The Housing Minister says local authorities are ‘too slow’ to build water and road infrastructure, but council leaders say Government red tape is to blame.
Never mind a burning platform – Ōpōtiki is on a sinking one. The business centre of the eastern Bay of Plenty town sits just above sea level, protected by stop banks, for now. When a storm comes through, like it did last week, the streets fill with water.
Yet for all its challenges of geology and geography and social deprivation, the town’s economy is booming. Construction is healthy, the town has government funding to build a new $100 million harbour, and iwi-owned firm Whakatōhea Mussels is buying a third barge and opening a new $5.5m factory next month, creating more than 100 jobs.
One thing is holding Ōpōtiki back: housing. Even out here, far from the metropolitan sprawl, they are experiencing a housing crisis. Mayor Lyn Riesterer says people are living in cars, caravans, and even cowsheds. Unexpected numbers of locals returning from overseas have worsened the problem.
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So Ōpōtiki is welcoming this week’s announcement of a $1 billion-plus Infrastructure Acceleration Fund, to build new water pipes and sewerage and the odd local road to enable the development of new housing that wouldn’t otherwise have happened.
Housing Minister Megan Woods unveiled details at a big Kāinga Ora housing development in the suburb of Mt Roskill – but this pot of money won’t be going to the housing agency. It will go to private developers, iwi, community housing trusts and councils to lay down the pipes that are a prerequisite to any housing project.
A Local Government NZ survey of provincial and rural district councils identifies 7500 new, additional houses that could be brought quickly to market with infrastructure funding. They need $307m infrastructure investment, of which councils can co-fund $41m. Mayors of those small districts hope they will be able to access the Infrastructure Accelerator Fund quickly.
“Flip-flopping has cost the country an absolute fortune and local government has been stuck in the middle of it. It’s one of the most frustrating things of my whole political career.”
– Stuart Crosby, Local Government NZ
Riesterer is delighted. Her council has a particularly well-formed aspiration to work with local landowners on the construction of 200 new houses in the Hukutaia neighbourhood on Hospital Hill, across the river from the existing township.
But the council hadn’t been able to lock it into its long term plan, because it couldn’t find about $24 million needed for wastewater infrastructure. And without that, no developer could start work. Now, Ōpōtiki intends to be first in the queue for Megan Woods’ new money.
Not that Riesterer’s complaining, but there is a catch. Woods’ announcement is the latest signal of the government’s disdain for the capacity of local governance – councils and DHBs and polytechs and even school boards – to manage critical local infrastructure.
The three waters (drinking water, wastewater and stormwater) have always been owned and managed by local authorities, but this week’s funding plan anticipates the expropriation of those assets from local hands. Instead of going through council hands, this $1b will be managed by Kāinga Ora.
That has caused discomfort in local councils and also, a Cabinet paper reveals, at the Treasury.
“Treasury does not consider that Kāinga Ora’s board, or a committee thereof, should lead the decision-making process for a competitive Crown investment program in which their organisation has an interest,” the paper says. “Kāinga Ora will be responsible for administering the Infrastructure Fund, and could also provide technical input to the advisory group, but recommendations for Crown investment should come from an independently-chaired advisory board appointed by Ministers.”
The Cabinet has largely disregarded that advice, deciding that Kāinga Ora will administer the competitive fund, develop detailed funding agreements and undertake ongoing contract management and monitoring. The Minister of Finance and the Minister of Housing will be the final decision makers on where to invest money, but acting on the advice of a subcommittee of Kāinga Ora’s board.
Woods, with Associate Housing Minister Peeni Henare, reassured Cabinet last month that this structure was on the basis that Kāinga Ora was not able to apply directly to the competitive component of the Fund.
Expressions of interest to the Fund will open on June 30, with the expectation that the first projects will be approved by November or December this year.
“While developers and landowners will be expected to contribute to infrastructure costs, we propose that the Fund provides for infrastructure traditionally paid for by local authorities and ultimately funded by rates,” the Cabinet paper says.
“If I was to learn anything from the 1970s, it’s the last time that we had central government investing in infrastructure, and it’s the last time we built at a rate that built enough houses for New Zealanders.”
– Megan Woods, Housing Minister
“While it will not be a requirement that this funding be recovered, co-investment from local authorities will be sought in many cases. Providing this subsidy to local government will overcome a barrier to those councils unable to fund additional infrastructure investment, and it will also act as an incentive to pro-actively support unlocking housing development.”
Announcing the opening of the fund and the criteria, Megan Woods was clear about her lack of confidence in councils to deliver infrastructure and get housing projects underway in a timely manner.
Woods said councils were moving “too slow” on housing, and it was important that decisions about where to build new housing projects were taken out of their hands and made made in a cohesive manner. Till now, such infrastructure spending had been fragmented.
Councils hit back
First and foremost, councils leaders expressed gratitude at receiving any infrastructure funding. “This is the first grant money coming from any government of any substance, since the reforms of 1989, where there used to be financial assistance rates for water and wastewater, stormwaters and public transport,” said Stuart Crosby, the president of Local Government NZ. “The billion dollars is significant.”
He acknowledged that yes, council bureaucratic processes needed to pick up the pace – but told Newsroom government red tape like Resource Management Act planning processes and financing were to blame for slowing them down. And those were being addressed.
“It’s not that councils per se are slow. There are genuine reasons for it. The system is broken and it needs to be reviewed and reset for the future,” he said.
“We’re slow because of the processes we’re forced to go through, under the legislation. Which is decided by various governments. And there’s risk management – it’s a lot of money. That process and that system needs to be sped up.
“We all have our strengths and weaknesses. Our strength in local government is we know our communities better than any government will ever know them. Their strength is they collect 90 percent of the taxation in this country, and they set the high-level strategy.”
Crosby said the challenge was not to regain Government ministers’ confidence. “I don’t thing it’s so much about trust,” he said. “You can only get so much blood our of the local government funding stone.
“Local government’s often the victim of the flip-flop of government policy, it doesn’t matter what colour the government is.”
For instance, the Helen Clark Government had begun to put in bus lanes; the John Key Government came along and threw them out and instead set in place Highways of National Significance; then Jacinda Ardern’s Government was sworn in and returned to the focus to bus and bike lanes.
“That flip-flopping has cost the country an absolute fortune and local government has been stuck in the middle of it.”
Housing projects, too, were predicated on national strategies that constantly flip-flopped, he said. “It’s one of the most frustrating things of my whole political career. Therefore the opportunity in front of us is to have central and local government delivering in a more seamless way, rather than in the silos that we have at the moment.”
In order to receive money from the contestable fund, bigger more complex projects in Auckland, Tauranga, Hamilton, Wellington and Christchurch will be expected to deliver at least 200 additional homes – and at speed. In other urban centres, the project would need to deliver 100 homes, and in provincial and rural districts, at least 30 new homes.
Funding would be available for things like upgrading water infrastructure, sewerage, roading and flood mitigation that will underpin (and underlie) projects throughout the country.
In the growth centres of Auckland, Tauranga, Wellington and Christchurch, each tranche of funding will be expected to ensure the construction of at least 200 houses. In provincial centres, they want more than 100 houses for every piece of funding approved, and in rural areas, 30-plus houses.
“What I’m interested in is how it is that we can once again have a country where we have the pipes in the ground, where we have the roads that will allow us to build houses for New Zealanders.”
– Megan Woods
Lyn Riesterer reckons she can do better than that: Ōpōtiki may be small, but it punches above its weight. If she gets the $20m she needs from Government, she is promising to get developers to the table to build 200 houses.
The $1b for the competitive fund is accompanied by $350m for Māori housing infrastructure. That will be followed by details of $2b to “shovel-ready” large scale projects to be run by Kāinga Ora, which is scheduled to be signed off by Cabinet this month.
“Large scale projects are the Government’s best bet for delivering accelerated housing outcomes,” the ministers’ Cabinet paper says.
And they’re betting on Kāinga Ora to deliver those projects. “No other agency or council in New Zealand is set up to manage the scale and pace of development proposed.”
The large-scale infrastructure projects will contribute significantly to housing outcomes, the paper says, providing build-ready land that will enable the delivery of 14,000 new additional homes and 4,000 replacement public homes on Kāinga Ora land over the next five to 10 years – as well as unlocking a further 11,000 homes on surrounding privately owned land.
Five of these big projects will be in Auckland (Mt Roskill, Mangere, Tāmaki, Oranga and Northcote) and one will be in Porirua.
Asked if she was inspired by Robert Muldoon and his Think Big projects of the 1970s, Megan Woods laughed and said no. But she did observe that some of that infrastructure had proved valuable, with the benefit of hindsight.
“If I was to learn anything from the 1970s, it’s the last time that we had central government investing in infrastructure, and it’s the last time we built at a rate that built enough houses for New Zealanders,” she told Newsroom.
“The way we’ve done this for the last few decades has resulted in us not having the infrastructure that is required to keep pace with the numbers of houses that New Zealanders require.
“That’s all I’m concentrating on. I may have been born in 1973, but I’m not taking any other grain of inspiration from that decade! What I’m interested in is how it is that we can once again have a country where we have the pipes in the ground, where we have the roads that will allow us to build houses for New Zealanders.”