3 Jul 2016

$1 billion fund to boost housing build

6:18 pm on 3 July 2016

Mayors are welcoming the government's plan to spend $1 billion on increasing housing supply in areas of high demand.

Housing construction in an East Auckland suburb

John Key told the National Party conference the government was already doing a great deal to try to increase housing supply. Photo: RNZ / Claire Eastham-Farrelly

Local councils in Christchurch, Queenstown, Tauranga, Hamilton and Auckland will be able to apply for money to bring forward new roads, and water infrastructure needed for new housing, where financing is a constraint.

Prime Minister John Key made the announcement as part of his keynote speech today at the National Party conference, being held in Christchurch.

The government will have to borrow the $1bn for its contestable fund, which would increase net debt until it is repaid - that is expected to take 10 years. Councils will also be expected to repay the funding they receive "over time or as development occurs".

The fund would only be available for "substantial new infrastructure investments" that support new housing - not to replace existing infrastructure.

Building and Housing Minister Nick Smith said the government was also considering creating Urban Development Authorities (UDAs) to help boost the supply of new housing.

They would have streamlined powers to override barriers to large-scale development, including potentially taking responsibility for planning and consenting, and other powers.

Mr Key told delegates while the government was already doing a great deal to try to increase housing supply, some councils have strict debt limits that prevent them from investing in the necessary infrastructure.

"But I want to emphasise this is not a hand out. It's about getting infrastructure and housing built faster in high-growth areas."

He said councils would have to say how many houses would be built, where they would be built and when they would be available.

And Mr Key said, ideally, councils would already have agreements with developers.

Prime Minister John Key speaks to media outside the National Party conference in Christchurch.

Prime Minister John Key speaks to media outside the National Party conference in Christchurch. Photo: RNZ / Chris Bramwell

He also floated the idea of adopting the same model the government has used for the roll-out of Ultra-Fast Broadband to transport projects, that is buying the assets and selling them to providers once customers were on board.

However Labour leader Andrew Little said the fund was not the answer to the housing crisis and it was a piecemeal policy which had not been thought through.

"When you've got an infrastructure deficit in Auckland alone of nearly $20 billion and billions more around the rest of the country - a billion dollar loan, it simply doesn't cut it.

"It's a piecemeal, ill thought through, urgent measure to give the appearance, in classic National form, of doing something and in fact doing very little."

Mayors welcome funding

Hamilton's Mayor Julie Hardaker had been advocating for infrastructure funding for quite some time and welcomed the new fund.

She hoped it would help with the major financial barriers councils were facing, particularly for water.

Hamilton mayor Julie Hardaker.

Hamilton mayor Julie Hardaker. Photo: RNZ

"It's not the whole answer but it's certainly another part of this jigsaw puzzle that's most welcome."

Tauranga Mayor Stuart Crosby said the fund would help growing cities stay in prudent debt.

"High growth councils have been seeking funding support for infrastructure from the government. Whilst we don't know the details yet, for the government to get involved in possibly water supply, wastewater supply, I think that should be an advantage, but of course the devil will be in the detail."

His council will be facing $500 million worth of debt by 2020 as a result of a $70m water treatment plant.

It was big costs like that which created financial barriers and he hoped the fund would help the council stay at prudent debt levels.

Key takes swipe at Labour

In the rest of his speech, Mr Key detailed what he said were the government's economic and fiscal achievements, in job creation, social welfare, health and education.

He also took a swipe at the opposition while recalling the events 80 years ago, when the National Party was first formed, including Bing Crosby's number one hit "Pennies from Heaven" - going off script to quip that was still where the opposition thought money came from.

Mr Key went on to say New Zealand's future lies in being an open, outward-facing nation "that welcomes people and ideas from other countries".

"Contrast that with our opponents' dreary and closed view of the world.

"They remain inward-looking, angry and forever negative".

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