12 Jul 2017

Auckland on track for more infrastructure funding

8:27 am on 12 July 2017

The government has hinted more money is coming to help fund Auckland's infrastructure development.

Construction site for the SkyCity Convention Centre in Auckland.

Photo: RNZ / Claire Eastham-Farrelly

Yesterday it announced it was giving a $300 million infrastructure loan to fast-track the construction of 10,000 houses in the city, as part of similar support to five councils.

Just last month, Auckland mayor Phil Goff said his council had reached its borrowing limit and needed help to pay for roads, sewerage and water for new housing projects.

Over the next 30 years the infrastructure bill for 140,000 homes in new developments is estimated to be $19 billion.

Speaking alongside Finance Minister Stephen Joyce yesterday afternoon, Mr Goff welcomed the $300m injection but said more was still to come.

"This is a partial answer to Auckland's needs, and the minister has foreshadowed that in a few weeks time there will be a further announcement, which will assist us with infrastructure in a way that it does not become part of our financial balance sheet and does not create problems for us in terms of the debt to revenue ratios."

After hinting more funding was in store, Mr Goff remaining tight-lipped about the details, but indicated it would be more than the $300m allocated under the Housing Infrastructure Fund.

Mr Joyce said the final details were still being worked out.

"We're developing a mechanism to help the council achieve that infrastructure and we're looking at off the balance sheet ways of doing that. So as I say, we can't write it all out today but we're certainly working on that for them."

Mr Joyce said he had had informal talks with other mayors, who also wanted a different funding approach, and the government's plan would work for them as well.

Mr Goff has previously suggested options to take the stress off the council's books could include getting a share of GST revenue, as well as targeted rates for land bankers.

Local Government New Zealand spokesperson Malcolm Alexander said while more money was a big help, his organisation and others wanted a new look at how infrastructure was funded.

"Under a property tax model it becomes a difficult proposition. Ratepayers have limits to how much they're prepared to accept, there are also straight-out debt limits around credential requirements - you need to keep your credit rating etc.

"So if that model is under stress, which is now and will increasingly be so into the future, now is the time to think about different ways of doing it."

Infrastructure New Zealand chief executive Stephen Selwood said the government should simply take over some of Auckland's big projects.

"It makes sense that the government has a very strong balance sheet relative to the council, so [it] could take on more of those responsibilities and hopefully that's the tender of the announcements coming up.

Mr Selwood said councils could also follow overseas examples and sell assets to build new ones.

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