The Government is planning to bring together players from the finance community with people representing development and construction interests to hammer out a plan to solve New Zealand’s infrastructure financing problems.
Minister of Housing Phil Twyford says the event will be going ahead “within the next couple of months”, but details are limited at this stage.
Last week, Twyford said lack of access to capital is “crippling the supply of houses,” adding that one of the Government’s biggest priorities is cracking down on the problems around infrastructure financing.
“There is a planet of cash out there that would love to invest in our cities’ growth, but they have no way of doing it at the moment.”
He says the Government is actively exploring the concept of “value capture” – the ability to capture uplift in property values around new transport infrastructure – as well as issuing infrastructure bonds and tapping into longer-term debt financing.
The event, which will happen “quite soon” will workshop these ideas with the finance community and players in the construction and development sectors.
When it comes to the bonds, Twyford says he wants to attract overseas investors from the private, and public sector.
“The trick is to find a balance sheet where that debt can sit, and put together the revenue ideally from the properties in that new development to service the debt.”
Under the Government’s fiscal responsibility rules, Labour promised to reduce net core Crown debt to 20% of GDP within five years and to keep spending at roughly 30% of GDP.
Twyford says himself, Minister of Economic Development Shane Jones and Finance Minister Grant Robertson are doing policy work on the infrastructure bonds and the value capture ideas now.
Meanwhile, the Te Atatu MP is keen to build on the progress of the previous Government’s Crown Infrastructure Partners project – formally known as Crown Fibre Holdings.
Crown Infrastructure Partners aims to bring the investment skills and experience, gained through the Government’s ultra-fast broadband rollout, to the job of attracting private investment in roading and water infrastructure which opens new tracts of land for more housing development.
Twyford says this project is “a useful step forward”.
“But you can’t rely on the government of the day writing a check for hundreds of millions of dollars every few months – we have to set up a pipeline where good quality infrastructure for new developments can attract that investment, as long as the private owners and developers are willing to carry that risk.”
And he is confident they are – “there are a lot of jurisdictions overseas where precisely these types of systems are in place and working well”.