If councils enable more homes, they’ll receive extra funding to help deliver the infrastructure and services their local communities need, Housing and Infrastructure Minister Chris Bishop says.
As part of Budget 2026, the Government has announced that they’re “incentivising councils to go for housing growth” – this is the third pillar of its Going for Housing Growth programme.
Calling it the Incentives for Growth Fund, Associate Finance Minister David Seymour says Budget 2026 allocates $400 million over four years for the Incentives for Growth Fund.
Broken down, the Budget 2026’s summary of initiatives suggests $100 million each will be allocated in 2026/2027, 2027/2028, 2028/2029 and 2029/2030.
Councils will receive payments based on a proportion of the national average new dwelling consent value.
Here’s how councils will be paid:
- For each new home consented up to 1% of their existing dwellings, councils will receive a payment of 0.25% of the national average consent value.
- For consents between 1% and 2% of existing dwellings, councils will get a higher payment of 0.5% of the national average consent value.
- Over 2% of existing dwellings, each new consent will receive a payment of 1.25% of the national average consent value.
Seymour says currently local councils face “poor incentives to enable growth”.
“New housing developments can involve costs to existing ratepayers to provide the new infrastructure and services needed before houses can start construction. These costs act as a disincentive for councils to approve new houses and subdivisions.”
Seymour says the new fund “provides both an incentive for councils to enable housing growth and a means of covering some of the costs that fall on them as a result”.
“It transforms development from being a source of cost to a source of revenue.”
Seymour, who is also the leader of the ACT Party, says this announcement is part of the ACT-National Coalition agreement.
Bishop says this delivers the third pillar of the Government’s Going for Housing Growth programme. Payments would start from April 1, 2027, for consents that are granted in the year to January 2027.
“New Zealand’s housing crisis didn’t happen by accident. For decades we’ve had a planning and infrastructure funding system that made it too hard to build the homes New Zealanders need.”
Bishop says: “For too long, growth has been seen by councils as a cost to manage rather than an opportunity to embrace. We’re changing that.”
Local Government Minister Simon Watts says while central government expects councils to do more with less and to “focus on the basics … we also recognise that enabling housing growth creates real fiscal challenges for councils”.
“Infrastructure like local roads, parks and community facilities often need to be built years before new residents move in and start contributing rates revenue.”
The new fund will help councils manage those pressures, Watts says, by “providing a direct funding stream linked to housing growth”.
Councils would be able to use this funding for infrastructure-related capital and operating expenditure but not for water infrastructure or costs chargeable to developers through development contributions or levies.
Watts says: “This is about creating a more balanced system where councils and communities see the benefits of growth, not just costs.”
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