Housing Minister warns Auckland Council not to overplay its hand on granting approval for greenfields Special Housing Areas; tells Council to use development contributions to pay for infrastructure

By Bernard Hickey

Housing Minister Nick Smith has warned the Auckland Council that the Government retains the power to over-ride the Auckland Council and take over the power to approve new Special Housing Areas (SHAs) directly if the Council overplays its hand in demands for new Government funds for public transport.

The warning came after the Auckland Council suspended requests for three SHAs to build thousands of homes in John Key's electorate near Huapai in North West Auckland. The Council argued it could not afford the transport and other infrastructure to support the greenfields developments.

Deputy Mayor Penny Hulse defended the Council's decision to block the new greenfields SHAs, saying the Council needed further funding for local transport in the area, including plans for a busway on the North West Motorway.

"This isn't a major stoush with Government, but we're saying let's look very carefully at the funding that's needed to build the North West Bus Way and to provide public transport to this area," Hulse told Radio New Zealand.

She said residents in West Auckland had said further consideration was needed to sort out congestion on the North Western Motorway "to make sure the people already living there aren't hugely impacted by thousands more houses."

"This is not saying there will never be any extra development there. It's just not in the short term, so we need to get around the table with the Government and work out how we work through this."

Hulse said the Council was working with the Government on a Transport Accord for Auckland. "That's probably the area where there's the most tension," she said, pointing to the Government's rejection of the Council's ideas for a Motorway toll or a fuel tax and its reluctance to accept the Council's plan for a NZ$100/ratepayer/year transport levy.

"The relationship between the Government and the Council has been quite good on the Housing Accord, and it's quite appropriate for us on Council's behalf to stand our corner and ground for the people of Auckland, which is what we're doing on this."

Smith warns of intervention

Meanwhile in response, Smith told reporters in Parliament the Government had been working with the Council on the infrastructure issues.

"There's always going to be some tension and some argy-bargy around those costs. The Council has the capacity to recover those through the development contributions and, of course, for every 300 new houses built in Auckland the Council gets a revenue stream of NZ$1 million a year in rates," Smith said.

Smith rejected the idea that the Council's suspension of new housing areas for North West Auckland was a road block for the Government's completely supply-driven focus for solving Auckland house price inflation.

Smith said the Government was investing record amounts in infrastructure, including Transport.

"There's always a tension with other parts of New Zealand that also want to ensure that they get their fair slice of that money. And then, of course, there's the capacity issues. We are building sufficient houses in Auckland now, about double the number that was at the bottom of the GFC, that there are real pressures coming on in the skills area. I am expecting to see some of the building capacity shift from Christchurch to meet some of that growth," he said.

'Not held to ransom'

Asked if the Government was being held to ransom by the Auckland Council, Smith said: "I would remind you that the government also has the power to create special housing areas without the approval of the Auckland Council if they choose to overplay their cards and demands for money."

"The legislation makes plain that the government's strong preference is to work in cooperation with the Auckland Council and to work on these issues together. Those arrangements are still robust but ultimately, if the Auckland Council overplays its cards, the legislation does make provision for the government to create SHAs without the approval of the Council," he said.

Smith was then asked how far away from full intervention the Government was:  "I remain very confident that the relationship's robust and that we are working these issues through. The questions that have been raised today were raised privately at our accord meeting last month. We've got our officials beavering away on them. I remain confident that we will not have to use the over-ride powers for creating special housing areas, but I simply note that they are there in the event that the Council tries to overplay its hand in trying to gain additional resources for government for meeting some of those infrastructure challenges."

Political reaction

Labour Housing Spokesman Phil Twyford said the Government's failure to fund infrastructure was now dumping massive costs on Auckland ratepayers.

“If the Government does not pay its fair share, that burden either falls on the ratepayer or developments get built without the infrastructure they need," Twyford said.

“Two hundred thousand extra people, 80,000 new dwellings and 60,000 extra jobs are planned for Auckland’s North West, but the Government hasn’t thought about how these people are going to get to work," he said.

“They are splattering Special Housing Areas around the city -- 84 in Auckland so far -- without thinking about what it means for transport infrastructure," he said.

“The Government should be investing in a dedicated busway on SH16 like the successful one on the North Shore which currently carries the equivalent of three lanes of traffic into the city every morning. But having blown the national transport budget on wasteful projects, the Government has no money left to service the regions or Auckland's growth."

(Updated with photo and political reaction)