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Officials warned Nat’s $1b infrastructure fund ineffective and rushed

Treasury papers show the Government rushed out an infrastructure announcement officials told them risked making no significant difference to housing supply, says Labour’s housing spokesperson Phil Twyford. 

“Like so much of National’s housing policy, this was another poll-driven PR initiative designed to get a headline rather than seriously tackle the infrastructure deficit that is crippling the building of new housing.

“National had been stung by the negative reaction to the Budget’s lack of housing initiatives, and the underwhelming response to its National Policy Statement on urban growth. This announcement was a desperate attempt to find something the Prime Minister could announce at their party conference on July 3. 

“Documents show the policy, which extends a line of credit to high-growth Councils, was hastily cobbled together in only one month, with Treasury officials warning the rushed process risked the policy design being compromised. 

“Officials also told the Government the policy would not release land for housing for 5-7 years and so would not alleviate pressure on housing in the short term. 

“The financing of infrastructure is overdue for reform. Labour has proposed using infrastructure bonds paid back by a targeted rate on the properties in new developments. This would be fairer, cheaper and more efficient. It would spread the cost of new infrastructure over the lifetime of the asset. 

“Currently infrastructure costs get loaded onto the price tag of a new home pushing up house prices. Those inflated values are then capitalised into the price of homes across the market. 

“Again National has shrugged off the challenge of genuine reform, and instead rushed out a policy designed to generate a headline and convey the impression that it was doing something. The country deserves better,” says Mr Twyford. 

 

Officials on the lack of impact on housing supply:

·        Treasury “Most of the projects that would be brought forward if additional financing was available are medium-term projects that will enable the supply of land in 5-7 years and therefore will not alleviate pressure on housing in the short-term”

·        Treasury “is not likely to result in additional housing in the short-term”

·        Treasury “financing is not the main constraint so the initiative may not release significant amounts of housing.”

·        Cabinet Paper “there is a risk that the pace of housing development is not progressed significantly as a result of this initiative.”

 

 

Officials on the policy being rushed:

·       Treasury “these are not proposals by officials. These were ideas that were brainstormed and discussed in that light. We have not done sufficient analysis to be able to provide concrete advice on these ideas”

·        Cabinet Paper “In the time available, it has not been possible to work through all of the details so there is a risk that the announced fund design constrains future choices about the optimal design.”