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

 

Frog Recruitment: Kiwi Workers Reluctant To Make Business Trips Across The Ditch Despite Trans-Tasman Bubble Opening

When the trans-Tasman travel bubble opens today, many Kiwi companies won't be rushing to buy an air ticket, reluctant to cross the ditch to do business. The latest survey conducted by leading recruitment agency, Frog Recruitment of nearly 1,000 New Zealand ... More>>

Tourism: Employers Welcome Back Working Holidaymakers

Tourism businesses gearing up for the return of Australian visitors from next week will be relieved to learn that they will also have access to an offshore pool of much-needed job candidates, Tourism Industry Aotearoa says. Tourism employers around ... More>>

Commerce Commission: Latest Broadband Report Confirms Improved Performance Of Premium Fibre Plans

The latest report from the Commerce Commission’s Measuring Broadband New Zealand programme shows that the performance of Fibre Max plans has improved substantially. This follows a collaboration between the Commission, its independent testing partner, ... More>>

Air New Zealand: Capital Raise Deferred

Air New Zealand has decided to defer its planned capital raise to later in 2021 allowing more time to assess the impacts of recent developments on the airline’s path to recovery. 'We’ve seen some clearing of COVID-19 clouds recently, with ... More>>


Stats NZ: Prices For Transport And Housing Rise In March 2021 Quarter

Higher prices for transport and housing led to a 0.8 percent lift in the consumers price index in the March 2021 quarter, Stats NZ said today. Prices for getting around rose in the March quarter. Transport prices rose 3.9 percent, the biggest quarterly ... More>>

Stats NZ: New Report Shows Impact Of Demands On Land In New Zealand

A new environmental report released today by the Ministry for the Environment and Stats NZ, presents new data on New Zealand’s land cover, soil quality, and land fragmentation. The land cover data in the report, Our land 2021 , provides the most ... More>>

ALSO:

Stats NZ: March Card Spending Rebounds Despite COVID

There was a lift in retail card spending in March following a fall in the lockdown-disrupted February month, Stats NZ said today. Seasonally adjusted retail card spending rose by $53 million (0.9 percent), compared with February 2021. Visit our website to read ... More>>