New Zealand is growing fast, but housing and associated infrastructure are not keeping pace. In high growth areas such as Auckland, Hamilton, Tauranga and Queenstown more housing is needed. Councils in these areas face borrowing constraints that can mean investment in viable infrastructure projects has to be postponed – including infrastructure essential for underpinning new housing developments.
To tackle this issue, the Government has worked closely with the high-growth councils to develop a new alternative funding and finance tool.
The tool will allow private capital to be accessed to get infrastructure built sooner than would otherwise be the case, without putting pressure on council balance sheets. It will also help make the cost of new infrastructure more transparent, while spreading that cost so it falls primarily on the homeowners who benefit, including over time and across generations.
Water and transport infrastructure (including cycleways, roads and public transport infrastructure) could be funded using the tool, as well as certain community amenities and environmental resilience infrastructure, such as flood protection.
The tool will complement rather than replacing existing council planning and decision-making processes. It will be an important addition to the high-growth councils funding and financing toolkit, helping them start viable housing and urban development projects sooner, unencumbered by financing constraints.
In 2018, a Crown Infrastructure Partners Special Purpose Vehicle was used to fund infrastructure at Milldale, north of Auckland, and landowner ‘infrastructure payments’ are being used to repay this borrowing. This infrastructure will eventually support the creation of a community of 9,000 new homes.