New Zealand Moves to Make Fast-Track Growth Pay for Infrastructure

New Zealand councils will get stronger powers to recover infrastructure costs created by future Fast-track developments, as the Government looks to prevent rapid growth from leaving ratepayers carrying costs for roads, water and other essential services.

Housing and Infrastructure Minister Chris Bishop and Local Government Minister Simon Watts said changes will be made to the Local Government Act 2002 as an interim measure while the Government develops its new Development Levies system, which is expected to replace Development Contributions and become operational from 2029.

The changes are based on the principle that "growth should pay for growth", particularly when new developments move ahead of existing council infrastructure plans or create demands that were not anticipated when councils set their funding policies.

Councils to get more flexibility over development costs

Councils have raised concerns about their ability to recover the full infrastructure costs associated with unplanned or out-of-sequence developments, including projects approved through the Fast-track system.

Under the planned amendments, councils will be able to change their Development Contribution policies when necessary to recover growth-related infrastructure costs attributable to eligible Fast-track projects. This could become important where a development uses network capacity that had been planned for already zoned land or requires councils to bring forward infrastructure investment.

Current rules generally lock Development Contributions in when a resource consent application is made. The proposed changes will allow councils to update those contributions after an application has entered the Fast-track process, giving them greater scope to respond to infrastructure impacts that become clearer as a project progresses.

Any changes would need to be adopted within six months of Fast-track approval and published as soon as practicable, providing a defined timeframe for councils and developers.

Cross-boundary infrastructure costs also addressed

The reforms will cover situations where a development in one council area creates infrastructure costs in another, allowing Development Contributions to be recovered and transferred when impacts extend across council boundaries.

This is intended to address a practical challenge created by large developments whose transport, water or other infrastructure requirements do not necessarily follow local government boundaries.

Bishop said Fast-track panels already have powers to impose conditions requiring developers to provide local roads, water, wastewater and other services needed for their projects. Panels can also decline developments when adverse effects, including infrastructure pressures, are considered disproportionate to their regional or national benefits.

The new measures focus on wider network costs that councils may currently struggle to recover rather than replacing those existing Fast-track conditions.

Existing Fast-track projects will be protected

Projects that have already received Fast-track approval, or have lodged a substantive application by the time the amendments take effect, will not be subject to the new arrangements.

The Government said safeguards within the Development Contributions framework will continue to apply when councils calculate growth costs. Developers and councils will also remain able to negotiate development agreements, which can provide greater certainty over infrastructure responsibilities earlier in a project.

Since the Fast-track system began operating, 31 projects have been approved across housing, infrastructure, mining and quarrying, aquaculture and renewable energy, representing billions of dollars in investment and supporting thousands of jobs.

The latest funding changes are intended to keep that development pathway moving while ensuring councils have stronger tools to meet the infrastructure demands that accompany new growth.