Housing Acceleration Fund welcomed but industry questions if it is enough to fix crisis

By RNZ's Adam Jacobson. 

Councils and developers are praising a multi-billion dollars fund which aims to kickstart the supply of infrastructure for new housing.

The government's so-called $3.8 billion "accelerator fund" is designed to pay for some infrastructure in public and private sector projects.

But some are criticising the plan, saying this is just a temporary fix to a problem which has been years in the making.

The cost of roading, sewerage and connections for new subdivisions have been cited by developers as a significant barrier in building more affordable housing.

Infrastructure New Zealand policy director Hamish Glenn said he backed the fund but after decades of underinvesting, the country had a lot of ground to make up.

"The level of growth that New Zealand has seen over the last decade or so has been largely unprecedented," Glenn said.

"It has been too fast for mechanisms which were in place to respond, we needed to be onto this problem much sooner than before, but unfortunately we have dealt with around 20 years of governments taking an instrumental approach to quite a structural, systemic problem."

While this package was going to provide short-to-medium term relief, it did not solve underlying problems, he said.

"What is required is a change to the incentives and resourcing of local councils so they want growth and have the ability to respond to growth.

"Until we get that change, we are going to have to continue with these incremental investments - $3.8b billion over the next few years, a few billion a few years after - that's not going to answer the questions first-home buyers want answered."

Auckland development company Ockham Residential director Mark Todd said to turn the water and electricity on, it cost him almost 10 percent of the price of building a new apartment block.

While the $3.8bn would help ease some of this burden, Todd said long-term infrastructure costs needed to be spread across all ratepayers.

"An acknowledgement that if Auckland needs more high voltage electricity, or more capacity for potable water, then all the 500,000 houses in Auckland should pay for that upgrade, not just the 12,000 new houses built every year because it's the collective underinvestment that has driven that," he said.

At the local government level, Hamilton Mayor Paula Southgate said it was unclear how the funding was going to be divided up among councils, but the package had been a long time coming.

She said the money would help get a number of developments off the ground.

"Any project that's already in the books we would want to complete and get them all done as quickly as possible, that includes both housing and some of our commercial infrastructure as well," Southgate said.

"The second priority would be leveraging off some new areas like Rotokauri or the northwest of Hamilton."

However, she said one area which the package did not help address was hyper-inflated land values.

"The one concern I do have is we need to tackle land value, this enables development to go ahead but the price of land is still quite high in Hamilton as well as many other places," she said.

"I'm still yet to see how this programme tackles that."

Auckland Council planning committee chair Chris Darby said infrastructure - not a lack of land supply - was the key to unlocking Tāmaki Makaurau's urban growth.

"I'm encouraged by this particular part of the government's announcement, but it is going to be very important that the application of this spend … it is consistent with our strategic documents and doesn't wander outside of that otherwise it could create consequential issues for us," Darby said.

The government was signalling it was not interested in "doing everything itself" and councils would have to play their part by opening up land and enabling intensification in order to access the funding.