Media release: A breakthrough for housing affordability
Wellington (23 July 2017): The New Zealand Initiative congratulates the Government on its new mechanism for delivering local infrastructure – not least because it follows a recommendation the Initiative first made in 2013.
The Government has just announced it will rename Crown Fibre Holdings into Crown Infrastructure Partners. The new entity will deliver new trunk infrastructure through special purpose vehicles. In this way, infrastructure costs will be recovered through special rates over the lifecycle of the infrastructure assets. The total investment volume will be $600 million.
Commenting on the Government’s announcement, the Initiative’s Executive Director Dr Oliver Hartwich said:
“Establishing Crown Infrastructure Partners is a great step towards restoring housing affordability. It will help make new homes more affordable because infrastructure costs will no longer have to be paid upfront. It is good to see that the Government intends to bring private investors into the scheme alongside Crown Infrastructure Partners.”
“By taking infrastructure costs off councils' balance sheets, it will be easier for councils to develop new land and deliver the houses New Zealand needs.”
“Councils will gain new ratepayers without having to provide infrastructure for them. This will allow councils to go for growth because they will financially benefit from it. It is an incentive scheme in all but name – something the Initiative has repeatedly called for.”
“At the Initiative, we are convinced that this new scheme will work. It is exactly what we proposed in our 2013 report Free to Build. Our recommendation back then was informed by our research on Municipal Utility Districts in Texas, which we described in the previous report Different Places, Different Means. Most recently, we reiterated our support for this scheme in Manifesto 2017: What the next New Zealand government should do.”
The Initiative notes that with the Government having now accepted this key recommendation for housing policy, there is a growing cross-party consensus that Municipal Utility Districts are the way forward.
“It is great to see this new plan for infrastructure delivery. There is more that can be done to restore housing affordability for New Zealand. The next thing on the Government’s agenda has to be repealing the Resource Management Act and replacing it with a better planning system. And, of course, we want to see a new local government finance system which directly allows councils to share in the proceeds of growth and development. There is work to be done but this is an encouraging first step.”
For the Initiative’s previous work and recommendations on alternative infrastructure funding, please read:
Free to Build: Restoring New Zealand's Housing Affordability (2013, pp. 13-16)
Different Places, Different Means (2013, pp. 31-39)
Manifesto 2017: What the next New Zealand government should do (2017, pp. 16-23)
How to fix a crisis: An Auckland housing manifesto (section on ‘Better Incentives’)
ENDS
Dr Oliver Hartwich is in Auckland at the LGNZ Conference. For any interviews, please phone him directly on 021 0815 4973.
Media contact
Simone White, Communications Officer
The New Zealand Initiative
Phone: +64 4 494 9109
Mobile: +64 21 2937 250
Email: simone.white@nzinitiative.org.nz