English says NZ Initiative's 'big bang' housing reform plan 'pretty radical', but well focused on supply and affordability; Water review underway
Finance Minister Bill English has described a plan unveiled yesterday by the NZ Initiative thinktank to improve housing affordability as a "pretty radical" change to the funding arrangements for councils, "so we're not going to be rushing into that."
The NZ Initiative proposed in its 'Free to Build' report that Councils receive 'Housing Encouragement Grants' for every new house built, funded through the GST raised from the building of the house. It also proposed the private financing of the infrastructure for new developments that would allow companies to effectively levy rates on residents instead of councils, and it proposed water infrastructure be taken off councils and given to five new regional water companies able to set their own levies. See more here in David Hargreaves' article.
English told reporters before a meeting in parliament of National MPs that the Government agreed with the report's strong focus on housing supply.
"I haven't seen the detail of their proposals, but some of them sound pretty radical. In fact they'd change the basis of local government in New Zealand, so we're not going to be rushing into that," English said.
English acknowledged the Government needed to better understand the incentives facing councils, which the NZ Initiative said were currently stacked against Councils encouraging development because Councils were forced to fund expensive infrastructure for such development upfront.
"We need to understand the decision makers quite a lot better than we do. We've come quite a long way by working closely with the Auckland Council through the Housing Accord. I think central government has a better idea, but there's still a long way to go understand just why councils make the decisions they do and get a better understanding of the connection between those decisions and housing prices, because New Zealand has among the least affordable housing in the developed world, and we've got to do something about it," English said.
Asked about the NZ Initiative's proposal to strip councils of the water infrastructure companies and create new regional ones, English said Local Government New Zealand and the water industry "were doing a pretty hard look at the water industry right now."
"Everyone acknowledges it could be managed better. They'll come and tell us what they think and in the meantime we're just focusing on our programme of getting the special housing areas out, getting the Resource Management Act through, and working with the councils on how to do more," he said.
Asked again about the proposal for the effective privatisation of water rates, English said that was a matter for councils.
"The councils control and run water. We don't, and we're not making policy of their behalf."
Elsewhere, English was asked about proposals in a report released yesterday by Parliament's Health Select Committee to spend more on early childhood health to prevent diseases and ill-health, rather than spend large amounts in the last two years of life.