Government reveals criteria for $1b funding to speed up housing development, seeks urban density

Tuesday, 22 June 2021

Housing Minister Dr Megan Woods announces $1b funding to speed up housing development. Video first published in June 2021.

Housing Minister Megan Woods is promising a new fund will see more houses built, but National has labelled it the “provincial growth fund round two”.

Woods announced criteria for the $1 billion pot of contestable funding at an event in Auckland on Tuesday morning.

The money will be targeted at housing projects which would not have gone ahead without the extra funding boost for the infrastructure behind them.

“This is about the Government adding to what’s already happening. We want to see more houses. This is about additionality,” Woods said.

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Housing Minister Megan Woods says the new fund will quicken the pace of housing supply coming to market.

“This isn’t about the Government stepping in paying for things that would rightfully be expected of developers or councils.”

However, National Party housing spokeswoman Nicola Willis said far from clearing things up Wood’s announcement had made criteria for the fund look less transparent.

“We’re not convinced this is a transparent funding mechanism. Nor are we convinced that this is the fastest way to fund infrastructure right now,” Willis said.

“Already I’ve heard developers and local government leaders express to me the concern that this may be like the provincial growth fund round two.

“Which is to say, screeds of form filling, millions of dollars being spent on consultants and lobbyists in order to get the funding, and a lot of churn in the process.”

Government funding will be available via the Infrastructure Acceleration Fund which is part of the Government’s $3.8b Housing Acceleration Fund.

An invitation for expressions of interest from local councils, iwi and developers will be released on June 30.

Willis argued a National Party housing proposal would be cleaner and easier to manage. The policy would provide $50,000 for every dwelling consented above a council’s five-year historic average for consenting.

“If we passed our bill tomorrow it would require top-tier councils to have new district plans in place within a matter of months.

“And the funding for additional houses they’re consenting would be available within the year, and they [councils] would be able to make decisions right now based on the certain knowledge they would be getting it.”

Fighting the Council infrastructure ‘go slow'

Woods said the Government was looking at encouraging councils to live up to their obligations under the National Policy Statement on Urban Development even before they were “legally operative”.

“We have said right from the beginning that we are looking to partner with councils and with developers that share our ambition for momentum and for the number of houses that can be built.

“We’ll be looking to councils to start having regard to the requirements of the [urban development policy statement] before they’re legally operative in their plans.”

National Party housing spokeswoman Nicola Willis says the housing fund shows signs of ending up like the Provincial Growth Fund.

Woods said councils in a “number of cities” were moving “too slow” on urban intensification and housing.

Wellington City Council has been criticised over the past week for a spatial plan which appeared to go against several of the council’s obligations under the NPS-UD.

The policy statement required councils to zone for more housing in their district plans, especially close to city centres and along major transport routes.

“We know that it can be difficult for councils in terms of the intensification of suburbs,” Woods said.

“That it is something that can be very challenging for councils, but that’s something that our [urban development policy statement] has been put very much in place [for].

“To say that actually if we are going to have a country where we have affordable housing, where we have enough housing for New Zealanders, then we do need some greater intensification.”

Yet Willis said it was ’s fault councils were going slow on providing infrastructure and trying to get onboard with the policy statement.

Part of that was because of the way the policy worked, which would require a lot of time-consuming consultation if a council wanted to enact its requirements ahead of time.

Councils were also moving slowly on infrastructure because they could not be certain they would be able to access government funding for housing.

An extra $8m of Government funding has enabled hundreds more houses to be built.

The Government should instead choose to pass a National Party bill which would allow councils to bypass this process, Willis said.

The National Party Housing Emergency Response (Urgent Measures) bill would allow councils to zone enough land to provide enough housing for a population target of 15 per cent above the 30-year projection for population growth.

“It’s fine to talk about wanting more zoning for housing, but unless the minister is giving councils the tools to do that then talk is cheap.”

Despite the focus on new housing projects Woods said projects already under way could still be funded through the scheme.

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“Where it is we can add to existing projects, such as we are doing here, so that we can up the number of houses that are being built, and we can increase the pace and scale then we will look at those.”

Woods made the comments at a Kāinga Ora housing development at Freeland reserve in Mt Roskill, Auckland. The development was chosen because extra Government funding for infrastructure had allowed 500 new houses to be built at the site.

Originally, 258 houses were slated for the development, but now 758 houses would be built there after an extra $8m was put in for stormwater upgrades.

Woods said the Government decided not to give the money to councils directly, because it could not have been sure the maximum number of new houses would have been built.

“If I have a look at the infrastructure loan scheme that the previous government put in place there were no requirements directly linked to housing, and we haven’t seen the housing uplift.

“We do not want to replicate those kinds of schemes.”

Willis said the Ministry of Housing and Urban Development’s own figures showed this was not the case. Several projects green-lit under the previous National government’s $1b interest-free loan scheme to local governments had resulted in thousands of houses being built.

Unlocking housing development

Woods said in areas such as Auckland, Tauranga, Wellington and Christchurch, projects that were selected would be expected to deliver at least 200 additional homes.

In other urban centres, the project would need to deliver 100 homes, and in projects outside the main centres, 30.

Funding would be available for things like upgrading water infrastructure, sewage, roading and flood management.

Eligible costs included early stage feasibility studies, design, consenting and in some cases, land costs.

The fund would prioritise funding for brownfield intensification, greenfield expansion with access to amenities, and developments where infrastructure investments might not otherwise be funded.

“The Infrastructure Acceleration Fund is designed to allocate funding to infrastructure projects that will unlock housing development in the short to medium-term,” Woods said.

“It will jump-start housing developments by funding necessary services, like roads and pipes to homes, which are currently holding up development.

“This is about getting the most houses in the places across the country, where they are needed, happening as quickly as possible.”

The fund will also seek value for money through co-funding, contributions and commitments from third parties, including local councils.

“In order to bring on significant new supply we need to fund larger scale projects in large urban areas, as well as smaller scale projects outside the main centres, where there is also a housing shortage,” Woods said.

“We’ve been proactively working with Local Government New Zealand since the March announcement to identify these smaller scale opportunities.

“We know that the housing crisis is being felt right across New Zealand.“

Final decisions had yet to be made on how the full Housing Acceleration Fund, she said.

“We’ll also be looking at how to best build upon what we’ve started in our large scale projects, which are already transforming the urban environment.

“Together with the new $2b borrowing capacity for Kāinga Ora, central government will help green light tens of thousands of house builds.”