The Department of Internal Affairs engaged SPM Consultants Limited to conduct a review of 2007/08 financial contributions in order to assess the variability and levels of financial contributions in use, and to undertake a preliminary analysis of the actual costs charged through the use of residential financial contributions. The project did not consider the particular merits of individual contribution policies; the methodology councils use to calculate demand; the actual costs for non-residential development; the relationship between actual costs and the total cost of new housing; or information about development contributions.
This report describes the taxonomy developed to categorise and describe financial contributions and the associated cost impacts. It describes the process of data extraction and collations necessary to gather the required information, and explores the trends and variations in financial contribution costs within councils and between different local government sectors. Following an initial review of the financial contributions, policies contributions were categorised for analysis as reserves, network infrastructure (transport, watersupply, wastewater, and stormwater), and community infrastructure (parks infrastructure, community services, other, and cash in lieu of parking).
The review found that most territorial authorities (70 out of 73) have a financial contributions policy. 42 of the 70 also have a development contributions policy. The quality of the available information meant it was not feasible to undertake a quantitative analysis, but the majority of the financial contributions policies are formula based.
The most persistent trends are for the larger territorial authorities and those with the highest growth rates to have development contributions policies. The smaller councils and those with low or negative growth rates are more likely to have financial contributions policies. They are also less likely to have an overlapping development contributions policy. Based on the information available, the 73 territorial authorities are expecting to collect total revenue of $73.3 billion during the period from 2006 - 2016. It is unclear how much of this is made up of financial contributions revenue because of the way the information is presented and reported. In a number of cases it appears that financial contribution revenue and development contributions revenue are reported together, or financial contributions revenue reported as development contributions revenue.
The review found insufficient consistency in the way contributions were defined to allow any significant quantitative analysis. Based on the information provided it is however possible to show that the bulk of the territorial authorities charging financial contributions adopted a formulaic approach to the assessment of charges. Others presented a schedule of different charges relating to the location or catchment of the development. These varied from zero (where there is no charge for that activity) to one (for a single citywide charge) up to as many as 32 different catchments and charges for an activity.
Overall, while the Local Government Act 2002 (LGA 2002) attempts to cast financial contributions and development contributions in a similar frame, there are subtle and important distinctions between them which may explain why there is substantially less quantitative data available for financial contributions. Development contributions are principally a funding tool to recover a portion of the costs of growth. Financial contributions are sets of rules as a mechanism to mitigate the effects of growth. Development contributions tend to be lead by strategy, finance, or infrastructure, while financial contributions tend to be lead by the land-use or environmental planning groups.