Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

New infrastructure financing scheme a major step forward

13 November 2018


“The announcement today of a pilot scheme to bring forward infrastructure for housing is a significant milestone and establishes a new direction for growing New Zealand’s cities,” says Stephen Selwood CEO of Infrastructure New Zealand.

“The Government has announced that third party debt will be used to finance the roads and water infrastructure needed to unlock land for development in Milldale, north of Auckland.

“Crown Infrastructure Partners will establish a ‘special purpose vehicle’ (SPV) to raise funds from investors, comprising itself, Fulton Hogan and the ACC, to enable the construction of bulk housing infrastructure which otherwise would be deferred.

“Home owners will repay the SPV with an annual charge of between $650 and $1000 per annum.

“This is a material additional cost to new homeowners, but the real benefit is that private finance for infrastructure will increase housing supply, making homes cheaper. Currently, lack of infrastructure means homes are not being built at the pace required and the cost of housing remains out of reach of many New Zealanders.

“There should also be some combination of lower development charges or lower general rates to reflect the reduced dependency of Milldale homeowners on the Auckland Council. It is important that these homeowners are not asked to subsidise wider growth infrastructure across the region.

“The real opportunity is expanding the model beyond Milldale and beyond Auckland to address the wider national housing crisis.

“If developers can access third party finance to bring forward bulk infrastructure investment, development can proceed at the pace and scale needed to deliver the productivity improvements critical to delivering enough homes to meet growth.

“This approach is standard practice in the USA and enables that country to have one of the most flexible and responsive housing systems in the world.

“There is no reason the approach will not work in New Zealand and, when combined with the promised reduction in planning restrictions, will overcome the greatest barrier to getting affordable homes delivered.

“As long as general ratepayers carry the risk and cost of debt from new development there will be opposition to growth and investment in growth, which is in no one’s interest.

“Legislation is needed to consolidate the model and allow it to be rolled out nationally.

“This legislation will need to be clear on where the risk and responsibility for repaying debt sits. The Milldale initiative relies on debt, but for the model to be successful in meeting ongoing housing demand, developers will need to be able to partner with investors repaid on the basis of risk taken.

“If risk is disproportionately allocated to developers, then the model will not lead to the increase in developable land required.

“The sooner private capital can be injected into infrastructure for new development, the sooner growth cities like Auckland, Tauranga, Wellington and Queenstown can increase housing supply to meet demand,” Selwood says.


ENDS

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Ground Rules: Government Moves To Protect Best Growing Land

“Continuing to grow food in the volumes and quality we have come to expect depends on the availability of land and the quality of the soil. Once productive land is built on, we can’t use it for food production, which is why we need to act now.” More>>

ALSO:

Royal Society: Calls For Overhaul Of Gene-Technology Regulations

An expert panel considering the implications of new technologies that allow much more controlled and precise ‘editing’ of genes, has concluded it’s time for an overhaul of the regulations and that there’s an urgent need for wide discussion and debate about gene editing... More>>

ALSO:

Retail: Card Spending Dips In July

Seasonally-adjusted electronic card spending dipped in July by 0.1 percent after being flat in June, according to Stats NZ. Economists had expected a 0.5 percent lift, according to the median in a Bloomberg poll. More>>

ALSO:

Product Stewardship: Govt Takes More Action To Reduce Waste

The Government is proposing a new way to deal with environmentally harmful products before they become waste, including plastic packing and bottles, as part of a wider plan to reduce the amount of rubbish ending up in landfills. More>>

ALSO:

Earnings Update: Fonterra Sees Up To $675m Loss On Writedowns

“While the Co-op’s FY19 underlying earnings range is within the current guidance of 10-15 cents per share, when you take into consideration these likely write-downs, we expect to make a reported loss of $590-675 million this year, which is a 37 to 42 cent loss per share." More>>

ALSO: