Monday, February 11, 2013

Subsidising developers

So, the government has its answer to the housing crisis: subsidising developers, by forcing everyone else to pay for their costs. Not that they're putting it in those terms, of course; insted they're talking about capping development levies:

A cap on local authority levies adding as much as $64,000 to the cost of a section is among the options the Government has put out for consultation.

Housing Minister Nick Smith and Local Government Minister Chris Tremain announced yesterday the Government was reviewing the way councils charge for new sections and other developments after charges soared from an average $3000 per section to $14,000 over the past decade.

The reason those levies have risen is that councils have moved to a model whereby developers pay the full costs of their activities. The levies pay for the additional infrastructure the council has to install - the roads, water and sewage pipes, lighting etc. And if they're not paid by developers (and therefore new home buyers) they're paid by everybody else, effectively subsidising development costs through higher rates or reduced services.

Meanwhile, while the government plots to shovel more public money into the pockets of its rich mates, the real causes of the housing crisis - low wages and a preference by developers to build big, expensive houses with higher profit margins - go unaddressed. Wouldn't it be nice to have a government which actually looked at the real problem, rather than simply using everything as an excuse to further enrich its cronies?