Today’s release of the Government’s exposure draft for a new development levies system represents the most significant rethink of infrastructure funding in more than two decades. It is a welcome step toward addressing one of the biggest barriers to New Zealand’s housing supply: how we pay for and deliver the essential infrastructure that enables growth.
For too long, development contributions have been a source of frustration for both industry and councils. They are unpredictable, inconsistent, and often fail to reflect the true cost of infrastructure needed to support new homes, communities, and businesses. When development contributions fall short, ratepayers pick up the bill and councils become hesitant to free up additional land for development. When they are too high or volatile, development simply doesn’t proceed. In both cases, housing supply suffers.
That is why today’s announcement matters. It signals that the Government is serious about tackling the fundamental issues that sit beneath our housing crisis. The planning system can remove barriers to zoning and density, but without the pipes, roads, water networks and transport links to support that growth, planning changes mean very little. Infrastructure is the backbone of urban development and improving the tools available to fund and finance it is essential if we want affordable, sustainable growth.
The move from development contributions to a new development levies system has the potential to provide much-needed consistency and transparency. Developers need a system that is predictable and fair. At present, development contributions vary widely across councils and can change without warning. A national framework with clearly prescribed methodologies, levy areas and oversight mechanisms could improve certainty for everyone – industry, councils, and homebuyers alike.
However, the detail will be everything. Levy areas must reflect real infrastructure catchments, not arbitrary boundaries that mask the true cost of servicing growth. The development levies methodology must not inadvertently drive up costs or undermine development feasibility. Our members want to see a system where charges reflect actual infrastructure demand, high-cost areas are treated fairly, and councils are incentivised to deliver infrastructure efficiently.
One positive development in today’s announcement is the Government’s in-principle decision to use the Commerce Commission as the independent regulator for development levies. This is an encouraging step. Development levies involve significant cost and risk, and independent oversight will help ensure charges are fair, consistent and grounded in genuine infrastructure need. The challenge now lies in ensuring the regulator has the right mandate, capability and engagement with the sector to operate effectively.
We also welcome improvements to the Infrastructure Funding and Financing (IFF) Act. Despite its promise, the IFF model has been underused, with only two levies established to date. By simplifying the Act, removing unnecessary hurdles and broadening the scope of eligible projects, the Government could unlock new opportunities for private-sector investment in infrastructure and deliver more homes faster.
But while the direction of reform is positive, we must proceed with caution. Expanding levy areas and shifting toward an aggregated cost model could result in higher charges in some locations, particularly where networks are already stretched. If levies increase without corresponding improvements in efficiency or infrastructure delivery, development costs will rise—and ultimately, so too will housing costs. Affordability must remain front and centre. A system intended to enable growth must not inadvertently make it more expensive.
Industry needs reassurance that this new framework won’t become a mechanism for loading historical or unrelated costs onto new development. Strong guardrails, transparency and a clear link between levies collected and infrastructure delivered are essential.
For these reforms to work, Government must continue to listen to those who build our cities every day. Developers, councils, iwi, and communities understand the practical realities of delivering housing at scale. Their insights will be vital to ensuring the new system is workable, efficient and fit for the future.
The property sector stands ready to partner with Government to get this right. With the right settings, these reforms can remove some of the biggest blockers to urban growth and help deliver the homes and communities New Zealand needs.
> Read the consultation document
Author | Leonie Freeman
A well-respected industry leader, Leonie has extensive experience in the New Zealand property industry, having held top positions in both the public and private sector. From creating the concept of what is now realestate.co.nz, to buying and transforming her own residential property management business, helping establish the new Auckland Council, and managing asset development for Housing New Zealand, there’s not many areas of property that Leonie has not touched.
In 2011, Leonie was appointed to the board of NZX listed company Goodman Property Trust, and up until her 2018 appointment as Property Council’s Chief Executive, she dedicated her time to leading an independent philanthropic initiative to solve Auckland’s housing crisis.
Leonie holds a Master of Commerce, majoring in valuation and property management and is a life member of the Property Institute of New Zealand, a chartered member of the Institute of Directors, and a member of Global Women. In 2017 she was awarded the Property Institute’s Supreme Property Award, and the Property Council Auckland Property People Judges Choice Award, and in 2020 she received the prestigious Bledisloe Medal from Lincoln University.