Infrastructure Funding and Financing Bill

on behalf of the Minister for Urban Development: I move, That the Infrastructure Funding and Financing Bill be now read a second time.

The Infrastructure Funding and Financing Bill provides the framework for a new funding and financing tool for bulk infrastructure that supports housing and urban development. This tool can be used by anyone, whether they be a council, a developer, or Kāinga Ora. It demonstrates that this Government is tackling the issues that underpin New Zealand’s housing affordability challenge.

I would like to thank the Transport and Infrastructure Committee for its work on the bill and the organisations and members of the public who made written and oral submissions on the bill. I’d also like to acknowledge and thank the efforts of the Opposition, who actually began this journey. It is great to see all sides of the House supporting this bill. I would like also to acknowledge the efforts and collaboration of the high-growth councils and Crown Infrastructure Partners who partnered with Treasury and the Department of Internal Affairs to develop this bill. The partnership signals a new way of working, and I hope that councils and developers continue to engage in this way.

The committee received 38 submissions, representing individuals and organisations with interests in housing, infrastructure, financing, the environment, public health, and local government. Of those who expressed a clear position on the bill, 90 percent supported its broad intention and direction. Submitters generally noted that the bill will only support large infrastructure investments and that the bill lends itself toward new development areas. This is true. It is these areas where we tend to see financing constraints inhibiting investment in housing-related infrastructure. Nevertheless, the bill is flexible, to allow for the possibility of supporting brownfield development and infrastructure needs. Some concerns were also raised about transparency, given the possibility of a private entity levying the public. I am pleased to see that the committee has sought to bolster these provisions in the bill by bringing a special purpose vehicle’s (SPV’s) activities within the ambit of the Official Information Act and the Ombudsmen Act, to strengthen levels of accountability.

This bill supports infrastructure projects that are economically viable. It allows them to proceed in environments where councils don’t have enough debt headroom to deliver the project on their own, and it does this by ring-fencing the financing eligible infrastructure from a local authority’s balance sheet. The bill is not designed to crowd out local government. Instead, it adds to their funding and financing tool kit. This is about creating partnerships between councils, developers, and the Crown to bring the infrastructure that our communities need.

During the first reading, the Minister for Infrastructure highlighted the funding and financing constraints that councils are facing on a daily basis. Auckland will use 90 percent of its debt capacity over the next decade. Hamilton will use 86 percent over the same period. COVID-19 has exacerbated these debt constraints. With council revenues expected to fall as they grapple with the economic consequences and help their communities with rate deferrals and other support, it has become even more critical to address some of the funding and financing challenges today. By mitigating financing constraints on the infrastructure decision-making process, this bill will assist with the funding and financing of critical infrastructure projects to provide the homes that New Zealanders need much sooner than would otherwise be possible.

While we do face tough economic challenges ahead, we mustn’t forget the long-term outcomes that this Government hopes the bill will achieve. By overcoming technical financing constraints and speeding up the provision of housing-related infrastructure, we are tackling one of the fundamental problems that is driving up house prices: a lack of serviced urban land. Increased land and development capacity available for housing will support a more competitive urban land market, ultimately helping to bring down the cost of urban land. The bipartisan support seen in this House on this bill’s introduction and general support from submitters in local government sends a strong signal that resolving local government funding and financing challenges is a priority that is something we can all be proud of.

Now turning to the committee’s work, they have made a number of useful changes in response to the submissions. Transparency and accountability are going to be critical to gaining support from the public, councils, and the wider sector for the underlying model. I’ve already mentioned that the bill now includes provisions to bring SPVs within the ambit of the Official Information Act and Ombudsmen Act. The committee has also identified other opportunities to bolster these provisions and made changes to protect the legitimate interests of landowners and councils when it comes to infrastructure endorsements and construction powers provided to SPVs. I welcome and support these changes.

One small but key amendment was made in response to submitters to ensure that the infrastructure and levy endorsements from local authorities and consents to include protected Māori land within a levy area are all required before the levy order can be recommended. This was always the intention, but required a slight tweak to avoid any doubt. The endorsement requirement is a fundamental part of the levy proposal process. It makes sure that local authorities who will ultimately own and operate the infrastructure once constructed are satisfied with the quality and technical aspects of the infrastructure.

Some council submissions highlighted that it was not clear that the costs of acquiring land to provide infrastructure could be covered by a levy. These costs make up a significant portion of infrastructure investment. In some cases they can exceed a third of the total construction cost. The committee has helpfully ensured that the bill is explicit that land acquisition costs are eligible for establishment costs to be recovered via a levy. The committee has also made a number of technical adjustments to ensure that the bill operates as intended and interacts well with local government practice and key legislation such as the Local Government Act 2002 and the Local Government (Rating) Act 2002.

I want to touch briefly on one area where submitters made comment but the committee has not sought any changes. A number of the submitters sought an expanded scope for the bill or wanted it to be altered to become a general local government financing tool. The bill arises from the Government’s urban growth agenda, thus does have a deliberate focus on supporting housing-related infrastructure. As such, it creates processes for and obligations on councils and SPVs around this purpose. What the bill does do, which goes some way towards some of the submitters’ comments, is provide for the model and underlying commercial structures to evolve over time. It only prescribes processes necessary to protect levy payers, local authorities, and the Crown. The methods used to identify and develop projects remain unprescribed. However, Crown Infrastructure Partners are the Crown’s agent to help facilitate use of this bill, should it be passed into law. This will encourage a continued partnership approach between councils, developers, and the Crown to help provide the infrastructure needed to support housing for our communities, something which has historically been a rare occurrence but is critical to the successful provision, funding, and financing of infrastructure.

Overall, the changes recommended by the committee improve the bill, provide additional transparency, and support its objectives. I thank the committee for their consideration of the bill. The bill is stronger because of these collaborative efforts from across the House. I move that the House take note of the committee’s report and I commend this bill to the House. Thank you, Mr Speaker.

Thank you very much, Mr Speaker. Phil Twyford has been a disaster as transport Minister. But—

💬 Marja Lubeck: I think we’re looking at the disaster.

Oh. Be kind, eh? Isn’t that what they say, Marja? Didn’t they say “Be kind”? Clearly the memo didn’t get through to the list MP based in Rodney, about “Be kind”. You’re what number? Is it 56 or something? I don’t know.

💬 Hon Member: 64.

64, is it? She’s going to lose by about 19,448 votes I think, but anyway.

ASSISTANT SPEAKER (Adrian Rurawhe): Back to the bill, eh?

Well she started it, Mr Speaker. But, fair enough. Anyway, Phil Twyford has been a disaster as Minister of Transport, but he has got a couple of things right. One of them is the Infrastructure Funding and Financing Bill, because actually Phil Twyford intellectually understands the case for urban land reform and for changing the way in which we finance infrastructure in New Zealand. He recognises, quite adroitly, the connection between funding of infrastructure by local councils and housing supply. I have quite a lot of experience with the challenges of funding and financing infrastructure properly, because my own electorate, my own area, is very similar to many other parts of the country that are struggling—

💬 Hon Scott Simpson: Where is your area?

Lower Hutt. Thank you, Mr Simpson. Struggling with the challenges of rapid population growth—actually, in some ways quite surprising population growth—and funding the housing supply to keep up with that growth. And the challenge of—

💬 Darroch Ball: Oh, here we go. What did you guys do in nine years? What did you guys do in nine years? You just figure it out now, did you?

Well, no, no, no, no, no, I’m not making a party political point. This problem goes back across our Government, and the Government before that, and the Government before that. This is a 30-year problem we’ve had in New Zealand. And what we’ve had in Lower Hutt is—Lower Hutt was fine for about 15 years, when the population stayed stagnant. It had 100,000 people; it bubbled along. When I was growing up in Lower Hutt, the population of the Hutt was about 100,000 people—that was 20 years ago. I’m 36, about to turn 37. In between 2013 and 2019, the population in Lower Hutt grew by 10,000 people—so 10 percent growth in Lower Hutt in five years. Now, by any stretch, that is very rapid growth, particularly for a city that had become used to a stagnant population that was not growing.

Now, a growing population is a good thing. Cities that are growing are more vibrant; economically, they are more competitive. And all cities, I think, frankly, want people to move there. I mean, in the same way New Zealand wants people to move to New Zealand, cities want people to move there, because actually a growing city is the sign of a successful city, in the same way a growing country is a sign of a successful country. Actually, over time, if you don’t grow, you stagnate, and you wither, and you die. So of course we want people in Lower Hutt, but you’ve got to build the infrastructure.

The problem that’s happened in Lower Hutt in the last five years—seven years in particular—is we’ve constrained housing supply growth. We’ve made it impossible to build new housing. The effect of that, the effect of not building more housing in Lower Hutt, has been house price increases of $300,000 over the last five to six years; rent is up $200, on average, per week in the last four years; and the social housing waiting list has quintupled in the last three years and is at record levels. There are over 500 families in the Hutt, priority A and B, waiting for a home. They’re priority A and B, they’re the most urgently in need of housing support, and they can’t get one.

Of course, the thing I always say to people is: our housing problems are connected. It’s not enough just to say we need to solve homelessness. Of course, we need to address homelessness, and of course we need to do programmes like Housing First. I commend the Government for continuing with the Housing First programme, to wrap that social support around people who are at the real hard edge of homelessness. It’s not enough just to say, “We need to solve homelessness.” Frankly, it’s not enough just to say things like, “Well, we need to get rents under control.” Everything in the housing market is interconnected; everything you do in housing relates to supply.

You grow the supply of housing, you constrain rapid house price increases, and you make it easier for people to rent. You constrain those rent increases, because rent increases are obviously highly correlated to house price increases. Of course, once you constrain rate increases, you make it easier for people in the private rental market to get into a home. You don’t crowd people out of the private rental market who then have to be forced to rely on social housing. People who can’t afford market rents—private market rents—obviously approach the Ministry of Social Development and Kāinga Ora and say, “I need a home.”, and if there’s a fixed supply of Kāinga Ora houses and social houses in some areas—which there is—then those people struggle to find their way into a home. That’s why we have a social housing waiting list. That’s why there are 500 people in Lower Hutt waiting for a home right now. They can’t get into a social house because there are not enough numbers; they can’t access the private rental market because they can’t afford it, even with the accommodation supplement; and they certainly can’t afford a mortgage. So we have to reform the way in which we fund infrastructure to fund housing and that’s the critical connection that we absolutely have to understand.

The good news is, on this side of the House, we get it. We started the infrastructure funding and financing work in Government under Bill English and then continued by Steven Joyce and we have carried that through.

💬 Marja Lubeck: It’s not the party of Key and English any more.

That is both incredibly insightful but also one of the most trite statements you could ever make, because they are literally not here. So well done, Marja, for that stunning insight: Steven Joyce and Bill English and John Key are not here. Congratulations. The deep thinker from Rodney worked out that people have left. Well, actually, she’s about to leave at the next election and we look forward to that and the—anyway.

So we get it, and before I was interrupted by the rudeness from Rodney I was actually going to make it a nice point, which is Phil gets it and he’s continuing it. It’s taken too long, hasn’t it, Ms Dean—it’s taken too long. We’re sort of, what, three weeks out from the House lifting and this is only the second reading. I mean, it’s nuts when you think about it.

💬 Fletcher Tabuteau: Imagine what we can do in nine years.

But at least it’s been—“Imagine what we could do in nine years.”, says Under-Secretary Tabuteau. I don’t want to imagine what this Government would do in nine years. If the social housing waiting list in Lower Hutt quintupled in three years, I don’t know what the multiple of 15 is, but it’s a lot, and if you had nine years, we would all be in trouble. We’d all be in trouble.

💬 Hon Scott Simpson: The member won’t have to worry though.

“That member won’t have to worry.”, says Mr Simpson. That’s correct.

But anyway, there is a serious point, which is that what this does is make sure that the people who benefit from the new development pay for that development. That sounds like a simple idea, actually, but it actually is quite a revolutionary concept, which is that if a council wants to facilitate new development, the people who are the beneficiaries of that development—people who benefit from the infrastructure, the waste water, and the roads, and the infrastructure that goes into facilitating that development—they will pay. At the moment, you’ve got this weird situation—or at least difficult situation—where existing ratepayers are asked to pay for the infrastructure and they pay for it through their own rates. Unsurprisingly, that creates a backlash to varying degrees of intensity from existing ratepayers.

So what we’re saying is, absolutely, councils need to get on and facilitate new housing supply, yep, and central government’s got a role in doing that—absolutely. But the fundamental part of that infrastructure to facilitate those developments will come from local councils. What we’re saying is this creates a new funding model and new vehicles to make sure that can happen: special purpose vehicles which can raise capital, finance the infrastructure, commission construction of the infrastructure, and transfer it over time back to the relevant local authority.

We examined it pretty closely in the Transport and Infrastructure Committee. It probably doesn’t go as far as we in the Opposition would like it to go. It’s something that we will re-examine in Government. But it is good that there is a consensus across the Parliament, I think—I hope—that this bill will make a difference. There is no doubt in my mind that one of the greatest challenges we will face as a country over the next 20 years—the immediate short-term priority is COVID, obviously, but over the next 10 to 20 years, we have got to make sure that local councils can fund infrastructure properly. We know that on this side of the House and we intend to make sure that we are part of the solution, not just part of the problem. Thank you.

Thank you, Mr Speaker. Look, this—and it’s great to hear Mr Bishop’s closing words there that we do seem to have an accord in recognising that infrastructure is a huge issue. This Government is committed to addressing that on all fronts, from setting up Kāinga Ora itself through to the Urban Development Bill, the infrastructure bill, and the infrastructure commission Act, and, of course, now we have this Infrastructure Funding and Financing Bill—a bill which recognises that when benefits flow from development, those benefits should be paid for by the people who receive them.

So the levy structure here is a fantastic structure and allows those costs to be borrowed and to be spread across a long period of time. But what this really is is just another step by this Government to make sure we have a comprehensive approach to addressing all of the infrastructure issues around the country, whether it be housing, whether it be water, whether it be transport. The fantastic Minister who’s taken this bill to the House, Minister Twyford, has done an outstanding job in this area.

I absolutely commend this bill to the House. Thank you, Mr Speaker.

Thank you, Mr Speaker. Like a lot of the Government’s work on infrastructure, that was a very brief and half-hearted attempt. But nevertheless, I’ll take a call here on the Infrastructure Funding and Financing Bill second reading as it’s come back from select committee.

Now, they get a bit touchy about infrastructure over there, because they know that they haven’t met the expectations of the public and, indeed, the expectations they probably set for themselves, if we’re honest. But the reality is that infrastructure is absolutely fundamental. We have to get it right, we have to do better, and, actually, over a period of time—a few decades—we haven’t had the depth of pipeline, the confidence for the construction sector, that is necessary to really start streamlining that work and getting the efficiencies that can be achieved from having that more consistent pipeline.

So this is good; we support it—Mr Bishop, I think, made that quite clear. But the reality is that there are a number of facets within here that are absolutely vital, and I really just want to pick up on the point that Mr Bishop made as well, around the interwoven nature of the different development aspects. Housing, of course, is reliant on having good infrastructure, and that’s roads, waste-water connectivity, a whole range of different aspects, and we need to link all of those up. So this Infrastructure Funding and Financing Bill helps to do that.

Now, we had started working on the framework of this, actually, and it’s something that I do with my four-year-old daughter as well. You sort of trace, you put dots on a piece of paper and then they come along and join it, and you congratulate them on doing a great job, and I think that’s what the Government has done here. We’ve put the dots out for them, they’ve joined it up, they can be really chuffed with what they’ve achieved, but it just makes sense and we were heading in that direction in the first place.

So we have a pretty ambitious plan for infrastructure, and we heard that just on Friday from Judith Collins announcing a massive plan of works: $31 billion over 10 years across a range of different areas, and, in particular, in the upper North Island. So that has real benefits, and when I look at my electorate of the Waikato, it’s set to benefit significantly from the increased potential that the investment in infrastructure under that package will deliver through jobs growth, greater social opportunities, and improving the wellbeing, I suppose, of the broader Waikato community. So we’re really excited about those projects in the Waikato—expressway projects, but also looking further down the track at linking those into Auckland and further north, and across to the Bay of Plenty as well. So this bill presents opportunities in that space as well.

When we look at how the local authorities will fit in with what’s being planned in a broad, visionary infrastructure pipeline, like the National Party announced just the other day, there is a need—it provides the ability for some of the territorial authorities to then start thinking about their longer-term plan and how they fit in with that. An example would be the Waikato District Council, largely within my electorate, and that district covers quite a large area—it sort of skirts around the eastern side of Hamilton City to Tamahere at the southern end, and then goes right up to the Bombay Hills at the top, and the difference between those communities is significant. What they’re experiencing in the Waikato—and in a number of other areas, but specifically in this case, they are experiencing high growth in those northern communities: Pōkeno, Tuakau, Te Kauwhata. All those areas that need significant investment in infrastructure—and Mr Bishop touched on it as well—around the current model that, effectively, requires existing ratepayers to fund that infrastructure investment to then bring in additional ratepayers and homes over time.

Now, there’s an element of fairness within that, and ratepayers will readily raise that as a concern for local councils. I hear regularly from councillors and mayors around their difficulty in trying to juggle that particular requirement. So communities like Tamahere who aren’t seeing the same growth that’s being experienced at the top end are still having, through their rates, to fund some of that infrastructure. This bill provides a new model to help facilitate some of that growth over a period of time, so the establishment of the special purpose vehicles (SPVs) will enable that particular project to get off the ground. So that’s creating a vehicle to implement—to carry out the construction of that project then handing it over to the particular territorial authority at the end of it. That’s really what we’re trying to achieve here, is taking away the complexities of managing around existing debt levels on local council balance sheets and enabling them to still invest in infrastructure that’s needed in the areas—so this does that.

There are a couple of areas through the select committee process that we tweaked to improve. One of those I just wanted to touch on was around the eligible costs—what could or couldn’t be considered eligible costs. Land acquisition hadn’t been part of that, but, actually, a fundamental part of any infrastructure project is having the underlying land on which to begin your construction. So that now will be considered an eligible cost under this bill, which is appropriate, and the other aspect was then around transitioning that. These SPVs are only ever a tool for the development, the construction phase, of a particular project, and then the intent is that it is handed over at the end.

That needs to happen promptly. There’s no need for these SPVs to continue on over time, and so there were some questions around how you deal with excess levy that may build up through that period of levy being sourced by the local bodies for that particular project, and then, indeed, potentially having a surplus levy at the end, or actually having uncollected levies as the case may be. So what we did through the select committee was to actually tweak that slightly to allow for the more rapid wind up of the SPV by assigning any uncollected or postponed levies back to the territorial authorities so that they can effectively then continue—as they would with outstanding rates as well—to look at avenues to collect those that are required.

So those couple of changes were just a few that I thought were relevant to note in this, but broadly it’s getting the plan in place to provide a bit more long-term planning for territorial authorities, for central government, for ambitious plans like we announced last week—$31 billion infrastructure plan. This will enable those territorial authorities to work in amongst that so that regions like the Waikato, Auckland, Northland, and the Bay of Plenty can prosper. So we commend it to the House.

Thank you very much for the opportunity to speak on this fantastic piece of legislation. I say that despite the contributions from those opposite. They seem to be in a really kind of moody psyche at the moment. It’s not good on the other side of the House—it’s just kind of nasty—and, with your patience, Mr Speaker, I’ll just point out some of the flaws in their arguments that they have put to the House this afternoon.

💬 Darroch Ball: You haven’t got time, mate.

It’s true—I will run out of time. I’ll be concise.

Mr Bishop very succinctly outlined the fact that he saw the only way for our economies to get better was for the populations to continuously grow. At some point, we have to ask the National Party—because they did it for nine years. That was the second part of their solution for economic growth. It was unfettered immigration into New Zealand. At what point do you say “We have to manage this.”?

I put that question to the opposite side of the House, despite their guarded support this afternoon, and I ask those members opposite: at what point did they go out to local councils in their nine years that they were last in Government and say “We have an unfettered immigration policy, so you might want to look at investing in infrastructure, roading, schooling, and housing in your communities.”? I’ll give you the answer: nobody from the National Party ever went to a council anywhere in New Zealand and told them that that’s what would happen. How do I know? Because in Tauranga and Rotorua I spoke to the mayors and their councillors—and in Auckland, actually—and was told point blank, “I’ll tell you what, Mr Tabuteau, if only National had told us what was coming, we could have planned for it, worked towards it, and maybe, just maybe, we might have been able to get ahead of the curve.”

So what we see here today represents an amazing opportunity for this country. Mr Bishop spoke of his community of Lower Hutt. I can use Rotorua as the example of the issues that we have been facing in our time of growth in population in Rotorua. Just recently, we were able to announce a $55 million investment in the Te Ngae Road upgrade, for example. What that did was unlock an investment by Ngāti Whakauē land development of more than 1,000 properties to be developed in Rotorua—something we have been achingly, desperately wanting for so long—and what was necessary? Actually, before this legislation, it meant the Government had to come along and co-invest in the infrastructure upgrades. That meant storm water and that meant safely re-contouring the road so that people could safely move off into what will be this new housing development—$55 million to make that happen.

So what we see here today is what I genuinely—I genuinely—believe is an answer on top of all that this Government is doing to address the housing crisis in New Zealand. It’s been so difficult trying to catch up with the kind of non-attempt from the National Opposition in their time in Government. Nothing was done, we went nowhere, and a housing crisis ensued.

What we have now is the ability to unfurl councils’ constraints on investment in infrastructure so that housing can be undertaken in our towns and cities. The obligation, as members know, was that councils are legally required to take responsibility for these infrastructure upgrades. Unfortunately, everyone is all too well aware of the fact that councils do not have this money. Post-COVID, this is even more of concern for our councils when trying to manage their debt structure, and the last thing we want to do is encourage councils to increase rates. We need to help them to alleviate the burden of these costs.

So what this legislation does is it says to councils, “Actually, what you now have is an opportunity through the special vehicles”—or investment vehicles, as they were—“to work with the developers, perhaps, who can now spend the money themselves directly on infrastructure upgrades in order to unlock that housing potential that we so desperately, desperately need.” In doing that, we—I mean, it’s kind of so basic but so fundamentally important. It simply means more houses for New Zealanders, and, actually, I’ll give Mr Bishop credit. He articulated the argument and the spillover benefits of this legislation in an articulate manner.

It’s not just about the ability to build houses; it’s the question of what that means to society. Actually, I’d put it to the House that the ability to offset these costs through these special purpose vehicles means that more houses can be built now, and I note to the House that this is on top of the national policy statement on urban development, which will require councils to zone more land for housing and will allow for more apartments and town houses. The Resource Management Act reform led by Minister David Parker will change the way we plan for urban growth in New Zealand. The Urban Development Bill will cut through the red tape and will lead large-scale, master-plan urban development projects that are too complex, risky, or uncertain for the private sector to undertake alone.

Fundamentally, that means cost savings. That means massive cost savings. That means New Zealanders can buy houses at a cheaper cost than they can today. This is exciting for New Zealanders struggling right now. It’s exciting for the next generation of New Zealanders wondering how on earth they are going to buy their first home.

This will fundamentally change the way New Zealand moves forward and the way that we can look at homeownership in this country. Homeownership, for me, defines wealth equality in this country. We used to be the home-owning democracy of the world. We can be again, and it is legislation like this that takes us down that pathway in an accelerated and an exciting way. So for me to be able to stand up in the House today and commend this bill to the House is an honour, and I thank you very much for it.

We’ve just had eight minutes of a speech from Fletcher Tabuteau, the soon-to-be retired New Zealand First member. It took me all of seven minutes and 45 seconds to find out whether he was actually supporting the bill or not. It was typical of a New Zealand First speech—one that is hard to define and hard to quantify and hard to actually understand what point the member was trying to make; grab bags of bits and pieces from Winston Peters’ speeches still ringing in his ear from their modestly attended conference at the weekend.

It was very, very funny to see that the other side of the House is looking very glum—very glum indeed over there. They’ve got cause to be very glum over there, because we are but 60 days from an election and this has taken them—

ASSISTANT SPEAKER (Adrian Rurawhe): And we’re 60 seconds into a speech that has not yet mentioned the bill.

This legislation has taken them—notwithstanding that we’re 60 days from an election—nearly an entire term to get to a second reading point. That’s incredible, given that this was work that was first started—the conceptual work, the initiation of this legislation—by the previous National-led Government in the last Parliament. Why has it taken them so long? It’s just bizarre. But it’s like so many other things that this Government has done: not much, and what has happened has happened at snail’s pace, at glacial speed.

So here we have the report back from the Transport and Infrastructure Committee that I don’t sit on, but I gather, from speaking to colleagues and listening to speeches in this debate and reading in preparation for speaking today in the House, that the select committee actually did some very good work. That doesn’t surprise me, because there were good contributions from across the House. Much of the good work, the detailed work, of most legislation is done in select committees, and here we have a classic example of how that worked and how the select committee worked to improve the legislation that had been developed in concept form by the previous National Government that, as put in at first reading, needed quite a bit of tweaking, I have to say, but we’ve sort of got to a better position now.

I listened very carefully to my colleague Christopher Bishop, who is the very good and hard-working member for Hutt South. He has made it very clear that on this side of the House, we support this legislation, we like the concept, we understand what it is trying to achieve, and we endorse that—we support it and endorse it. So if I think about the examples that he cited from his electorate, where there has been rapid growth, rapid development, and an inability by the local authorities there to fund, through any other mechanism than rates, the kind of infrastructural development required to support rapid growth, then I understand the sorts of issues that he and his communities are confronting.

But it’s not just in Hutt South and in Lower Hutt where these are issues; it happens all around the countryside. Even in my own electorate of the beautiful Coromandel, we have issues where small territorial authorities are having to fund infrastructure and growth because people are moving to the Coromandel—many of them are retirees; people who are moving from the cities and coming to live in a very beautiful part of the country—and they want to have homes and facilities, but the council is already stressed and strained in terms of their rating capacity. Mine is a unique area, much the same way that parts of Jacqui Dean’s electorate has the same problem, where you have big influxes of tourists at certain times of the year, and that means the local council not only has to provide infrastructure for people who just are living in the districts but they actually have to provide massive infrastructure for the seasonal peaks of visitors, and that means a further burden on ratepayers.

So this funding mechanism is going to fundamentally transform and change the way that local authorities are able to raise money in what is, effectively, a mechanism that means that the people who will benefit from the building and installation of this new infrastructure will be the people who, effectively, fund it through the new special funding vehicle. I think that’s a very good and sensible idea.

Most local councils in the high-growth areas are already under rating stress. We’ve seen post-COVID that, in fact, many councils are already under even greater stress now because there is a call by many ratepayers to actually have rate increases that had been promulgated and budgeted for and set out and publicised for those rate increases to be reduced. So that only adds further pressure on an already stressed funding model and they’re unable to invest in the core infrastructure that’s required to support high-growth new housing developments.

So one of the things that I particularly like about the special purpose vehicle model that is created under this legislation is that it gives a degree of flexibility for councils to be more imaginative at times where they can raise a bit of money through the special vehicle. They can then leverage the balance sheet to take advantage of the very low interest rates that exist at the moment in a way that helps find the funding to build infrastructure that is specifically not the actual housing infrastructure but it’s the support infrastructure—so it’s the transport, the roads, the water infrastructure, the energy infrastructure, the social assets, the community halls, the parks, the reserves, and, of course, in today’s modern age, the digital infrastructure as well, which everybody seems to need as a matter of course these days, to provide broadband and mobile coverage in the new housing developments.

What this legislation doesn’t do is enable the special purpose vehicle to fund the actual housing. It’s not going to fund the building and the construction of houses; it’s the support infrastructure that provides the funding mechanism here, and I think that’s a good idea. It’s not going to be able to be used to, for instance, provide solid waste disposal or recycling infrastructure; that needs to be funded elsewhere. And it’s not going to be able to be used to provide schools, hospitals, prisons, or social housing.

The levy is going to be capped to protect landowners from cost overruns, because we all know, after years of experiences and many sad instances, that too often the budgeted and contracted price for much of this important infrastructural spending, when it comes to the end and it’s installed and completed, there are often significant budget overruns. This legislation means that that debt is going to be ring-fenced, that it will be capped so that the people that are contributing to the funding and who are going to benefit know what the quantum is going to be and they know what their liability’s going to be, and that’s a very good degree of certainty that they are provided with.

So we support this piece of legislation, on this side of the House. We think it’s a good piece of legislation. We think it’s worthy of support. I want to thank members from across the House who sat on the select committee, who did improve it; I think that the work that they did was very worthy and very good. On this side of the House, we commend the bill for consideration.

E Te Māngai, tēnā koe. Tēnā koutou e Te Whare. I won’t do as good of a job of speaking on this piece of legislation as our Associate Minister of Transport, Julie Anne Genter, would, but filling her massive boots this evening, I’d like to state upfront—just because the Hon Scott Simpson asked us to be upfront about our position—the Greens do support this legislation. This legislation, the Infrastructure Funding and Financing Bill—as I think was quite well articulated by the Hon Scott Simpson, the problem; but I don’t know if he’d necessarily agree on the solution—speaks to the failing, or the failings, rather, of our currently very centralised model of governance and of resourcing of projects. Primarily what we’ve seen—the problem that I’m speaking to is over the past several decades, and the past decade in particular—is an expansion of the mandate of local government, the amount of things that they are blamed for and expected to do, but no requisite expansion of the resources available to them, which means that frequently there is a reliance—or an overreliance, arguably, as was put forward by the Hon Scott Simpson—on rates. I would argue that there is somewhat consensus on the kaupapa on the Government benches. I’ve been pushing the Minister of Local Government, the Hon Nanaia Mahuta, on continuing to expand and change those models of revenue available to our local governments.

But to the purpose of this legislation—as has been well articulated by a number of members across both sides of the House, and it would appear that everybody is in agreement on it—basically, it enables a special purpose vehicle, or an SPV, which will be set up for each project. It’s responsible for raising the necessary finance and, in most cases, also constructing that infrastructure. For those who happen to find themselves tuning into Parliament TV—best show on TV—just to let those folks know something which I think is critically important and, in listening to the debate so far, I’m not sure has been raised, which is it’s worth noting that this infrastructure funded by these SPVs will always end up back in local council ownership under this model, meaning, of course, that the infrastructure that is built—which, you know, the community needs and wants—will remain in the community’s ownership, fundamentally.

There’s been a lot of talk of housing throughout this discussion of this infrastructure legislation this evening. Infrastructure is, of course, recognised as critical, potentially for different reasons and from different perspectives across political parties. Housing is, of course, important. I was finding it fascinating listening to the contribution of the new shadow Leader of the House, Chris Bishop, and his statements that everything is connected as far as housing goes because, funnily enough, that’s frequently a turn of phrase that you will actually hear from the Green Party talking about how everything is connected—whether it’s in terms of policy, the economy, housing, the environment, or otherwise. I found it fascinating that he spoke to the fact that housing and infrastructure and our communities are connected. But he didn’t quite connect the dots back to the issue of inequality, which, in his contribution, Fletcher Tabuteau did.

Chris Bishop also spoke to the issues only of supply in the housing market and didn’t quite hit the nail on the head with regard to the issues around demand, which, actually, we have an opportunity to recognise in this House. The issues around demand are largely driven by the systemic settings that we put in place, which enable the seeing of housing as commodities. Housing isn’t stocks. People do need to live in housing and there currently is a disproportionate taxation on working income as opposed to capital.

But all of that aside, recognising the inextricable links between our housing stock and the infrastructure that is critical to supporting it and to supporting flourishing communities, particularly where there is increasing intensification and the need for density done well, the Greens support this bill for its facilitation of the development of that necessary infrastructure. There has been a whole lot done in this past term of Parliament, but there is, as I think everybody in this place recognises, still a whole lot more to do. The Greens support this bill.

The member who just spoke, Chlöe Swarbrick, made an observation around this bill which I think was certainly worth making, and it is something that as legislators we might not be that aware of, and that is that the assets of whatever local authority it is that have gone through the special purpose vehicle process ultimately return to that community. It is a good point that has been raised by Chlöe Swarbrick—[Hon Jacqui Dean’s phone rings] excuse me, I’ll just deal with that, make it go away—but also it comes with another aspect that I think—I did not sit on the Transport and Infrastructure Committee. A number of us are seeing this bill for perhaps the first time, and it occurs to me that while it is cause for celebration indeed that the community asset is returned to the control of the local authority upon completion; however, what that comes with is the attendant liabilities that will have to go on to the local authority’s balance sheet, ultimately.

So if we think about the example of local roads, local water infrastructure, storm water, waste water, etc., if that has been part of the infrastructure mix in that special purpose vehicle project, then those assets will then, once they are returned to the control of the local authority following construction, have to be folded into that local authority’s asset management plans, 10-year planning documents, and so on and so forth. So to think of this as a special purpose vehicle which has a happy ending upon completion and returned to the local authority, that is certainly not the case, because there will be, for all time, consequential roles of local government in terms of maintenance and further funding for depreciation, all of those matters that must be managed by local authorities with the attendant cost to the ratepayer.

The question I have, because I didn’t sit on the select committee—unfortunately, because I would have enjoyed it very much, because this is this is a good concept and a good bill. But I guess the question I would like to have explored is the liability, the ongoing liability—who will pick that up? Will the local authority then have to review its rating policy and determine whether or not the cost associated with that asset road infrastructure be ring-fenced, as it is during the course of the finance raising and the construction of that asset? I think that is a question that all highly geared local authorities may well have submitted on, but it should certainly be a consideration for local authorities.

Having said that, I mean, this was a piece of work which was begun in 2017, I understand, or earlier by the previous National Government. It is a successful model. We support it. I mean, my colleague Scott Simpson sitting beside me is forever extolling the virtues of the beautiful Coromandel, but if I think about the even more beautiful town of, say, Wānaka or Cromwell, some of those fast-growing local authorities in the South Island, then this special purpose vehicle for the provision of much-needed housing infrastructure I think holds a lot of promise to the local authorities—Queenstown Lakes District Council, Central Otago District Council, and on and on it goes—because those councils struggle with getting the community mandate to raise funding often to put in that necessary infrastructure to support housing.

Yet housing is the one thing that those growing communities need, and good-quality housing for all those people that come to, say, Cromwell and Wānaka, if I am to remain talking about my own electorate and local authority areas. If we are to provide good housing across the range, then there needs always to be the provision of good infrastructure. It just seems to me that if we are talking about subdivision expansion, expansion of waste-water services and water services, as those councils are funding, and if this vehicle is going to support that work to enable more good-quality, cost-effective housing to take place, then we give this bill our endorsement. Thank you.

I call Jamie Strange—five minutes.

Mr Speaker, I thank you for the opportunity to take a brief call—

ASSISTANT SPEAKER (Adrian Rurawhe): Five minutes.

—on this bill this afternoon, the Infrastructure Funding and Financing Bill. I’d like to thank the Minister for Urban Development for bringing it to the House. As a member of the Transport and Infrastructure Committee, I really enjoyed shepherding this bill through the committee. We have a housing shortage in many areas of New Zealand, and this bill is one of the tools to address that shortage, particularly highlighting the aspect around the special purpose vehicles. One example of a special purpose vehicle is the Milldale development up in Auckland. The sod was turned in 2018 by Hon Phil Twyford, Mayor Phil Goff, and Marja Lubeck, sitting beside me.

💬 Marja Lubeck: Oh, thank you. That’s right—action.

And this action taken by this Government enables the building of 9,000 houses up in the fast-growing Auckland region. The previous Government, during their nine years, did a lot of talking about housing, but not a lot of action. But we are seeing action by this Government. We will see more action, and this bill will facilitate that, and I look forward to seeing that. I commend this bill to the House.

Thank you, Mr Speaker, for the opportunity to speak on this bill, something which I believe—and my colleague Scott Simpson mentioned—has been under development for a considerable period of time. And here we are, in the last breathing weeks of this Parliament, to see this bill go through here. At this particular point in time, infrastructure is incredibly important. It adds not just connectivity to our society but value to our communities. There’s no point in somebody building a housing estate if they have no supporting infrastructure. It is so important, so expected, so just baseline.

But, you know, we do live in a country which is long, and narrow, and sparse, with a relatively low-density population. So it has been an issue, in terms of funding infrastructure, that this country—the local and central government—has had to grapple with for a considerable period of time because we know that, particularly, the on and underground costs are very, very high. Yet without them, we cannot live in a modern society, we cannot connect to a world overseas, which is so important for us. Here in New Zealand, though a small nation, we are a particularly strong trading nation. Our infrastructure is critical. So we see that this bill proposes different mechanisms by which we can attack this problem. We can set up a process and a special purpose vehicle to enable the infrastructure challenges of our country to be met.

It’s very good that we have this broad support across the House, and no doubt broad support between central and local government, because we all acknowledge that we do have—in many places—ageing infrastructure that is looming to be a significant impediment to our society progressing. And so we are very pleased to support this bill. We understand that the beneficiaries of infrastructure will pay a levy to this special purpose vehicle, and the levy will be based on rates under the Local Government (Rating) Act. The person who is liable to pay rates on a property will be responsible for also paying the levy. Look, we all know that—especially in local government, when local government elections come around—everybody is loath to see rates increase. Yet we all want to see services increase. We want to see the quality of our infrastructure increase. We want to see amenities continue to be improved in our local communities. All of those make our communities, our towns, and cities, and our countryside pleasant and beautiful places in which to live.

So I am pleased to support this bill, along with colleagues in this House, because we are indeed addressing a problem that has been around Parliament after Parliament. We want to see this succeed so that we can be very proud and very secure in a nation that we believe has the amenities and the infrastructure to support our growth going forward. Thank you.

Thank you, Mr Speaker. I’m pleased to take a short call on this piece of legislation, the Infrastructure Funding and Financing Bill. I think this piece of legislation is, I would say, a result of some innovative thinking. What we know for certain is that we’ve had a chronic housing shortage across New Zealand for many, many years, and one of the biggest hurdles that we find is money and finance to build infrastructure—whether it be housing, whether it be roads, etc., etc. What this piece of legislation does is it creates a new infrastructure funding model that will allow us to see far more houses being built far sooner than we would have without it. So I commend this bill to the House.

It’s my pleasure to take the call leading up till 6 o’clock. National supports this bill, but I do wish to talk really around the reasons and the genesis for where this bill came from. It’s a National Party idea, it’s a National Party suggestion, but also in my former role as president of Local Government New Zealand, despite what Fletcher Tabuteau MP said previously in this House, there were a lot of conversations with the Government around how we could advance housing, how we could fund infrastructure, and what were the barriers to that.

It’s fair to say that the funding model, particularly around housing, for the provision of infrastructure is a barrier to development, and I just want to paint a picture for members of this House of the sort of choices that local authorities face. They are faced with, in many cases, debt ceilings—Auckland in particular has a debt ceiling. They are faced with, for want of a better word, a reluctance for communities to pay substantially more in rates and to spend more on debt servicing and debt itself. So you have that on one hand, and then you’ve got this insatiable demand for housing. When you have an insatiable demand for housing, there’s a lot of pressure on local authorities to do things. Developers come along and they say, “Mr Mayor”—or Mr Councillor or Mrs Mayor or Miss Mayor—“we’d like to do this.”, and generally the council has to put all the money up first, has to build the infrastructure, and then from that it charges development levies, but they generally only occur at the subdivision stage and when the titles are issued. Generally, the infrastructure’s already done by that stage because there’s a lag. So local authorities, in my view, carry all the risk. I’m reminded of going to Te Ānau about seven years ago. There were almost 800 sections in Te Ānau: fully roaded, all the reticulation, and no buyers. Now, that’s now been sorted out—I haven’t been to Te Ānau for a while and I’m sure it’s been sorted—but that local authority took the risk, did that development, and carried that risk itself.

Then you have this whole issue of developers saying, “We don’t want to pay the development levies, or if we do, we want to pay them as the closest possible time to when we get paid for the sections.” So there is complete misalignment of incentives for councils to stimulate housing development, to fund all the roading, to fund the other water and waste-water infrastructure when they know it could be a significant number of years before they get that money back. When councils have a debt ceiling and they have rating risks, generally councils are cautious. So they will develop a little bit here and a little bit there, but nothing of the scale of the demand that housing requires. Currently, most high-growth local authorities are close to their maximum debt levels—most. Auckland—it’s well known that it is, and in the recent controversy at Ihumātao, they talk about the fact that Auckland can’t borrow any more. That’s been a conversation that’s been part of that. I know of a number of others who are at their debt ceiling, and, really, they have limited ability to do things.

So, effectively, this sets up a new vehicle—a new vehicle that allows the councils to do things differently. It allows infrastructure funding and financing to be done differently and, effectively, takes it off the council books and allows a repayment mechanism which is not damaging to the credit ratings of the local authorities. Simply put, without it, Auckland would currently not be able to fund its future demands for housing requirements, infrastructure, bus lanes, and all the things that go with that development.

I remember sitting in meetings with the Hon Steven Joyce talking about how we could do this, and he reminded me of the fibre concept. Crown Fibre really was a concept that recycled cash, and this really is no different. There is a debt vehicle that the Crown largely helps with, the housing infrastructure fund is developed, the development happens. Once the money’s paid back, then we get on, and a new development is funded. So we support this because, frankly, without it, the challenges we face in housing would almost be insurmountable.

I look at my own community in Hawke’s Bay, where the provision of land is easily done, usually. There are zoning rules. In my own case, there is a thing called the Heretaunga Plains Urban Development Strategy, that determines where future growth is going to occur between Hastings and Napier and how that works. I can say from experience that what we generally find is the limiting factor is not what the land is; the limiting factor is who’s going to pay for the infrastructure, who’s going to take the risk, and what is the uptake of those developments. I often see, and I used to see in my previous role, developers come to me and say, “This development only works if you fund the infrastructure upfront. We’re not prepared to take the risk, and nor are we going to fund those development levies in the way you want.” Whether it’s industrial development or residential development, the net result of that is the council’s risk-averse, the developer doesn’t want to pay, and things get held up. In that environment, we are not helping ourselves or the people of New Zealand who need houses.

So this mechanism, worked out by the previous National Government, initiated, in my view, by people like Steven Joyce, Bill English, and Judith Collins, is a way of transferring that risk off the council balance sheet and putting it on the Government balance sheet through the Crown infrastructure fund. It can be used, also, for other things, not just housing: waste-water costs, water costs, electricity costs, even fibre. There are a whole lot of things that the Crown infrastructure fund can be used for on the very successful model that Crown Fibre has developed.

I’ll remind this House, as we come to the close for the day, in COVID-19, New Zealand was only able to operate because, effectively, we’d invested in fibre—way more than Australia, actually. We have a fibre network in New Zealand that allowed New Zealand to communicate and keep in touch with each other by Zoom and all those other things. That is because of the model that Steven Joyce put in place to recycle the money. As a result, we are the envy of the world.

So in commending this bill to the House, I think it goes a long, long way to solving our housing issues. Nobody else has been able to come up with a better solution, and it will take the risk aversion away from local authorities. I’ve sat round those tables and everybody wants to spend money—

Sorry to interrupt the member, but it’s come time for me to leave the Chair for the dinner break.

Sitting suspended from 6 p.m. to 7.30 p.m.

The House has resumed. Kia ora tātou, colleagues. When we were here last before the dinner break Lawrence Yule had the floor and he has one minute 40 seconds remaining to speak should he so desire. Are we taking a further speech? No. OK.

Bill read a second time.