Developers question impact of $3.8b infrastructure fund

Developers say $3.8 billion set aside for infrastructure funding may not be enough to make a difference.
Infrastructure funding for such essentials as roads, water and electricity, has long been pointed to as one of the major hurdles faced when building new developments.

The Government has responded by allocating $3.8b for a Housing Acceleration Fund to speed up the pace and scale of house building.

* Housing: Government to double bright-line test and end interest writeoff in war on property speculation, will spend $3.8b on new supply
* Fears of KiwiBuild fail behind $21m tax payer promise for developer
* Buyers flee from once-popular Wellington KiwiBuild development

Housing Minister Megan Woods said it was estimated the Housing Acceleration Fund would help green light tens of thousands of new houses in the short to medium-term.

Investment in infrastructure has been identified as one of the key actions the Government can take to increase the supply of housing in the short term.

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

Housing Minister Megan Woods says the $3.8 billion fund will jump-start housing developments.

Auckland property developer David Whitburn said the fund was a good move but $3.8b was not much compared to the scale of what was needed.

It needs to be taken in conjunction with a much-needed change of culture at councils and regional authorities around consents processing and targeted funding for infrastructure.

Some of the new funding was likely to be swallowed up until existing problems were sorted out, and that included the overhaul of the Resource Management Act, he said.

In the wake of Kiwibuild, there are also fears about the Governments ability to deliver in this area, particularly when it comes to volume.

Veteran property developer Ian Cassels, from The Wellington Company, was concerned about the removal of interest deductibility. He said he did not want to believe it could happen.

Ian Cassels, of The Wellington Company, is concerned about delivery.

He said New Zealands approach to infrastructure funding was back to front and that was a failure of local government.

The idea that new arrivals to a city should pay for the infrastructure is not right. If it is a good city, it should be funding infrastructure to accommodate growth already.

Cassels said that was not the case and the Government's move to help funding showed a desire for change which was required.

It is a concerted move in the right direction, which might make a difference. But Im concerned about delivery and I dont think that some of the levers being put in place are the right ones.

NZ Initiative chief economist Eric Crampton said addressing infrastructure funding was a key way to tackle the country's housing supply problems.

But the announcement looked like a big bailout for the current crisis rather than a sustained solution to long-term funding issues, the Initiatives chief economist, he said.

There needs to be better long-term funding lines to incentivise local governments to be proactive about enabling growth and working towards the ongoing development of their cities.

Master Builders chief executive David Kelly said he was pleased to see the Government taking urgent action and developing a package that had a strong focus on stimulating the supply of new builds into the market.

The plans provision for infrastructure funding to support new homes and developments is also a positive step, making it easier for us to build in the areas we need it most.

These measures recognise there is no quick fix. While some will start to make a difference now, they are also focused on providing a better continuity for supply for the future.

The Government is seeing housing as a key part of our critical infrastructure. This is something we have been advocating for many years. The infrastructure fund will address one of the key issues that has been holding back development for many years. Our members have been frustrated with the lack of infrastructure around key sites, making it impossible to get developments off the ground.


Our Partner