Property Council New Zealand has welcomed the Government’s latest announcement on its new development levies system, saying the reforms have the potential to deliver a fairer, more transparent way of funding the infrastructure needed to support growth.
The changes include independent regulation by the Commerce Commission, development levies for core Crown agencies, more targeted levy areas and a staged implementation pathway through to 2030.
“For too long, development charges have been unpredictable, inconsistent and, in some cases, disconnected from the infrastructure they are supposed to fund. Today’s announcement is a significant step towards fixing that,” says Property Council New Zealand chief executive Leonie Freeman.
“Growth should pay for growth, but the system also needs to be fair. That means independent oversight, the Crown paying its share, and developers having confidence that what they are charged bears a reasonable relationship to the infrastructure their development actually requires.”
Property Council has advocated for all three measures over several years.
An independent umpire
Central to the reforms is the appointment of the Commerce Commission as independent regulator of the new development levies system, backed by $30 million in funding through to 2030.
“Having an independent umpire is a big deal,” Freeman says. “Councils are effectively monopoly providers of much of the infrastructure that development levies and ratepayers help fund, so it is important that councils are making smarter, evidence-based decisions about the infrastructure needed to support growth.”
“Development levies can add significant cost to a project, so there needs to be confidence that charges are transparent, consistent and justified. Independent oversight gives both councils and developers clearer rules to work within.”
Crown developments will contribute
The reforms will also require core Crown agencies, including the Ministry of Defence, Ministry of Education and the Ministry of Health, to pay development levies for the first time.
“Growth should pay for growth, whoever is doing the growing,” Freeman says.
“If a Crown development, like a school or a hospital, creates additional demand for roads, pipes and other local infrastructure, it is only fair that it contributes to those costs. Private developers have been doing that for years. Applying the same principle to Crown development closes a long-standing gap in the system.”
Levies should fund the infrastructure that creates them
Property Council also welcomes the requirement for councils to establish smaller, infrastructure aligned levy areas where infrastructure costs differ substantially.
Freeman says this could be one of the most important changes for developers on the ground.
“The principle is pretty simple: if you’re paying a levy, there should be a clear connection between your development and the infrastructure you’re being asked to fund.”
“Our members have seen charges collected in one growth area contribute to infrastructure somewhere else entirely. More targeted levy areas should reduce that cross-subsidisation and create a much clearer line between the development, the charge and the infrastructure delivered.”
Certainty is critical
The Government has also confirmed a staged implementation pathway through to 2030, with enabling legislation expected to be introduced in early 2027.
“Property is a long game. Projects are planned, financed and delivered over many years, so uncertainty has a real cost,” Freeman says.
“Having a clear pathway gives the sector something it has been asking for: the ability to plan ahead.”
Property Council will continue to engage through the select committee process and consultation on levy calculation methodologies and disclosure requirements.
Freeman says while the direction of travel is positive, the detail will ultimately determine the success of the reforms.
“The test is whether we end up with a system that is fair, transparent and actually helps New Zealand deliver the infrastructure needed to support growth.”
“Today’s announcement gives us a strong foundation. Now we need to get the detail right.”
ENDS