Bill English wasn't interested in helping with infrastructure a few weeks ago, now National is riding to the rescue. It's a good move, but another sign of a panicked government
Underneath Auckland's housing crisis, both literally and metaphorically, lies infrastructure. One of the reasons for the lack of houses in Auckland is that the city doesn't have enough of it, and you can't build a house if you don't have the roads, pipes and power. So today's announcement from government addresses a fundamental problem.
John Key has said today that he'll offer fast-growing councils access to a $1 billion fund; they can borrow and spend and then pay the money back when houses are built and the residents are paying rates. It'd be nice if it was interest-free (I haven't seen, but I'm guessing not).
It's one of the many things people like me have been crying out for the government to do for some time. Auckland Council has been crying for it too; they're up against their debt ceiling and can't borrow more without seeing the city's credit rating fall. So this is a practical way for the stuff to get built and then paid back over time. Central government is really the only organisation that can carry this on its balance sheet. And my guess is that this $1 billion will only be the start (unless of course National caps it due to its obsession with surplus).
Labour has suggested similar things recently, such as allowing councils to issue bonds. One way or another, the money's been needed to get infrastructure built.
So good on them. But it's curious, given that just three weeks ago on The Nation, we asked Finance Minister Bill English about just this issue. This is how the conversation went:
Lisa Owen: The thing is you point the finger at the council there, but the council has been very clear about the fact it needs help with infrastructure. it says it needs 3 billion in the next 10 years for infrastructure. Where do you think that money's coming from? Because the council's nudging its debt ceiling. It can't rate people off their properties. So where is the money coming from?
Bill English: Well, fundamentally, that's Auckland's issue to deal with. We are certainly contributing. I mean, right now we're in intensive negotiation for a contribution of over $1 billion from the taxpayer to an Auckland City Council transport project called the Central Rail Link. Now, in the normal course of events, they would pay for that. We're negotiating where taxpayers will pay for that. That's a significant reduction in the burden on the council, and it allows them to pay for other infrastructure.
Minister, isn't it central government's responsibility to assist with that infrastructure?
No, fundamentally it isn't. It is the council's responsibility. That's the deal. They get to decide on how their city is planned, and they get to pay for the development. And for a lot of the people living outside Auckland and inside Auckland, there are real benefits from growth. And part of the puzzle here is that as more people turn up in Auckland and as incomes rise, growth is good. The council benefits from that, and so do ratepayers. And so they've just got to work out a better alignment between the funding and the growth.
So back then English was bullish, arguing that the government was already paying for a big chunk of the rail link and Auckland could blimmin' well just pay for it's own blimmin' infrastructure.
"It's the council's responsibility," he said, rather tersely. No help coming from him.
Well, that's changed rather rapidly. Which is good for the city, but also a sign that National really is responding to Auckland's housing pressure on the hoof.
Yesterday, as revealed on The Nation, suddenly prefab houses had become an option as well. How long before the government realises it needs to require more affordable houses on released Crown land and do something about land banking?
But hey, it's not a crisis, so no worries, right?