Housing growth fund leaves councils with ‘no excuses’ for inaction
Saturday, 30 May 2026
A new Government financial incentive for councils that aims to boost new home consents to support housing growth is long overdue, developers say - but they still have concerns.
In the Budget, $400 million was allocated to a four-year scheme that will essentially pay councils according to the number of consents they approve, and the more consents they issue, the better the pay.
The payments are expected to go towards community infrastructure and councils will have to demonstrate that.
Auckland developer David Whitburn, from the Whitburn Group, said the fund was a step in the right direction but there were a few issues with what was proposed.
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Many councils were weak on infrastructure and it did hold the development of housing back, so incentivising was needed, he said.
“But I take any projections on what it might achieve with a grain of salt. Even with financial incentives, councils can’t consent houses where infrastructure doesn’t exist.
“And they’re not taking into account the difficulties of the market. The economic climate means there’s constraints around developments because developers can’t get funding to build if they don’t get enough pre-sales.”
Even if developers could get consents more easily, if they could not get the funding to build it would not make much difference, he said.
'In the announcement it says the funding can’t be used for water-related infrastructure as Local Water Done Well is creating a new operating environment.
“That carve out seems odd to me as water infrastructure, or lack of, is a big constraint on new housing.”
Another point was that $400m over four years amounted to $100m a year, and when it was spread out over lots of councils the sums involved were quite modest, while infrastructure was costly, he said.
“But it is a positive move, and I like the fact councils will have to report annually on how they have used funding to show they are addressing growth impacts for communities.”
Peter Cooney, director of nationwide property development company Classic Group, said the fund was long overdue as councils were cash-strapped and needed incentivising.
They did not have the money to develop infrastructure as projected and that created a restriction on the release of land because the infrastructure was not there to support new housing, he said.
“The biggest reason there has been such high house price growth over the years is because the value of land keeps going up because it is restricted.
“This funding should help or motivate councils to push forwards with more infrastructure which will release more land and support housing growth.”
Councils would have no excuses now to avoid doing so, and that was good, he said.
“People say ‘well, developers should pay, but there is only so much a developer can pay. Development contributions have escalated to up to $100,000 per house in some areas. That’s out of control, and it just increases the cost of new homes. So something like this had to be done, and it’s welcome news.”
Waikato developer John Kenel, from Assured Property Investments, was more sceptical. He said the problem was not councils needing to issue more consents, rather that infrastructure was not there.
“Consents are just paper. Infrastructure is the real bottleneck. You can issue all the consents you want, but if the pipes are full and costs keep climbing, people still can’t build affordable homes.”
Central government handing councils another $400m did not help him build anything, it just looked busy, he said.
“Some will say the money is the point: give councils the cash and they’ll build. But that’s not what’s happening. We’ve already paid millions in development contributions that were supposedly for community infrastructure.
“Where did it go? Councils seem very good at finding money for consultants, reports, traffic islands, speed bumps, cycleways and shiny little vanity projects, but the pipes are still maxed out.”
He was not against the incentive, and said David Seymour was partly right - councils responded when money was attached to behaviour.
But if the government was handing councils $400m ratepayers should see exactly where it went without digging through a mountain of PDFs, he said.
“Show us the projects. Show us what got built. Show us whether it made any difference. Because a lot of us no longer trust councils to ‘handle it’, and throwing money at the same system without transparency won’t change much.”
New Zealand Initiative executive director Oliver Hartwich said his organisation had long argued that councils needed a direct financial stake in enabling new housing, and the fund put that principle into practice.
When more consents meant more revenue, councils would find ways to issue them, he said.
“The design is sensible, and should prevent money flowing disproportionately to high-value markets like Queenstown at the expense of areas building plenty of more modest homes.”
But the fund committed about $100m a year, whereas the initiative’s preferred mechanism, a 50% share of estimated GST collected on residential building consents, would have delivered more than $1 billion, he said.
“The government’s incentive fund will help, but it will not transform council behaviour the way our GST share would have. Fiscal conditions limit what is possible now. As surpluses rebuild, the payments should grow.”
While the amount in the incentive fund was modest, the principle of sharing growth-related revenue was now built into how central government funded local government, he said.
“That is what we wanted to see.”