Infrastructure Funding and Financing Bill

Thank you, Madam Chair. I saw the Minister for Urban Development looking to rise with some enthusiasm earlier, so I just wonder whether he might have liked to continue with that vein. But that’s all right; I’m happy to take the first call on this.

It’s good to see this bill and, actually, I think we’ve got to a pretty good space on this. It’s reasonably uncontroversial in bringing in, I think, an appropriate mechanism to enable the investment in additional infrastructure around our country. You certainly know there are a number of areas where this could play out. I just wanted to, I guess, query with the Minister around the eligible infrastructure aspects definition there and whether he has confidence that’s tight enough, that covers what he wants, in particular eligible infrastructure. Something that for our side has been important—and we’re seeing a lot of value derived from this—is around water storage projects. I would ask whether he sees that as fitting in within the meaning of eligible infrastructure.

Of course, we have four types there, that can be covered as water services, as transport, as community, as environmental resilience. Water storage definitely fits those criteria, but it isn’t specified under the water services infrastructure being related to what is supply, sewage treatment and disposal, although there’s certainly an argument to say it is related to water supply, of course. So I just wanted to clarify with the Minister—if he could please clarify whether water storage projects could be accessed under this particular bill.

I thank the member for his question. I want to acknowledge the support that we’ve had for this bill from all sides of the House, and I note that it builds on work that was started under the former Government with the Housing Infrastructure Fund to provide new finance for infrastructure. We’ve taken this to a new level, building on the work that Crown Infrastructure Partners has done. The bill before us today really is the fruit of all of that work.

In response to the member’s question about eligible infrastructure, we deliberately have cast the net widely. The mechanism that we’re setting up here is specifically designed to lift the burden on local authorities. So it’s designed to provide a new and additional funding and financing mechanism for infrastructure that has been in the past the preserve of local authorities, and, for the obvious reason, to take pressure off the overstretched balance sheets. So water services infrastructure, set out in clause 8, is intended to include all of the three waters—including waste-water treatment—transport infrastructure, community facilities, and environmental resilience. In relation to water storage, which the member asked about, which is a real need right around the country, the answer is that, yes, it could be included here if it relates to the supply of water for residential, for horticulture, or for whatever.

Thank you, Madam Chair. If the Minister might indulge, I wasn’t part of the Transport and Infrastructure Committee that scrutinised this legislation, but he just made the comment then about, obviously, what the funding and financing model permits, and he mentioned transport. So I’d just like to clarify it with my understanding, looking through the bill. So this bill permits an entity, and let’s call it a public entity, to basically finance, or borrow, against future revenues—in this case, the special rate levy—in order to fund transport works. Is that correct?

Yes, that’s correct.

Madam Chair.

CHAIRPERSON (Hon Anne Tolley): Oh, just go.

I thank the Minister very much for that confirmation. I’d be very interested to hear why that should differ for a local road versus, say, a State highway.

Well, to the member’s question, the financing mechanism that we have set up is—let’s give you an example of a project where there needs to be the provision of local roads that would normally be the responsibility of the local council in order to enable a new subdivision or a new development. It’s not uncommon as a developer tries to stack up the revenue and the financing arrangements to make a development work that they struggle to get it up to a level where it’s going to be affordable for the developer and affordable for the people who are going to buy the properties. The real problem that we have in so many of New Zealand’s high-growth areas now is that the council simply can’t borrow any money because they’re right up against their mandated debt limits. What this would enable a developer and a council to do, using this mechanism, is to create a special purpose vehicle that could borrow the money and pay for the local roads and have them built by borrowing against the future revenue stream of the levy, which is like a targeted rate.

So that is borrowing against that revenue stream. Councils do that. Really, it’s just another version of what councils currently do, and it’s just another version of what the New Zealand Transport Agency (NZTA) currently does. NZTA already borrows and has the ability to borrow against future revenues. This legislation and the approach that it embodies reflects my view that in government, both local and central, we’ve got to use our balance sheets more aggressively to support urban growth, and I think we are, not only with transport but in housing and urban development.

Parts 1 to 5, Schedules 1 and 2, and clauses 1 and 2 agreed to.

House resumed.

The Chairperson reported the Infrastructure Funding and Financing Bill without amendment.

Report adopted.

Third Reading