedrooms but will not be large. It will have all the facilities and will be warm and dry, and it will probably be put on the market for about $120,000. By the time the cost of a section is added in, it will be somewhere between $180,000 and $200,000. That is within reach of a lot of people. We heard a very good dissertation on that.

Then, in the debate on Part 2, we heard a very good dissertation on clause 42 and the issue around the word “if”. I know that we had that dissertation, because I made it. Both dissertations were very good, I have to say.

But the disappointing thing is that this whole issue is likely to move us further away from the objective rather than achieve the goal the Minister wishes to achieve, which is to make housing more affordable. If we could have argued here tonight that this bill in itself would somehow or other allow young families or those who are starting families to get into their first home, and if this bill gave them that step, then we could support it. We could actually say that, yes, there is merit in it.

Remember, it is not something that local government has to do; it is an option, and so far I think only two have suggested they might take an interest in it. One is led by Bob Harvey, the Mayor of Waitakere City, who is inclined to support Labour Government legislation. Only two local authorities might get involved—and there are only two that might. That means that nothing will be achieved other than that some people will have their expectations heightened because they will think the Government has put through a bill that will make housing more affordable.

If this legislation is implemented, it will actually put on more cost on; it will not take cost away. We would happily have worked with the Minister and the Minister for Building and Construction to take away compliance costs. We heard tonight that it is estimated that the cost of getting a permit to build a home is now, on average, about $25,000. Just to get a section with all the costs around resource management and other costs is about $50,000. That is before starting to build—just in compliance costs. That is a total of $75,000. We would happily have worked with the Minister to see how we could reduce that. We would have worked constructively with her and her colleagues to achieve that, because $75,000 is a lot of money for a lot of young people—for most people, actually.

We would quite happily have worked away with her, and local government would have come to the party to see how it could help reduce costs. Already there are ways in which that can be done, but, unfortunately, this bill does not address any of that. All it says is that if local government wants to it can consider affordable housing, and if it wants to it can include it in its long-term council community plan. If it wants to it can do an assessment, and if it wants to it can talk with developers. Well, actually, local government has the opportunity to do that already. This bill will not achieve any of that.

Groser TIM GROSER (National) Link to this

In some respects I have some sympathy for the position the Minister is in. She has just been appointed to this position recently, after God knows how many disastrous predecessors. She has inherited a problem, the roots of which are deep and substantial, and she has been told to come up with legislative sleight of hand masquerading as a substantive solution. Frankly, the time left for a substantive solution to the things actually driving this problem has long since disappeared. What we have left is a political fig leaf, and it will not cover the reality of the problem the Government will confront when, finally, it is forced to confront the electorate and face the decision of the New Zealand people as to who is to govern them for the next 3 years.

We have, with this bill, an empty vessel, almost wholly without content. Let us look at the language. It is childlike in its simplicity. We have bold, declaratory language leading absolutely nowhere. Clause 6(1) is my favourite—“Territorial authorities that want to find out whether there is enough affordable housing”. I have never heard anything more childlike in its simplicity than that clause. Clause 8(1) states: “A territorial authority that decides to assess the need for affordable housing … must choose the method”. Well, what on earth would it do? I have never seen anything so amateurish, so childlike, and so thin. But, of course, I understand the problem, because the roots of a solution would have had to be taken years ago by this Government, and this Minister, who is in the unfortunate position of receiving a suicide pass on an issue of fundamental importance to the New Zealand people, has come up with a completely empty vessel.

Let us examine what the real problem is and put some numbers around it. In 1999 a median-priced house in our country cost just over six times the median wage. By 2006 this cost had catapulted to 10 times the median wage, and it is higher today. In 1999 it took 42 percent of the average pay to service a mortgage on the median house price. Today it takes around 81 percent, and that is after people have saved 20 percent for the deposit, which, of course, by definition is a larger sum of money. It is no wonder that New Zealand is now one of the least affordable places in the world to find a house.

If members of this Government think that this political fig leaf, this legislative sleight of hand, that they are forcing through in the dying days of this Parliament [Interruption]—under urgency, I say to Mr Cosgrove—will fool anyone, then I say to them that the only people it will fool, I am afraid, are themselves. They will find this out the hard way on the hustings in a matter of weeks. The day of reckoning is right before them, in all their electorates—

Bring it on!

Groser TIM GROSER Link to this

—including Mr Cosgrove’s.

The Minister said that this bill is voluntary, and she asked what the alternative is. I will tell the Minister what the alternative is. The alternative has nothing to do with this approach. The alternative has to do with coming to grips with high interest rates. What has driven high interest rates? It is an inflation rate that has been divided up into two sectors for the last 5 years—the traded sector and the non-traded sector.

The one thing the Government had control of, if it had wanted to attack the roots of this problem, was non-traded sector inflation, which has been nearly above 4 percent for 5 years. But that would have meant tackling the gorilla in the room—the role of the Government—and tackling the need to do something to reverse the disastrous slide in productivity that is behind this problem. Having seen the Government do nothing on that front for 5 years, we now see, entering from stage left, a massive inflationary injection from the traded sector, which—up until now—with the higher exchange rate we had, and with constant price depreciation from the manufacturing plants of China, helped to contain inflation. But it has now gone berserk in the opposite direction. We now have imported inflation adding to the additional problem that this Government never tried to resolve and never tried to get on top of. These are the real solutions to the problem, not this phoney legislation.

Fenton DARIEN FENTON (Labour) Link to this

I move, That the question be now put.

Goudie SANDRA GOUDIE (National—Coromandel) Link to this

I am delighted to be able to take a call. I was appalled by the Minister’s previous speech to the Committee on this bill. It alarmed me in the sense that if councils can do this already—address the problems of housing affordability—then they should be left to it. We do not actually need legislation to say to councils that if they want to do this, they can. That is just an absolute nonsense.

The Minister then said, in terms of the affordable housing scheme, that if a council has a scheme, then all the developers can be blackmailed by that scheme to participate. When we start looking further into this bill, we see that it gets worse and worse. If developers thought things were bad now—and when I say “developers” I mean people who want to do the business of providing housing for our many, many communities in their own way, and that is a worthy endeavour—they can see that we are now putting in place yet another hurdle for them.

I direct members to clause 34. You know, if developers are scared, they will be even more scared by all this. In the event of a dispute it will be the Environment Court that decides. Clause 34(1A) states: “This section applies to a person described in subsection (2) if the person considers that there is a conflict”. Subclause (2) is headed: “The persons are—”, and the list includes the Minister for the Environment and the Minister of Housing.

Well, we know what it is like when a Minister suddenly gets pulled into a consent process dispute. We need only look at the Whangamata marina to see what a mess the Minister of Conservation made of that, and here we have the potential for that same event to happen again, with the Ministers not being able to help themselves and making matters worse by poking their noses in. The mere fact that the Environment Court will decide the outcome in the event of a conflict means that the affordable housing scheme just gets worse and worse. If a council has one, and if people want to build houses for their communities, they should look out, because that will really bite them where it hurts.

I refer members to the commentary on the bill. We talked about ifs—that is, the fact that adopting a scheme is optional. The fact that the Minister says “if” makes it voluntary. If it is voluntary, and councils can do it now if they want to, why do we need legislation? It is absolutely dumb, and the Minister just does not get it. The public gets it. Both Phil and I have received emails and texts from people saying: “We hear what you’re saying. Good on you. Go for it. How dumb can they be?”, and we totally concur with those sentiments. We are getting those sorts of emails and texts now.

When I was reading out some of the parts of the commentary on the bill earlier on, we talked about the provisions with regard to GST. The Minister said that the bill “should” reduce compliance costs. Well, hello—talk about hopeful and wishful thinking! It “should”, or maybe it will, but we do not think so. Quite frankly, this bill will do nothing but increase compliance costs. When we look at the consultative processes that local authorities will have to go through just to provide an affordable housing scheme, we see that the costs are absolutely huge. Local authorities have to do a full cost-benefit analysis, apart from all the other things they have to do that are set out in the different parts of the bill. It will be another huge cost on local authorities to get that expertise in order to pull all that information together.

Hon Clayton Cosgrove Link to this

Have you written this speech on your cast, Sandra?

Goudie SANDRA GOUDIE Link to this

Perhaps that Minister might like to take the opportunity to read the bill, and maybe to develop a bit of an understanding of it, because the Minister of Housing has absolutely no idea of the definition of a compliance cost. If she did, she would know that all this bill will do is add compliance costs.

This bill does not address the cost of a resource consent, the cost of a building consent, or the cost of development contribution fees, and it does not address the fact that most of that has to be paid up front. The people who are contacting us are talking about their own experiences. Ordinary mums and dads, as someone said, might want to build a hen house, a carport, a garden shed, or even a deck. It just gets worse and worse, and here we have a Minister who is totally ignorant about what compliance costs actually mean. This is something that Minister Cosgrove might like to focus his mind on. He might like to take a bit of notice of the actual bill.

Sio SU’A WILLIAM SIO (Labour) Link to this

I move, That the question be now put.

Hayes JOHN HAYES (National—Wairarapa) Link to this

Thank you, Mr Chair—

Hon Clayton Cosgrove Link to this

Here’s Sir Les Patterson.

Dalziel Hon Lianne Dalziel Link to this

It is Les Patterson if the member likes, but I tell Mr Cosgrove that this bill is theatre. It has no substance whatever. It is theatre. It is absolute arrant, childish nonsense. The Minister in the chair, the Hon Maryan Street, should be ashamed of herself, and her officials should be ashamed of themselves, for bringing this rubbish to the Committee and expecting us to be sitting here debating it. It will change nothing in this country. It will not deliver one affordable house to one person in New Zealand, and the Minister has wasted the cost of building an affordable house with all the costs of putting this rubbish together.

This bill is, in the Minister’s words, voluntary. Well, it is not as voluntary as she thinks it is, and let me explain why. If one develops a piece of land from nothing, the first thing one has to do is to go to the council and apply for a resource consent. Then that has to be advertised, and huge costs are associated with doing that. Then once one gets through the consultation process and secures the resource consent to subdivide, one has to bring in surveyors, architects, and electricians to provide underground services and lighting. Then one has to provide sewerage, curbing and channelling, and macadam. All those things amount to a very high cost. On top of that, the existing law requires one to pay a contribution to roading and a contribution to the amenities. Now clause 23 in this bill is proposing that developers can have additional costs imposed upon them, and the Government is to price all the constructions it is wanting to bring in to reduce the cost of housing.

All the Government is doing is putting up the price, because if it imposes a cost on a developer, he will pass it on. So if, as this bill provides, local authorities can start imposing additional costs upon developers on the basis that they may have to make so many houses in a particular development affordable houses, then all that is doing is creating a cost to be passed on.

The way to make house affordable in this country is, first of all, to get rid of the Resource Management Act and its Draconian elements. The Resource Management Act is OK to a point, but it needs significant changes.

The second thing that needs to happen is that the Government needs to encourage councils to back off on the requirement for building plans, because just to apply for a building consent requires a minimum payment of $7,000. Who told me that? Builder Dave Borman told me that in Masterton last week. It costs $7,000 to get the proposal to the council. Then the council will get engaged in the process. It will want engineering reports, and they cost money, and it will also start to engage in a whole lot of other rules and regulations that come from the long-term council community plan.

Clause 24, “Who may object to what” [Interruption]—the member may object to that—states: “(2) A person to whom notice is given under section 22(2)(a), ie, a person doing a development,—(a) may object to the decision on any ground; and (b) may object to a provision in the territorial authority’s affordable housing policy on any ground.” All the Government is doing is setting up in this legislation more confrontation between people in the community who want reasonably priced houses and the local authorities that the Government is dumping more rules on through this legislation. I can tell members that, because I have five district councils in my electorate and they do not want more nonsensical legislation imposed upon them. All the Government is doing is cluttering an already overburdened system that is not working.

It is not mandatory.