Advocacy in a Nutshell | March 2019

Welcome to the March edition of Advocacy in a Nutshell; the latest update from our advocacy team, featuring all of the projects, policy and issues that matter to you.

This month we're giving you a brief overview of our advocacy in action from the past year as well as key dates for the impending annual plan season and a quick overview of the Auckland Annual Plan's key policies for members.


Advocacy in action

- 2018 IN REVIEW - 

  • The Overseas Investment Act (Residential Land) provided a busy start to 2018, outraging members and resulting in a solid submission to the Select Committee which resulted in a substantially modified Act that took many of our members more pressing concerns into account. Direct engagement with the Overseas investment office led to them coming to talk to members to inform their thinking ahead of formal consultation on new changes affecting commercial property.  That public consultation is expected mid-this year.
  • The Tax Working Group dominated headlines, with huge potential costs and benefits to our membership. Our two written submissions made our case well around capital gains and depreciation.  The first submission was well-balanced and got us a great in person hearing with the Group.  The evolution between the submissions set-us up well.  Great use of members (in an internal working group) and KPMG for technical detail which we crafted into a persuasive summary submission – both catered to different members of the TWG.  With the TWG final report now out and recommending a capital gains tax, Property Council's advocacy has shifted to arguing why what has been proposed will damage businesses, the economy and negatively affect Kiwisaver.
    >> Check out our Tax Working Group scorecard
  • Local Government Well-beings - Our middling approach in supporting re-introduction of the four well-beings (one of the few business groups to support it) but opposing their extension to development contributions is a good opening skirmish in local government funding and system reform expected in 2019.  Already in March this year, Property Council has submitted on that as part of the Productivity Commission's Inquiry into Local Government Funding.
  • Our informal engagement with central government, while less visible has been busy and more importantly has set us up well for what is likely to be a busy 2019.
  • Long-term Planning System Reform stepped up a gear and has reached a tipping point.  The Resource Reform stakeholder workshop made a name for us and support of EDS’s work brands us a thought leader in the space.  The Government is now pursuing a work programme in this space – something we only dreamed of in 2017.
  • Fire levies – We are being listened to, finally.  The Government process has slowed down to do more work and further consultation.  While the emphasis is on trying to make their existing decisions work, the door was opened a crack to re-looking at the whole system, even if it is a narrow crack.  Engagement with Minister Tracey Martin in her office and at functions has worked for us.  And our work has continued in 2019.  In February this year, we presented to the parliamentary Select Committee considering the levy.
    >> Check out our most recent update on fire levies
  • Urban development – a lot of ground work with MBIE and the Minister was done on this issue, building on the formal submissions we made in 2017.  The fact the (not so) new Government will continue the previous Government’s idea of legislating UDAs is good, albeit with a new focus.  We are on the informal working group on quality urban intensification which will probably lead to a new NPS that will affect our developer members.  2019 will be a busy year getting the urban development details right so it works.  A formal Government Bill to make Urban Development Authorities law is expected to be consulted on in late 2019.
  • KiwiBuild – not as active as we might have thought at the beginning of 2018, but partly because the Government has realised what we all already knew this is a complex area that will take time to get right.  Implementation of Property Council members’ idea of “buy-off” the plans was positive – even if KiwiBuild is yet to really deliver.
  • In the regions we posted 24 submissions and spent months trawling through Long-term Plans to uncover hidden gems/landmines. We submitted on plans in Auckland, Rotorua, Tauranga, Hamilton, Waipa, Waikato District, Wellington, Christchurch and Queenstown. 
    Highlights/headlines were:
     - Hamilton – outrageous proposed rates increases wound back.  Good collaboration with the branch executive and oral submission to Council backed up by individual submissions (many high-powered) from members including corporate members.
    Tauranga – introduction of a business rates differential happened by much lower than proposed due to really coordinated advocacy – great research, solid rationale argument in written submission, a PR campaign and multiple submissions from members and non-members (many using a Property Council ‘template’).
    ​​​​​​​ - Queenstown – Not the best public policy comes out of the Council.  We pitched our submission just right balancing constructiveness and criticism and used our council contacts and LGOMIA.  It caused friction with some in Council, but got them talking to us in a constructive way.
  • Development contributions – Our “happy to pay our fair share” message gives us the moral high-ground and has worked. Auckland the obvious example but it was a lot of work – five submissions in fact – and numerous meetings at all levels of Auckland Council.  The big back down a real victory for our advocacy. Hamilton continues to prove inflexible no matter which tack we take – but it is backfiring on them as developers seem to be walking away and taking their money with them.
    >> Check out our latest update on the Productivity Commission's Inquiry into Local Government Funding and Financing
  • District plan reviews –  A good high-level submission on Waikato District’s plan review.  Tauranga / Bay of Plenty SmartGrowth need to be more ambitious to ensure development keeps pace.  More district plans are likely to come up for review in 2019 and 2020.  Watch this space.
  • Geographically local issues drove some of our work – priority ‘corridors’ for earthquake prone buildings in Wellington and Christchurch, Auckland regional fuel tax and Getting Wellington moving.

 


Annual Plan season

It's that time again! Councils around the country will be asking people to give feedback on any proposed changes to major projects, strategic decisions or essential spending on infrastructure and services. 

Auckland Council Annual Plan initial analysis

Senior Policy Advisor Jane Budge gives us a quick overview of the Auckland Council Annual Plan and Property Council's position on the proposals:

  • Recommending in investing in the City Centre and Waterfront and preparing for the America’s Cup and APEC. Support. 
  • Keeping rates at Long-term Plan (LTP) levels and continuing reduction in the business differential, regional fuel tax and targeted rates for water quality and natural environment.  We supported though LTP and remain very supportive.  Business differential in-line to reduce to 2.79 in line with the strategy. Support. 
  • Proposing increasing resource and building consenting charges including: 
    - Bundled consent deposits 
    - Tree consents
    - Boundary adjustment (unit title and cross lease), and others 
    - Lapsed/refused building consent,  
    - Waiver/modification of building code,  
    - Extensions of time to start building work, and 
    - Solid fuel heater/injected wall application, and others. 
    Do not support. Suggest insufficient analysis and evidence is given to justify increases. 
  • A major change to the LTP proposed.  Proposing to re-vest Panuku’s properties into Council due to tax changes coming into force on 1 July 2019.  Proposal suggests: 
    - Significant taxes of about $200 milion.  
    - Transfer costs of about $300-500K in legal and administration costs etc. 
    - $10 million operational annual costs for Panuku included.  However, there is a lack of analysis and justification as what this entails. 
    - The strategic decision-making authority will also be transferred back to Council which could lose momentum and leadership held by Panuku.   
    - Local government land is not subject to taxes, only companies (CCOs) held by Council. 
    - Changes to tax are included in the Taxation (Annual Rates for 2017-18, Employment and Investment Income and Remedial Matters) Act 2018.  This includes changes to the consolidated income tax group rules where dividends from CCOs in groups are now taxable.  Council has its CCOs consolidated into a group (ACCG) and will now be taxable.  PWC has estimated based on current land values both Ports of Auckland (POAL) and Panuku, at approximately $1.398 billion, and taxes of about $391 million. This will offset against Watercare losses of approximately $257 million.   
    - This all needs to be tested with IRD as IRD has the power to challenge this approach where it is clearly a move for tax avoidance.  
    Further information is required before adequate position is determined. 

Should you have any questions or wish to add your voice to our submission, please contact Jane Budge.

 

Annual Plan key dates

Some councils around the country will be asking for feedback on their 2019/20 Annual Plan. Property Council will be assessing how different the Annual Plans are from the 2018 Long-term Plans to determine whether we need to make a submission. We will prioritise those submissions where changes will most affect Property Council members.

It is important to note that not all councils are requesting feedback on their Annual Plan. Under the Local Government Act if an Annual Plan is not significantly different from the Long-term Plan, consultation is not required. This is currently the case for Hamilton City Council and Waikato District Council. 

Please contact Katherine Wilson should you have any questions, wish to add your input to a submission or discover Annual Plan changes that warrant a submission.  

Please find below the upcoming dates for Annual Plan submissions:

 Annual Plan

 Closing date

 Auckland Council 17 March
 Christchurch City Council 1 April 
 Queenstown Lakes District Council 12 April
 Tauranga City Council 20 April
 Wellington City Council 29 April
 Dunedin City Council TBC

 


Author | Matt Paterson

As Property Council's Head of Advocacy, Matt leads our team of advocacy advisors, researchers and public affairs experts. Based in Wellington but frequently found in all corners of the country, Matt has his finger on the pulse of central government, providing valuable insights for our membership and acting as the conduit between our members and the country's movers, shakers and policy makers.

Get in touch here.

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