The Productivity Commission is undertaking an enquiry into ways to improve local government funding. As part of a submission for Foodstuffs NZ, TDB analysed the use of development contributions (DCs) by local councils. Development contributions are a fee charged by councils on new developments to contribute to the costs of building the infrastructure that supports them. While DC use is governed by a sound set of principles, we found that in practice, some councils have been assigning DC charges that are disproportionate to the extra infrastructure costs arising from the developments. We found significant variations in charging mechanisms between councils, between developments and from one year to the next.

Other issues included transparency and the reliability of some councils’ financial systems. Considering the inconsistencies in DC use across the country, we recommend that the Productivity Commission develops a best-practice guide for local councils to ensure councils apply consistent, fair and appropriate charges.