Govt and fast-growing councils are in 'gritty talks' over use of $1bn housing infrastructure fund, PM English says; 'Councils don't seem to have projects ready to go'

Govt and fast-growing councils are in 'gritty talks' over use of $1bn housing infrastructure fund, PM English says; 'Councils don't seem to have projects ready to go'

The government is engaged in some “pretty gritty” discussions with certain councils about whether the local bodies do in fact have housing infrastructure plans that can be kick-started with central government funding, Prime Minister Bill English says.

The PM effectively called out New Zealand’s fastest-growing councils Monday, saying they had been complaining projects could not get underway due to infrastructure financing constraints. It appears that the councils do not have projects ready to go that are conditional on financing he said.

English announced the government’s $1bn Housing Infrastructure Fund in mid-2016. It was opened to applications from councils in New Zealand’s highest growth areas at the time: Auckland, Hamilton, Tauranga, Christchurch and Queenstown.

Speaking to media at his post-cabinet press conference Monday, he said use of the fund would help local councils tap funding for projects required to alleviate housing supply pressures.

“They’ve talked for quite some time about how the infrastructure financing is a constraint, and now we want to see them produce projects where it is a constraint, where they can bring supply forward,” English said.

“The real challenge is whether councils actually do have projects waiting for infrastructure funding. The initial indications are that they don’t,” he said. Councils now appear to be “sharpening their pencils” for efforts to receive financing from the fund, he said.

The government was being clear with councils that the fund was “not just a sort of subsidiary financing mechanism for their general plan, it is specifically bringing forward housing supply by overcoming constraints they said they have.”

“We’re just testing them against the claims that they’ve made about their financing constraints, and finding that a very constructive discussion,” English said.

There was a lot of discussion about how the financing would be structured, in relation to concerns councils would not take it on because it would sit as debt on their books, English said: “That can be resolved.”

'No particular evidence of credit constraints'

English was speaking after ANZ economists said earlier that growth headwinds were intensifying for the supply of new dwellings in Auckland as escalating costs and capital constraints started to squeeze the market.

There was no particular evidence of this happening, English said.

“Of course the ANZ are the main financier of house buying – they may be signalling some of their own choices about risk, about how they’re willing to lend. We’re happy to hear their story about that,” he said.

Anecdotally, the main constraint seemed to be around getting financing for some types of apartment buildings which the banks regarded as quite risky to lend against, he said.

“Otherwise we haven’t seen any broader sign of credit constraint.”

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This is further BS from the government. Most people do not understand big numbers. For some $1 billion will seem like an unlimited amount of money but it is not. One big sewage pipe in Auckland can cost that amount of money. Also the money is not a grant -the government expects to be paid back. It is just a low interest loan. Which given how low interest rates are is not worth that much. So mostly this is a government publicity stunt.

But for the government it also has the benefit of in return for a slightly cheaper loan the government gets veto control over what new areas local government opens up for development.

I think local government should call the government's bluff and announcement a wholesale removal of intensification rules -parking requirements, section sizes, height restrictions or something like I have argued here with reciprocal intensification rules http://transportblog.co.nz/2016/10/26/guest-post-a-right-to-reciprocal-i...

In exchange the Councils should demand extra funding from the government for public transport and cycle-ways to move the extra people around which will result from this greater intensification.

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Agree - just another ruse from National. Anything to take the focus off their failure over three electoral terms to properly address any of the root causes of the housing crisis. In fact, just like poverty, under John Key the main message was it (housing) isn't a problem.

And anything that is a problem is deemed "too hard to measure".

Agree with your bluff-calling proposal Brendon, but here's the rub.

The planning bureaucracy in the affected Councils is our Godzone equivalent of the Deep State in the USA.

What the Deep State in either case does not like, intend to implement or even consider, it subverts, delays, circumvents and just plain ignores.

So while your proposal has all the qualities of rationality and clarity one would expect, it neglects the existence of the Deep Planning State, the wedded-to-spatial-planning nature of the planning culture, and the persistence of the bureaucrats and attitudes against a three-year electoral cycle and the generally abysmal quality of elected members, which oscillates between show-ponies, political hacks, and complete maroons.

In short, you are expecting Goff to pull a Trump. Not gonna happen.,

Are these really 'gritty talks' or are all parties going through the motions?

Between the banks, council and government. The government are the game changer and can break this cycle of denial.

There is no denial.

Your three groups are in possession of data and acting upon it.
- fighting over existing and future positions.
Think of you and your actions more as a spoil

The proposition is more about acting together for the common good or anything that goes beyond the immediate material interest of an actor/group...
and where folk are on the spectrum.
- the more reduced on the spectrum any one group is, the worse off we all are.

Hello Palermo
you know, lovely house inside, crumbling infrastructure and wild knife attacks outside.

What a joke. This government needs to pull its head out of the sand. Auckland needs 100 billion dollars to build infrastructure and fix the gridlock. Filling the country up with people has created a small rise in tax take from GST but every person who steps off the plane gets this countries infrastructure for free. The infrastructure of roads bridges hydro dams etc is worth a trillion dollars and we give it away free! Our exports have gone down. We are now per person a lot poorer and have a huge deficit of infrastructure to build and pay for.

our problem has always been short term vision and planning by our political leaders. any that do have vision get thrown out of office as the opposition run campaigns about wasting our money, which ironically is what happens when we scale back projects only to be back in 10 years to double it at a greater cost that what would have been if built originally

Cool - Lets keep feeding the Ponzi ... the boomers need more passive income

Well it beats working like a slave.

Indeed, that's why you import slaves. Keeps the restaurant meals cheap.

Very true - Shonkeys original preference was a localised version of the confederate flag ... but the focus group said no

Has any of you guys actually seen the waate water route for the new northern interceptor? Do you see how many properties are affected? Why is planning only being done for this now. Council is 100% the problem. There is going to be some $500m in public works acquisitions and that doesn't include building the bloody pipe. Thank heavens the govt is calling them out.

@Jram026. The council didn't ask for the population growth of the last 5 yrs. How do you plan for a rogue Government that is determined to sell and give away our childrens birthright. Did the government say to the councils "hey by the way guys, where going to pump up the population with record high immigration for years on end so you better ask your rate payers to triple their rate payments so that this new population of people have infrastructure for free and a great lifestyle".

Auckland Council is not capable of sorting this mess out on its own , and no amount of money will help .

That august body of over-paid bureaucrats is the least commercially -aware or financially astute group we have in the whole country .

Its run wastefully and in some cases shambolicly ( Like buying a leaky CBD building with our money ) , and yet somehow maintains the veneer of a body that is efficiently running our city .

Well its not running our city properly , and the sooner someone points this out to the Emperor the better .

Then at least we can do something about it