Councils keen on Government's $1b for infrastructure

  • 03/07/2016

The Government says councils facing dire housing shortages are "incredibly enthusiastic" about the $1 billion infrastructure development fund that's just been announced.

It's the latest move to tackle the Government's most pressing problem and Prime Minister John Key says it could help create "tens of thousands" of new homes.

He announced the initiative at the National Party's annual conference in Christchurch on Sunday.

The fund will be open to councils in areas with high population growth - Auckland, Christchurch, Queenstown, Tauranga and Hamilton.

"I've spoken to all five of those councils, they are incredibly enthusiastic about its potential," Building and Housing Minister Nick Smith told reporters.

"The Government wants pace around housing."

Auckland is the city with the most need, and Mayor Len Brown has welcomed the announcement.

"We face significant housing challenges... this initiative could help provide more upfront funding without increasing the burden on ratepayers," he said.

The councils can use the fund to build roads, water supplies and other infrastructure - a key barrier to development.

It isn't a handout and they will have to pay it back when people move into the homes and start paying rates.

The Government is going to borrow the $1b but it won't pass on interest costs to the councils.

"This is bridging finance, money we know we can pay back," Mr Key said.

"It's a great way of us being the middle man."

To access the fund, councils will have to outline how many new houses will be built, where they will be and when they will be available.

"Ideally, they will have agreements with developers," Mr Key said.

Along with the new fund, the Government is considering setting up independent Urban Development Authorities with powers to override barriers to large-scale development.

Dr Smith says they won't have emergency powers, but the way Christchurch was able to handle its housing crisis after the earthquakes is an example of the way fast-track planning can help.