New Zealand: Chance to re-write development contributions regime

Brief Counsel

Download article: Chance to re-write development contributions regime

Big changes to the development contributions regime are offered in a discussion paper released by Housing Minister Nick Smith and Local Government Minister Chris Tremain at the weekend.

Proposals range from tweaking the existing system to abolishing it altogether and replacing it with an infrastructure levy or greater use of infrastructure bonds.

The Government is under immense political pressure to increase housing affordability so this review may deliver significant change.

Submissions are due by 15 March 2013.

Case for reform

Development contributions were identified as a factor in pushing up house prices by the Productivity Commission in its Housing Affordability Inquiry, a Chapman Tripp commentary on which is available here.

Problems identified with the current system, both by the Commission and in the review, are the lack of transparency regarding how the charges are calculated and the wide variation in how (and if) contributions are charged and in the amounts charged.

  • Only 45 of New Zealand's 65 territorial authorities apply development contributions (regional councils are not authorised to charge them but can charge financial contributions under the Resource Management Act).
  • Usage is highest for water and wastewater (43 councils of the 45) and lowest for community infrastructure (29) and reserves (25).
  • Average total charges across all services (community infrastructure, reserves, roading, and the three waters) ranged in 2012 from $249 per housing unit equivalent (HUE) to $64,489.

Development contributions can be charged by local councils to recoup some of the capital costs of providing infrastructure services to support new property developments. They can only be charged on growth-related infrastructure investment – not on quality upgrades, maintenance or operational costs.

Reform proposals

The proposals are grouped according to how easy they would be to implement – both legislatively and by councils on the ground.

Low end effort

Those changes which could be easily implemented are:

  • to improve council practice and consistency by updating guidance on how development contributions should be applied (this might include increased training and the development of a set of principles to guide use), and/or
  • tweaking and bringing together the existing provisions in the Local Government Act 2002 (LGA).

Medium effort

  • Amend the LGA to explicitly enable discounts on HUE charges to encourage more affordable houses and housing on Maori land – for example, charging a two bedroom house at 66% of the normal HUE charge and waiving charges for papakainga housing. A waiver policy in Ottawa to encourage inner city development in 1994 was estimated to cut $10,000 off the price of a new residential unit.
  • Inserting a purpose and principles statement into the LGA. This could:
    • clarify that development contributions are a charge related to the infrastructure demands created by growth
    • clarify that they can relate to the marginal costs of growth
    • incorporate more explicit direction around the need to consider both the cause of the demand on infrastructure and who will benefit from it when setting contributions, and
    • clarify the extent of consultation required when developing contribution policies.
  • Making more explicit the ability of councils to enter agreements with private developers for them to build and operate infrastructure. Such privately provided infrastructure might not need to match the standards the council would provide but the council would not be legally obliged to accept responsibility for it unless and until it was brought to council standard. The discussion paper cites the Hobson Point project where the developers were able to cut their development contributions by agreeing with the council to provide parks and stormwater infrastructure.
  • Reducing the range of infrastructure that can be funded from development contributions to reflect more closely the benefit to the wider community and whether the item is a public good or a private good. Sub-options could include:
    • only charging contributions on network infrastructure
    • clarifying that network infrastructure contributions can be charged only for headwork and trunk services
    • restricting the use of contributions for reserves and community infrastructure to facilities designed for use by the local community rather than the wider community (which is more appropriately funded through rates)
    • Queensland, Western Australia, South Australia and Tasmania exclude public transport, libraries, community centres, recreation facilities and sports grounds and New South Wales limits reserve and recreational contributions to local parks and to facilities which serve a particular development site or precinct.

  • Making contributions payable only upon the issuing of a building consent or the authorisation of a service. A sub-option may be to allow a council to require a development contribution at the time of subdivision but to postpone payment until the section or houses are ready for sale.
  • Capping development contributions. This might include:
    • allowing the Minister of Local Government to authorise cap breaches in exceptional circumstances
    • setting caps for particular types of infrastructure
    • indexing the cap to the Producers Price Index, and
    • providing a differential cap to recognise differences in house size, location or land ownership.
  • Independent dispute resolution hearings. The review asks whether this should be restricted to points of process or whether it should go to points of merit. Currently the ability to challenge decisions is limited to seeking a judicial review or declaratory judgment in the High Court – an expensive, limited and uncertain process.
  • Reinstatement of appeals to the Environment Court (this could be used in place of the dispute resolution mechanism above or in addition to it).
  • Regulations to promote greater consistency. These would provide more detail on what types of infrastructure contributions can be charged, the timing of particular charges and the format and content of development contribution policies.

High end effort

Three proposals requiring radical change are offered.

One: implement a percentage based infrastructure levy as an alternative financing tool. This would be based on the anticipated value of the completed development work with a maximum rate set through regulations and authorities able to charge different rates up to this ceiling.

Two: abolishing development contributions and instead relying on a mix of rates, targeted rates, user charges and financial contributions under the RMA.

Three: making wider use of infrastructure bonds with the bond principal and interest costs recovered from the purchasers of the new sections or properties. This facility is already available to Auckland Council and to the Local Government Funding Authority.

Steps from here

Development contributions were first introduced in New Zealand in 2002 and are a significant and growing cost of doing business for property developers. They can also be a major irritant and source of uncertainty.

This is the first time that they have been reviewed since their introduction and we do not know when they will next be reviewed so it is important to make the most of this chance.

The information in this article is for informative purposes only and should not be relied on as legal advice. Please contact Chapman Tripp for advice tailored to your situation.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions