Infrastructure Funding and Financing Bill

I move, That the Infrastructure Funding and Financing Bill be now read a first time. I nominate the Transport and Infrastructure Committee to consider the bill.

I want to start my contribution on this bill by talking about how it fits into the broader agenda of our Government to fix a broken housing system. Much of what I will talk about today enjoys, I think, a high measure of bipartisan support across the House. I think we all share the analysis that we have an unresponsive housing market constrained by regulatory failure and missing the tools to enable sustainable urban growth. And, with that in mind, I want to acknowledge the Hon Paul Goldsmith and the Hon Judith Collins of National, the Hon Shane Jones as Minister for Infrastructure and New Zealand First member, and the Hon James Shaw and the Hon Julie Anne Genter from the Green Party. It’s rare for such a substantive bill to achieve the level of cross-party support that this has. But we have achieved this, and I look forward to jointly shepherding this bill through Parliament with those members.

There is a startling array of indicators that, in housing and urban development, are telling us that we have a major problem: severe housing unaffordability, falling homeownership, increased hardship and homelessness, ballooning household debt, and increased intergenerational inequality. And, as you’d expect, our Government is committed to directly intervening to provide support to those who need it, to build more public housing and affordable housing, and to rein in excess demand by changing the tax settings to discourage property speculation. The Environment Committee right now is considering the Urban Development Bill, which is designed to cut through the red tape and lead large-scale urban development projects that would otherwise be too complex, risky, or uncertain for the private sector to undertake alone.

But where I want to focus today is this bill, which is one of the strands of our urban growth agenda. The agenda rests on the idea that sustained progress will rely on getting our urban land and housing markets to work better, to be more competitive, and, in our view, there are three big challenges that need to be addressed. The first is a planning system that has been based on the idea of urban containment; second, the failure of governments until now, both local and central, to actively work with the private sector to enable urban growth and expansion; and, third, a broken system for financing new infrastructure to support urban development.

Underpinning the first two is a planning system that stops our cities and towns from growing up and out. And this isn’t just the Resource Management Act (RMA), but it’s also how we plan three waters and transport infrastructure. The Government has a number of work streams under way to address these challenges. We’ve got a national policy statement on urban development that will set clear parameters for council plan-making and incentivise quality intensification and ensure that councils zone more land for housing and urban growth. There’s the RMA reform process led by David Parker, which will consider our legislative arrangements in this area. We’ve got central government, local government, iwi, and the private sector collaborating on planning for growth, regional spatial planning exercises in six of the country’s fastest-growing towns and cities, and Minister Nanaia Mahuta is leading a wide-ranging reform programme on the three waters.

But our infrastructure financing system is broken, and that’s where this bill comes in. The Infrastructure Funding and Financing Bill is part of the solution to fixing our broken system. Our cities and towns cannot grow without a ready source of investment to finance and fund infrastructure, both roads and the three waters, yet our current system puts in place a range of constraints that make it very difficult for the market and for local government, particularly, to plan for and meet the demand for infrastructure. Several of our high-growth councils have tapped out their balance sheets. They cannot finance the infrastructure that’s necessary for urban growth and too often they end up in a position of using the RMA planning powers to protect their balance sheet and stop residential expansion.

Auckland, our largest city, grew by more than 156 people in the five years to 2018. That’s the equivalent of adding a whole new city the size of Hamilton. Providing infrastructure for that growth means that Auckland will use 98 percent of its debt capacity over the next decade. It’s not just Auckland; for example, Hamilton has also seen very high levels of growth and will use 86 percent of its debt capacity in the next 10 years. The inability of local government to invest in the infrastructure to stop urban growth is one of the main problems we have in our housing markets. When a city cannot grow in response to demand, you get a pressure cooker effect, which is precisely what has given Auckland some of the most expensive land and housing in the world relative to local incomes. And it is a big contributor to why this Government inherited a deficit of 71,000 homes when we took office.

This bill establishes a new way of funding and financing bulk housing infrastructure. It sets up a flexible, legislative framework that will enable councils and developers to overcome one of the key constraints they face and provides them with a new tool to fund and finance infrastructure without being hindered by councils, financing constraints, or high upfront infrastructure costs, and it does this by allowing a third party other than a council to finance the construction of infrastructure. A special purpose vehicle (SPV) will be set up for each project. The SPV will be responsible for raising the necessary finance and, in most cases, constructing the infrastructure, too. It’s, essentially, a project finance model where the debt associated with the project is ring-fenced from the council. Where the infrastructure is not privately owned, once built, the infrastructure will be transferred to the council, which will then be responsible for running and maintaining it.

The bill puts in place a new system of funding and financing the infrastructure for urban growth that will turn on the tap for a virtually limitless pool of investment capital. The intention is that we create a system where the viability of the project is the determinant of whether to proceed or not, and whether private capital can be accessed and utilised. But financing, of course, needs funding. So, while financing is currently the main bottleneck to infrastructure provision, there also needs to be funding or a revenue stream to pay back the costs of the project. So at the core of this model is a long-term infrastructure payment which is paid by the beneficiaries of the infrastructure to the special purpose vehicle over the life of the infrastructure, often collected by the local authority as a separate line item on the rates bill.

This bill is flexible. It will enable the facilitator—one of the roles that’s established under the legislation—to allocate the cost to beneficiaries on a differentiated basis either by phasing a larger payment up front and smaller payments in the out years, excluding or varying the charge by the extent to which a homeowner benefits from development projects.

In developing this bill, we drew on our experience at Milldale, north of Auckland, where, through a partnership between Crown Infrastructure Partners and Auckland Council, an alternative financing model enabled the delivery of infrastructure to support the building of 9,000 homes. In that case, the infrastructure payment is secured by an encumbrance on the title of each section and is paid by section owners—in this case, $650 a year for an apartment, and $1,000 for a stand-alone home per annum. Because of this, Auckland Council was able to bring forward its investment in the project, and the upshot is 9,000 more homes built and 9,000 families housed.

Moving to a model where infrastructure is financed and delivered by a special purpose vehicle means that we need legislation to provide powers to the SPVs to receive the levy and construct the infrastructure. These powers are not provided lightly. The bill has extensive monitoring, reporting, and disclosure regimes to ensure the SPVs’ use of these powers is appropriate and monitored. My officials have developed this model and enabling legislation in close consultation with the high-growth councils to ensure that it is fit for purpose. All in all, what we have here is a first for New Zealand: a piece of legislation that can give more certainty to councils and developers about their ability to provide the infrastructure needed to support growing communities.

I’d like to thank the officers of the high-growth councils who have supported the development of this model and the legislation. I want to thank the officials at the Department of Internal Affairs, Treasury, and the Ministry of Housing and Urban Development, who have done so much work to bring the legislation to this stage. I also want to acknowledge the efforts of the Opposition, particularly, the Hon Steven Joyce in the former Government and the Hon Anne Tolley, who began this journey, first by establishing the Housing Infrastructure Fund and, then, by repurposing Crown Fibre Holdings to Crown Infrastructure Partners, who facilitated the Milldale pilot. I commend this bill to the House.

Thank you, Mr Speaker. It’s my pleasure to stand to indicate the Opposition’s support for the first reading of this Infrastructure Funding and Financing Bill and to make the obvious point that housing impacts the standard of living for New Zealanders immensely.

What we’ve seen over the past few decades is a relative increase in the cost of housing, both rents and buying houses, and the drivers of that in recent times have been the incredibly low interest rates that we’ve seen all around the world, and you’ve seen asset price inflation all around the world. But combined with that has been a shortage of supply of houses in New Zealand—building new houses—and the cost of building those houses and the land upon which they sit.

So we’ve had pressure building in the last little while. Particularly in the last two years since this Government came in, we’ve seen significant pressure on the rental market, where rents have gone up significantly. That’s been driven primarily by the many regulations passed by this Government, making it fundamentally more expensive and difficult for landlords to rent out houses. It’s not compulsory for people to rent out their houses, and if enough people conclude that it’s all too difficult and expensive and they pull out of the market and there’s a shortage of rental properties available, then the price goes up.

The other side is on housing generally, and in the spirit of bipartisanship that Minister Twyford referred to earlier on, I do acknowledge this is an area where the Government is making some progress. But we do need to hold them to account in Opposition for the failure to deliver on many other parts of housing policy, and so we can’t talk about housing and this Government without referring to KiwiBuild and the missed opportunity and the overpromising and under-delivering there.

Secondly, the reform that’s required of the Resource Management Act (RMA)—and we’re going to hear, no doubt, from my colleague Judith Collins on the importance of the reform of RMA legislation and the building and construction legislation, which is so much a part of the cost structure. This Labour Government—right at the end of nine years of Opposition, having opposed every effort that the previous National Government brought forward to do something about the RMA and to make real differences—alongside New Zealand First and the Greens, have woken up to the need to do something in that area, but two years into Government, they still haven’t made much progress at all. We hope they will, but that certainly hasn’t been happening particularly quickly.

The third area, of course, that impacts on housing, aside from the failure of KiwiBuild and the slow progress on the RMA, is in the transport space, because transport is intimately linked with the cost of housing. If you could live quite comfortably out the back of Meremere and actually still get into town, then you possibly could, and things would be cheaper. But you can’t, because it takes you three hours to get in in the morning because of the clogged Southern Motorway. So making progress on transport infrastructure is critical, and we’ve all shared the frustration that, after two years, the primary achievement of this Government has been to turn off the major transport projects and talk about a slow tram down Dominion Road. So that, collectively, all adds to the broader pressure.

But, having said all that, this bill is one area where we do agree that what is being proposed makes sense. It builds on the work that Steven Joyce and Anne Tolley did in 2017, which is to say that, if you want to build more houses, one of the things that is holding back the development of new subdivisions in part—particularly, of our big cities but all around the country—has been the debt limits that many councils have and their inability to fund the road and, particularly, the stormwater and water infrastructure that’s required for those subdivisions. Because they haven’t had the money available and they’ve been up against their debt limits, the reaction of councils has been to slow those developments. So we in the previous Government, and this Government also, were keen to see more development happening and more subdivisions opened up sooner and faster.

So the idea that the previous National Government came up with was allowing a different levy model, which was pioneered up in Milldale, north of Auckland, whereby a private developer or owner of the land would be able to levy the owners of the new properties in order for that work to be done sooner than it would have been otherwise. That is helpful to our overall affordability by delivering more houses sooner and increasing the supply. What’s being proposed by this legislation is to bring through some rules that will enable this to happen more widely, because the example up in Milldale was, essentially, one primary owner of all the land, and that made it simple, but where there are multiple owners, it’s more complicated.

Now, there are many questions that need to be resolved. The primary thing that the National Party insisted upon before supporting this bill to the first reading was that the Government would take this through a full select committee process, because we’ve actually got to take the time to work out how this applies in many instances. While it might be quite simple to see, if you’re in a new greenfields development, in a new subdivision on the edge of town, and owners have come together—they’ve built this subdivision—and the people that buy the new house are going to pay a levy on their house, and they know what it is over the next 30 years, and that’s enabled this thing to happen sooner, then most people, I think, would agree with that. Where it gets a little bit murkier is if there is other situations, envisaged potentially by this bill, whereby, say, for example, a major piece of transport infrastructure is put in and somebody living within 100 or 200 metres of a new railway station, for example—whether some sort of levy arrangement might apply to them. That’s nowhere near as straightforward, and so how we design the system so that it is fair and equitable to people who have existing rights and have been in the place for a long while and might not be interested in whatever’s being built in their neighbourhood—how we design that system is actually very complicated.

So our simple message is that the broad proposal is one that we support, and we want to encourage and to enable the financing of more development, and we want to go through it in a careful and considered manner to make sure that we bring the broader community along with us and we don’t create any quirks and kinks in the system that make people worse off. So, on that basis, I commend this bill and look forward to working constructively with the Government on it. Thank you very much.

Thank you, Madam Speaker. It’s a pleasure to be here to talk about the Infrastructure Funding and Financing Bill, a long-overdue bill. I want to acknowledge the Minister for Urban Development for his leadership here, and also those from across the House who have done some work on it in previous years. In essence, this had come to a grinding halt in terms of local government wanting a solution to move forward, around saying, “Hey, how do we finance infrastructure for housing, roads, and other core community infrastructure?” I know that, coming from local government, this is a solution that would’ve transformed parts of the city I represent a long time ago, because what this gives now is some hope and some new tools which had not been there previously.

So what local government did was work within its boundaries, what developers did was get frustrated, and what partners did was really hang around and hope like hell that they could do something within the current framework settings, but what this does is simply give a range of new settings which allows them now to move forward. I think that the example, or the pilot that’s being worked on now in Milldale, north of Auckland, over the last few years—that what that has allowed is to, I guess, smooth out some of the kinks and ensure that this legislation goes through and irons things out and allows all partners, all stakeholders from across New Zealand, to get on with the job, and that’s to create housing options.

I know, when you look at the housing continuum, this actually gives hope to the full spectrum, be it building housing for the homeless, looking for transitional and emergency housing, through into social housing when you’re looking at affordable rental accommodation, right through to private accommodation of those sorts. I know in my wee patch, and coming from local government, we were involved in a 20-year Crown-council partnership, a $400 million piece of work that is still rolling out, and what the arrangement was is it allowed houses to be built without the sort of political struggle, and that’s what I sense from this legislation. What this allows now is the developers, partners and stakeholders, to get on with the job of building houses. So there won’t be the general thrashing of the different aspects of the housing spectrum, the cheap political shots. What this will allow is for homes to be built for Kiwis who want to live in warm, dry, decent homes anywhere in New Zealand. There are some priority cities that have been identified, but I know a city like Wellington will certainly look closely at this, with our transport projects currently under way, to say, “How can a special purpose vehicle be utilised in a way to fulfil the housing needs of the capital city, for example?”

So this gives great hope. It allows developers now—and I attended a fund-raiser recently where two developers were expressing their fury at this. I don’t know if it was alcohol-related, but I gave them the benefit of the doubt, because what they showed was a long-term frustration at not being able to reach their full potential. I said, “Look, something is coming, and when you see this bill, I believe that you will look at the componentry of it and say, ‘That’s where we now play a part.’ ” What I like most is that everyone’s got skin in the game: local government, central government, the private sector, NGOs, even those community housing providers, per se, who will pick up a role along that housing continuum and allow them to get more Kiwis housed.

This is a great piece of work. It’s coming to the Transport and Infrastructure Committee. I’m looking forward to seeing it next year. I commend this bill to the House.

Thank you, Madam Speaker. It’s a pleasure to be talking on this first reading of this bill, the Infrastructure Funding and Financing Bill. I think it’s very pertinent when we’re talking today, just the closing out of 2019, with basically two years of non-delivery of infrastructure, which has been most disappointing from a Government that’s been talking about delivering much this year but actually resulting with very little to actually put alongside its name in terms of what it’s actually achieved.

So this bill, obviously, builds on the Milldale development in north Auckland. A number of speakers have referred to it. It is a development that’s been undertaken by Fulton Hogan; Crown Investment Partners, which is the old Crown Fibre Holdings model that’s been adopted; and also Auckland Council. It was one which was really dealing with the issue, particularly in Auckland, where you had a council that had an inability, challenged both financially but also just operationally, in terms of trying to help new developments occur rapidly. So we’re in that state where we’ve got people wanting new houses, we’ve got developers wanting to do it, but there’s just a difficulty in getting Watercare, Auckland Transport, and all the other agencies—the council agencies—together to be able to do these things quickly. Clearly, it wasn’t occurring.

Under the new model, what it means is the people that buy a house will, basically, agree to an undertaking that they will pay $1,000 per annum. That will be collected by Auckland Council for a period of 35 years. So if they sell that property, the new owner of that property will also have that incumbent liability until the 35 years is extinguished.

What this bill does is it creates the opportunity for a special purpose vehicle to raise money, utilising a levy revenue stream that I’ve just talked about—the $1,000—financing infrastructure, commissioning construction, transferring the infrastructure to the relevant local authority or any other public entity, and repaying any finance raised for infrastructure. But, whilst we’re all very supportive of it because we need more tools in the armoury to be able to deal with the issue of infrastructure and being able to allow developers to build these houses so we can get more families into their own homes, I think this bill will be an interesting one to be talking about at select committee, because I think there’s a number of issues that it raises. The first one is: what is a reasonable cost that a potential house-owner of that development, and there will be a number of them that will occur—what is the reasonable cost that they should be bearing in terms of the particular contribution towards the asset or infrastructure that’s being built? Of course, this is the first tension point between a council: how much they want to see passed on to the homeowner as opposed to what legitimately should be done or undertaken by the council.

The second thing is I think it’s got the potential for the councils to see this as a way of obviating or reducing their requirement to fund developments and, by the good nod and a wink, or whatever indications they might give to developers in future, to be able to say, “Well, actually, we’re not going to fund it, and maybe you should look at this as the option to fund your development.” as opposed to councils having a legitimate requirement to fund these types of infrastructure investment. So I think the tension point is around how this is managed and that councils don’t see this as an out clause and not meet their requirement to provide good infrastructure for their citizens.

I think also: how does the council choose to pay for the infrastructure in one development but, next door, or maybe not too far away, say, “Well, we’re not going to do that, and you need to go down this process.” I think, again, that issue about how that is actually managed by councils is quite an issue, because that, in places and situations, could be patently unfair to the future homeowners buying into that particular development where the council are not underwriting or actually paying for it.

I think the issue—the fourth one—is around the access of third parties to the infrastructure. So one of those things that could be done is this levy could be used to build water infrastructure—so oversize the pipes in a new development, but, actually, that relates to the existing water network. So how do you end up not cross-subsidising other ratepayers because you’ve incurred a lot of fees in terms of building infrastructure in that one development, but, obviously, it’s connected to the rest of the network?

Those are four issues I think we will have to traverse in the select committee, and I think they are going to be interesting questions as to how they are dealt with, because, ultimately, we’ll want to make sure that it’s fair for all ratepayers and new property owners in these different types of developments.

Thank you, Madam Speaker. New Zealand First too rises to support this Infrastructure Funding and Financing Bill, which is a bill that seeks to do exactly what it says on the tin. It’s pretty clear. Sometimes some of these names are a bit obtuse, but this is exactly what this looks to do. It looks to set up a flexible legislative framework and, essentially, allow some private sector funding to come in to address our infrastructure shortages and for local councils to have access to some private sector funding through these special purpose vehicles, or SPVs.

Of course, our councils, many of them are getting very close to their debt limits as they are under all sorts of pressure. I might say it’s not only—I heard the Minister in his address talking about those well-known fast-growing areas like Auckland and Hamilton, but, actually, there’s a huge housing shortage at the moment down South, in places like Invercargill, where there’s a housing forum that’s been formed—and I know local MP Liz Craig here is on that forum—because, all of a sudden, we’ve got these growing populations after decades of stagnation, and we just haven’t had the housing infrastructure. The local councils and the local communities are scrambling to try to get some houses built. In places like Gore, through my office in Gore, we have people coming in all the time who can’t get places to rent—30 people turning up to rent one place. In Balclutha, they’ve got 300 meatworkers coming in from Dunedin every day to go to the Silver Fern Farms plant at Finegand. That is an incredible lost opportunity for the town of Balclutha, in that case. They could be citizens of that town and be contributing to that community, but they can’t, because there are, simply, no houses.

So it gives the councils the opportunity to, where they’re up against debt limits, raise some private sector funding. It is important. Holyoake used to talk about New Zealand being a property-owning democracy. It is one of the great fundamentals of our society that you have a home, whether that’s one that you can buy or rent on the way to buying. We know our homeownership is falling; so we’ve got to have other ways. Social housing is becoming more and more important, and, of course, we’ve got the Three Waters Review coming up, for which, once again, the Gore District Council, the other day, costed their improvements at around $60 million to reach an estimated threshold. So that’s significant. They’re going to have to raise a significant amount of capital here, and these SPVs may be a tool that they can use, or a mechanism that they can use, to offset some of that cost in terms of debt on their balance sheet. Of course, there will still be a return.

The other part of this, too, is we’ve got a world awash with cash, quantitative easing around the world, and there’s very low returns in bank accounts. So there’s, essentially, an opportunity here for pension funds, for iwi, for private citizens, and for companies to invest in these developments to get a low-risk return. They’re investing in a public-good infrastructure and getting a return that, presumably, would be above the bond rates or the bank rates that they may be able to access otherwise. So there’s, potentially, a bit of a win-win there as well.

I note this goes to the Transport and Infrastructure Committee. All of a sudden—I heard before they were a little underworked—they’re getting a deluge of legislation coming forward from Minister Twyford today. I think they got the Racing Industry Bill, rather improbably, the other day too. So Darroch Ball, the chairman, is going to have to rouse that committee and get them under way, because these are important pieces of work.

We note that it’s also connected to a lot of the other mechanisms or tranches of work the Government’s doing: the RMA reform being led by Minister Parker and Minister Twyford’s urban development agency or authority, the second coming of Muldoon as he wades through red tape to get infrastructure and housing built. That’s welcome because we know that one of the issues has been red tape, and we are looking very seriously at addressing those things and giving the Government, in its case, the mechanisms to ride over the top or alongside councils to get some stuff done, just to get some houses built and get some infrastructure into the ground.

So New Zealand First are very supportive of all these tranches of legislation that have come forward today, but I think this one is a very good one in terms of addressing a very great need in our society: getting more houses built, getting our waste-water and sewage treatment plants up and running. Roading is another potential issue—another form of investment for pension funds, etc. So there’s a lot to like about this bill, and New Zealand First will be supporting it through to the select committee. Thank you.

Thank you, Madam Speaker. I’ll just be taking a brief call on the first reading this afternoon of the Infrastructure Funding and Financing Bill. As we’ve heard this afternoon, this bill provides a new funding and financing model to support the provision of infrastructure for housing and urban development. We see that as quite an important thing to do because, as we’ve discussed this afternoon, and particularly in relation to transport infrastructure, this is a Government that is struggling to build new infrastructure across a whole range of areas, not just transport.

The one I want to talk about this afternoon was urban development. It feels a little bit funny following my friend Mark Patterson, who I think lives in Lawrence, which has got about 400 or 500 people—and I, of course, live in the urban metropolis of Pleasant Point, which I think is about twice the size of Lawrence. So it’s a bit funny to be talking about urban development here this afternoon. But I did just want to talk about the light rail project which Jacinda Ardern promised a couple of years ago now—2½ years ago—would be built within four years—would be completed within four years. Here we are, more than two years after that promise was made, and literally nothing has been achieved. Nothing has been done on that light rail project.

The worst part about that, actually, is that this is a Government—as I’ve said this afternoon, a couple of times now—that took $5 billion out of the State highway network to put into rail and cycle projects, and now they can’t even get it right. With all of that money they’ve got available to them, they can’t get it right for the one major infrastructure project they’ve got in Auckland. What it means, actually, is that now they’ve had to go through and scrap a lot of roading projects that had been consented, that were shovel ready, and others that were promised by the previous National Government. Those roads are now more dangerous than they were two years ago. There are more vehicles on them, there are more trucks on them, and there are more people who are unwilling to drive on those roads now because they are more dangerous.

So we do see this bill as a very small thing that can be done to try and improve infrastructure arrangements. As we’ve heard this afternoon, it’s going to change the funding model for those infrastructure projects. We support that. I do hope it goes to the Transport and Infrastructure Committee. That’s the appropriate one for it to go to. I’d like to sub on to that committee, because there are a lot of particular issues with these funding models that have been raised: how to keep that debt off the council balance sheet—I’m interested to hear how the Minister of Urban Development proposes to do that, but until then, I do commend this bill to the House.

Kia ora, Madam Speaker. Ngā mihi nui ki a koutou, kia ora. I rise on behalf of the Green Party to support the Infrastructure Funding and Financing Bill. Look, it’s infrastructure that built our country, that saw us grow rich over time. It’s something we all, I think, should be able to agree that we’ve lagged on in recent decades. It has slowed down our productivity, it has slowed down delivering prosperity for New Zealanders, and I think if anyone tuning in wanted to know why, they just had to listen to the last speech. For so long, we’ve played petty politics when it comes to infrastructure. As a small country, we’ve wasted a fortune constantly chopping and changing. I think now is the time that we should be calling for cross-party support, greater long-term planning; not more petty politics and name calling. Look, we should just get on with the business of building infrastructure.

Here’s a good example of the Government getting down to business, actually delivering solutions, practical solutions, that are going to make a difference for people. You know, a couple of scenarios—because this legislation, basically, allows special purpose vehicles, a funding mechanism through a levy to fund these projects over a long time. Pretty simple, right? And there’s a couple of, I guess, tangible examples: say you’re in an apartment building, 100 flats inside, and you’ve discovered the sewerage is outdated and needs to be modernised. Now, that’s an expensive project for a single apartment building for a developer upfront, but say you spread it out across multiple decades, say you apply to the Minister to also apply to other infrastructure users who will benefit from that modernised infrastructure to also pay across a period of time, it becomes more affordable. You reduce the barriers to the upfront infrastructure investment. Take a papakāinga community where maybe 20 houses are going to be built around a marae but you need a new access road to be built. Instead of the massive upfront cost, you can spread it out across decades.

💬 Hon Phil Twyford: What a voice of reason!

The voice of reason. So, rather than playing petty politics, let’s get on with business. Let’s do this.

I really enjoyed the Hon Phil Twyford’s contribution today, but not nearly as much as I enjoyed from this side of the House. But—

💬 Chris Bishop: He’s your friend, isn’t he?

He is my friend, thank you very much. I think one of the things that the public expect from the National Party in Opposition is for us to be all grown up when it comes to things like infrastructure and not to do what, unfortunately, the other side did when they were in Opposition. I enjoyed the fact that the Hon Phil Twyford mentioned the regulatory failure that has made it so difficult to get anything done. It’s so nice to hear a politician of the left variety not blame the market but actually put the blame where it really should be, which is in the regulation and overregulation. It’s really hard, as we know, to get any infrastructure built in this country. We need to reform the Resource Management Act. We need to reform the way in which we can fund infrastructure.

If you think back to the last really big infrastructure projects, the ones that we did in Government around roading were very useful—shame we weren’t there longer to finish a lot of those and get all the roads joined up—but before that was really actually back in the 1970s under the Think Big projects. People think back to that and think how terrible it all was and, basically, sort of, bankrupted the country for a while, but, frankly, we wouldn’t have our hydroelectricity generation if it weren’t for those. We wouldn’t have Marsden Point. We wouldn’t be talking about ports being shifted. We wouldn’t have gas reticulated around the North Island. We wouldn’t have, frankly, anything other than coal-burning power stations, or we would be going without power.

So I think there are lots of things that we need to do in Parliament, and one of the things that we need to do is to work together where we can to at least support ideas where we’re looking for solutions. The Milldale project, which Phil Twyford has referred to, is one which was started before the current Government. It did deal with issues around how to actually fund infrastructure where a developer may not be able to do it straight away and to understand that councils cannot continue to borrow as they have, because they can’t actually get past their debt ceilings. None of them seem to have any ability to sell anything, not like people in the normal world, who actually do sell a property before they buy another one or sell something. Councils seem to have given themselves all sorts of reasons why they can’t do things. So sometimes it is important for us in Parliament to be the people with the big girls’ and big boys’ pants on and make those big decisions and help them do the right thing, and I think most people would consider that that is actually part of our job. We’re here to get the job done, not to get all petty about stuff but to understand that that takes the adult in the room, and that just happens to be us. Thank you.

This is a split call. I call the Hon Willie Jackson.

Kia ora, Madam Speaker. Tuatahi, e tautoko ai te kōrero a te mema, a Judith Collins, he rawe tāna kōrero. He rawe ki te whakarongo ki ngā kōrero pērā, i te mea kei te tino tautoko ia te kaupapa, koirā te mea nui. Ngā mihi ki a koe, Judith, mō tō kōrero ātaahua i tēnei rā.

I tēnei wā, e tika ki te mihi ki a Phil Twyford mō tāna mahi. I tēnei tau, he rawe tāna mahi. Ka tika me mihi ki a koe, Phil, mō tō kaha ki te ū ki te kaupapa i ngā wā katoa. Ahakoa he nui te whakahē, he nui te whakaparahako i ētahi wā, kei te ū ki te kaupapa, tika me mihi ki a koe. I whakatakoto te rautaki mō tēnei whenua, Aotearoa. Ngā mihi ki a koe. Ngā mihi ki a koe.

Koutou katoa, tēnā koutou.

[Greetings, greetings Madam Speaker. Firstly, I support the member Judith Collins’ speech; her speech was excellent. It is great to listen to such speeches, because she is really supporting the initiative. That is the main thing. I acknowledge you, Judith, for your beautiful speech today.

At this time, it is appropriate to acknowledge Phil Twyford for his work. This year his work has been excellent. It is only right to acknowledge you, Phil, for your strength to persist with the initiative at all times. Despite there being much criticism, and belittling at times, you continue to persist with the initiative, and it is right to acknowledge that. The strategy has been set for this country, New Zealand. This is thanks to you. This is thanks to you.

All of you, greetings to you.]

I was just congratulating the previous speaker, Judith Collins, for her wonderful kōrero in terms of the House today. I thought that was a leadership-type kōrero—no doubt about it—leading the way for the National Party, who seem to go to other areas on a bill that is going to be very positive for this nation. Just wonderful to hear those leadership-type speeches, which are so rare from the Opposition these days—wanting to put the knife in at a time when we should come together for a kaupapa like this, where New Zealanders are going to benefit from this bill and the wonderful work done by Minister Phil Twyford. I was saying in my mihi, too, that he has done, in my view, a great job this year. Despite the criticism, he’s hung in there and done the business and now he’s come up with a bipartisan bill and the National Party are supporting it wholeheartedly, which is really good to see tonight—tremendously good to see going forward.

Of course, we as a party have built more houses than the Opposition ever have. We’ve come through all the muck and all the nonsense, and I just want to congratulate ourselves for such a fantastic job with regards to housing, and the public are seeing that. They’re seeing the work done despite the negative, negative, negative, negative campaign from the Opposition every week. So, well done to us and Minister Phil Twyford, and also Marja Lubeck, who last week—

💬 Chris Bishop: Lubeck.

—oh, thanks for that, thanks for that correction; we’ve got to get it right, no, no, absolutely—

💬 Hon Member: She’s right in front of you.

—oh, is that right, thanks very much—who was doing the business last week.

I wanted to just say, in the short time I have left, though: this bill is really important for Te Ao Māori because it offers opportunities for our people to enter into partnerships—to enter into partnerships. I know that Minister Twyford has been speaking with Ngāi Tahu, who are looking for an opportunity in terms of Māori. Ngāi Tahu, one of the most innovative tribes in the country today, are looking at opportunities for Māori in this space, because our people, sadly, have been ruined—well, not ruined, but certainly been dealt to because of the National Party’s terrible policies over the last nine years, where we have seen homelessness at an all-time low. So Ngāi Tahu have entered into the kōrero, have entered into the negotiations, and I’m really pleased to see that they’re going to be working with the Minister in terms of this bill.

Also, Ngāi Tai ki Tāmaki, James Brown in Auckland—they’re also doing some really, really positive work, entering into this opportunity that has been created by us and supported—

💬 Hon Phil Twyford: Exactly, like KiwiBuild.

KiwiBuild, that’s right. It’s coming back. We’re coming back here. Despite all the negativity, our people want to enter into this relationship, and also Ngāti Whātua with Ren Blair and Ngārimu Blair—young guns at Ngāti Whātua. They see the opportunities of this Government. They don’t just see negativity, which is, sadly, still being portrayed by this National Party every single day. They have to get with it. It’s Christmas. They know that this Government is on track. We’re going to turn things around. Well done to Minister Twyford, and well done to us. Kia ora anō tātou.

Thank you very much, Madam Speaker. Well, that was a typically self-congratulatory speech by the Hon Willie Jackson, but we’ve enjoyed his kōrero in the Chamber this year, and I want to wish him and his whānau a merry Christmas. It’s been good sparring with him across the House.

This is an extremely important bill, and I want to congratulate, genuinely, the Minister for bringing it to the House. Minister Twyford, every now and then, delivers very erudite and excellent speeches about urban spatial economics and our land markets, and the most recent one was on 7 December. He gave one to The New Zealand Initiative a while ago, which I read and I enjoyed. It sounded like a speech Bill English would’ve given, but I really enjoyed it. I want to quote him, because he’s absolutely right: “The argument I want to make to you is that generations of urban land use policy have lacked a decent grounding in economics. The consequences of that have been disastrous. And if we want to turn it around it is going to take bold reform and policies informed by an understanding of urban spatial economics.” There’s some stuff in there and about the speech that we wouldn’t necessarily agree with. There’s some stuff that the Labour Party campaigned on that we wouldn’t necessarily agree with, but the fundamental underpinning of the Minister’s speech was around how poor-quality urban land-use rules, largely driven by central government and enforced by local governments, have created artificial scarcity that has driven up the price and cost of housing and that we are now grappling with as a community.

Let me tell you, in the Hutt Valley, because we have not built housing quickly enough, over the last 10 years when we had that very sharp population spike from about 2012 and 2013 onwards—sometimes driven by immigration but actually driven by internal migration from Wellingtonians forced out of their own over-expensive housing market, moving to Lower Hutt to escape the high prices in Wellington—we had a population shock. For 30 years, Lower Hutt’s population was about 100,000 people, it bubbled along around that; within five years, it was 108,000 people, and housing supply did not keep up. Now, social housing supply did not keep up, and I put my hand up and say that the former National Government did not build quickly enough in Lower Hutt, but we are also not building quickly enough now in terms of social housing. But the solution, as I always say to people in the Hutt, is we’ve got to free up housing rules and density restrictions in the city that make it difficult to build houses.

The point I always make is that everything in the housing market is connected. If you make it difficult to build houses and you put an artificial constraint on the number of houses in a city when there’s a population shock, unsurprisingly, rents rise, and we’ve seen rents rise $80 a week in the last two years. When rents rise, you force more people into social housing, and when there’s a shortage of social housing and it’s as difficult for the Government to build houses in the Hutt Valley and other parts of the country as it is for the private sector, you get more people seeking social housing places, and they miss out because there’s a queue. At the moment in the Hutt Valley, the social housing waitlist is 640—640!—families or clients on the register, waiting for a house, and that number has quintupled in the last two years. Of course, the consequence of people being on the social housing register is real homelessness for the first time in a generation in the Hutt Valley.

So this bill is really important and, as I said at a public meeting in Wainuiōmata last night to discuss transitional housing in the Hutt Valley, in Wainuiōmata, the solutions to our housing problems in New Zealand are going to be multifaceted and they’re going to take a long time. It involves the State building more social housing. We all agree on that. It involves freeing up our urban planning rules, which the Minister is working on, alongside David Parker, but critically we need to make it easier to finance infrastructure developments as well. And that’s why this bill is really important, and I am pleased to see it come to the House. It builds on some of the work that National started in Government. It builds on the work done at Milldale, which I think everyone agrees has been very successful. And it builds on the work that we’ve done with the special purpose vehicles.

Time doesn’t allow me to go into all the details, but I am really looking forward to considering the bill at the select committee. I commend the Minister for introducing it, and we look forward to working with them as we get on with it.

Thank you, Madam Speaker. I am very pleased to take a call to support this bill. In my humble opinion, this is one of the most progressive and inspirational bills. In fact, the relevant sector has been talking for quite a while about the credit rating of the big three—Moody’s, Standard and Poor’s, and the Fitch group—and its direct impact on the ability of central government or local government to raise funds. For example, the Auckland Council’s debt to revenue ratio has reached a certain point that the local authority may not be able to raise any funds at all. An SPV—a special purpose vehicle—is the answer, and this is what the bill’s all about.

I want to reiterate what the Minister has just said. Our infrastructure funding and financing model is broken. Our current system has presented a range of constraints which make it harder for both the market and central and local governments to plan for and to meet with infrastructure demand. Some of our higher-growth councils, which provide most bulk infrastructure, have tapped out their balance sheets. The bill provides council and developers with a new tool to fund and finance infrastructure projects by enabling a third party, rather than a council, to finance and construct infrastructure projects. A special purpose vehicle will be set up for each project. The SPV will be responsible for raising the necessary funds and, in most cases, constructing the infrastructure, too. This is, essentially, a project finance model where the debt associated with the project will be ring-fenced from city councils. This is an omnibus bill which represents a substantial policy programme. There are specific provisions dealing with the debt, the public ownership, and the city council’s involvement.

I have recently joined the Transport and Infrastructure Committee.

💬 Chris Bishop: A good committee.

A very good committee—thank you, Mr Bishop—unlike the Justice Committee, which has been overburdened and full of issues and problems. It’s a great pleasure for me to have joined my former buddy from the Justice Committee and to have joined the Transport and Infrastructure Committee. Probably, we’re lucky enough—wherever we go or whatever kind of select committee we have joined, that committee will attract more bills. How lucky we are!

I very much look forward to the progressing of this bill and, in particular, to the submissions from the sector and the public. I both commend the Minister and commend the bill to the House. Thank you.

Madam Speaker, it’s 5.40 p.m. and people are getting a bit jaded, I can see. It’s important, though, that this bill gets through its passage. First of all, I want to acknowledge you, Madam Speaker, as the former Minister that was involved in local government with the Hon Steven Joyce. That’s why the National Party is supporting this: because it makes sense. Its genesis was actually developed by the previous Government, who saw the need. I do want to congratulate the Hon Phil Twyford on his words and getting it to this point, because I think you have cross-party support because it makes sense and it is a real issue in New Zealand.

I just want to give a little bit of context, because, in my previous role, I often worked and understood issues with local authorities who reached a debt ceiling. Auckland Council is a classic, but there are others—high-growth councils—in New Zealand who got really worried and, in many ways, almost got unbankable from a debt perspective as to how much further they could raise their debt. They could actually raise their debt further, but usually what happened is that the institutions responsible for their credit rating or their lending perceived that as a higher risk, and the total cost of their borrowings went up. So, while it might have been a marginal increase in debt, the total cost across their whole portfolio, if you had $50 million or $100 million, was significant.

I always used to argue that, largely, local government debt is safe as houses, because, ultimately, you know, the council had the guarantee of the rates supply—guaranteed. If people didn’t pay, their houses were sold. Now, that never usually happens; so it’s a very stable income source. But then what ended up happening was that, in the middle of the global financial crisis, councils became very risk averse as well. One of their areas of greatest exposure is developing the infrastructure for land development and then not getting the development contributions in to fund that cost.

I remember going to Te Ānau about, I think, seven years ago and there were roughly a thousand sections that had been developed by the Southland District Council; all developed, not a house on them, and there were holding costs of development at that stage. It’s been developed now, but the holding costs of that development were significant. And, in those cases, many councils became even more risk averse, more risk averse, because economic cycles and housing cycles go like this, and while we’ve got a massive boom on at the moment and we have had for some time, councils still have to watch what their exposure is to the debt market.

So these special purpose vehicles, Minister, are a very good thing to do. They do not, though, take away the total encumbrance of costs on a property owner, but they do allow the local authority to operate over here with a relationship with its council through rates and its debt servicing ability, but also allow a thousand dollars a year or something—whatever the value’s set—to be set aside for that infrastructure. And, believe you me, there’s a lot of developers out there today who would say, “Let us build the infrastructure to a standard, at a cost, guaranteed funding. We’ll get it done and take the risk away and put it straight back on to the owners of the property rather than the collective risk of the local authority.” I agree with what Chris Bishop has said: this has been a bit of a perfect storm. And Minister, you’ll know, even in my own patch, you know, we have some social housing issues, and the party I now represent could have done more at the time, and I’ve been publicly acknowledging that. I now want this Government to do more, and I want them to do it quickly, because we have 459 people in motels looking for houses.

So this is a very big issue. The land supply issue in Hastings district, anyway, is one issue. The ability to fund the infrastructure is another issue. And, when you put all that together, what it means is that development doesn’t generally happen as quickly as it can. When there is more and more demand for housing, what happens is some people get displaced, rents go up, and we have lots more people living in motels and things.

So I think this is a good thing to do, and I hope that councils who are largely and quite highly indebted will make use of this. There will be some things we have to work out at the select committee stage, some details, but this is a good bill. It’s a good idea. It’s a good piece of legislation. And I agree with what Chris Bishop and the Minister have said. We have got this wrong in New Zealand—how we manage housing supply, land supply, and demand—and it has ended up costing everybody; unfortunately some people disproportionately more, and that’s what we’re trying to help. So I commend this bill to the House.

Peace and harmony have broken out across the House at a quarter to six—

💬 Hon Phil Twyford: It’s Christmas.

—which is really lovely to hear. It is Christmas-time, Mr Twyford, and I’d like to acknowledge the previous speech there. The member Lawrence Yule spoke quite candidly about his experiences in local government. We certainly appreciate your experience here in the House and in this debate. So thank you very much, Mr Yule. We also heard from Chris Bishop there, who talked about some of the challenges in his area and how this bill does address some of those issues. And, thirdly, we heard from the member Andrew Falloon, not about the bill but about his pet roading project, but that was certainly interesting as well. So, anyway, we’ve all got our different flavours in the House here tonight.

So turning my attention here to my specific contribution to the bill, I’d like to, in the first part of my speech, outline the current situation as I see it and what’s got us into this situation, and then, secondly, some of the solutions to the situation around housing. Just before I do that, I would like to acknowledge the Minister, Phil Twyford. I’d also like to acknowledge Ministers from the previous National Government who did work on this, particularly around the Crown infrastructure work as we link to that.

So the current situation, as we have heard, is that we are a number of houses short in New Zealand. This has happened for a variety of reasons. A little aspect around immigration: New Zealand is a very popular place to live and we have had a lot of people come here. Businesses have had people come over from other countries to support their businesses, and that’s great. But, at the same time, it puts pressure on housing, health, and education.

A key aspect here has been around the regulations from councils; some of the challenges, particularly around their debt ceilings. And, if I could turn my attention a little bit to Hamilton, as Mr Bishop did, just to put a bit of a local focus on this, when I was first elected to Parliament, two years ago, I met with the previous mayor of Hamilton, Andrew King, and the CEO, Richard Briggs, and their first topic of conversation was housing. There was a number of topics they wanted to talk about, but housing was their priority. They spoke back then around the special purpose vehicles. They spoke about Crown Infrastructure Partners. They spoke about what was happening in Milldale and they spoke about their desire to have something like that for Hamilton. So I certainly heard those words and fed them through to Minister Twyford. What they told me was that their debt ceiling was, effectively, maxed out. You know, they couldn’t afford to pay for the infrastructure and they needed new tools. That was the key point that they said: they needed new tools in their toolkit in order to deliver housing.

Hamilton is a number of houses short. There was a recent piece of work done by the Waikato Plan and it analysed the state of housing across the whole Waikato area. Specifically, Hamilton is 4,000 houses short, and I’ve seen firsthand evidence of that as people are coming into my electorate office—and I’m sure the National MPs based in Hamilton have seen the same thing: people coming into our offices in desperate need of housing, desperate need. We talk about homelessness. Sometimes homelessness evidences itself by people living rough on the streets, but also homelessness evidences itself by people being crowded into houses. Often two or three families are crowded into a three-bedroom house, four-bedroom house. And the social impacts of that are terrible, basically. It affects health, it affects education, and also, as Mr Bishop said, it lifts up the price of rent, because a lot of these people are renting and they, basically, can’t afford to pay the rent. But not even that. I mean the rental properties aren’t even there—the properties aren’t even available. I was talking to a real estate agent just a couple of days ago and I said, “Talk to me about what’s happening in the rental market.” And they said, “Look, if something gets listed, straight away 60, 70 people are wanting a house.” So, look, it is a very important issue that we are trying to address here.

Moving on to the second part, in terms of the solution, I’m heartened to see in the House that we have a piece of legislation supported by both parties. Just as Mr Yule was saying, I like seeing that as well. I like seeing aspects where the politics is taken out of it, where people use their common sense and they say, “Look, this is a good idea.” I’m actually surprised this has taken so long to get to the House. I don’t know the history—I mean I don’t know the challenges—because it really does seem like a very practical idea. We do have a test case—

💬 Andrew Falloon: That’s not career enhancing, mate.

I’d like to move on to that. Look, I’m not—I don’t want to attribute blame because, I mean, I don’t know. Maybe others who were here could—

💬 Hon Phil Twyford: It’s complicated.

It’s complicated, yes. Ha, ha! Anyway, on a positive note—

💬 Hon Phil Twyford: Tauriko West is the big opportunity.

Big opportunities—big opportunities in the Hamilton to Auckland corridor. I will get on to the Hamilton to Auckland corridor because there are a number of opportunities for this.

So the solution: we have heard about Milldale, and I’m honoured to be on the Transport and Infrastructure Committee where Crown Infrastructure Partners gave us a briefing just a few months ago. They spoke about Milldale and it’s a project that has worked—hands down, it has worked. One of the previous speakers, Andrew Bayly, sort of gave the details; so I won’t go into that too much, but they have produced 9,000 houses for an area of Auckland that certainly needed houses with the targeted rate.

There’s another point that I like about this bill, and that’s the aspect of collaboration: so councils collaborating with central government. It’s very important that we have that collaboration within our system. At times, silos can exist within areas of our society. One of the most dangerous silos is if central government and local government aren’t working together, because we absolutely must work together. We each have our unique roles, but there are certainly great outcomes for people when central and local government do work together, and this is an example of that.

As the Minister alluded to previously, there are a number of opportunities for a special purpose vehicle (SPV) within the Hamilton area and also the Hamilton to Auckland corridor, which is—people have heard me speak in the House before—the fastest-growing corridor in New Zealand. There is huge demand within that corridor. We’re seeing businesses shift out of Auckland and relocating within that corridor. We’re seeing their staff come with them into that corridor, whether it’s Hamilton, whether it’s Tauriko, whether it’s, obviously, Pōkeno—but all through that corridor. We have those river towns that at times have been doing it tough over recent years. There are opportunities for those river towns: the likes of Huntly, Ngāruawāhia, Te Kauwhata—huge opportunity for those towns to play a key role in New Zealand’s future, as we see people from Auckland shift south into the lovely Waikato region.

Tim van de Molen: Great region.

Great region. And I can see why people are starting to shift south. I can see why businesses are starting to relocate. If you’ve got a business in Auckland—

💬 Chris Bishop: The city of the future.

City of the now, Mr Bishop—city of the now. I have been quoted in the media saying Hamilton will be the second-biggest city in New Zealand in 30 years; so let’s see what happens there. Someone can quote that back to me when I’m 72 and see if I was accurate.

But, look, I mean it’s not just about Hamilton growing; it’s about the whole country. It’s basically about providing houses for people, because housing is a basic human right. In New Zealand, we’ve seen large-scale housing developments. We’ve seen some in the 1930s, we’ve seen some in the 1960s and 1970s, and we’re starting to see some happening now. It happens when Government takes an active role within the housing market, and that’s what’s happening here. So lots of opportunities for collaboration, for developers, obviously, for councils. Particularly from a Hamilton point of view, I was very pleased to see current mayor Paula Southgate’s comments speaking in favour of this. So I look forward to an SPV for Hamilton, and I look forward to seeing the great things that this bill will do. Thank you.

Bill read a first time.

Bill referred to the Transport and Infrastructure Committee.