The Dim-Post

July 4, 2016

One BILLION dollars!

Filed under: Uncategorized — danylmc @ 7:11 am

The Prime Minister today announced a new $1 billion Housing Infrastructure Fund to accelerate the supply of new housing where it’s needed most, Finance Minister Bill English and Building and Housing Minister Dr Nick Smith say.

The contestable fund will be open to applications from councils in the highest growth areas – currently Christchurch, Queenstown, Tauranga, Hamilton and Auckland.

Mr English says the Housing Infrastructure Fund will help bring forward the new roads and water infrastructure needed for new housing where financing is a constraint.

“The Government will invest up front to ensure the infrastructure is in place. But councils will have to repay the investment or buy back the assets once houses have been built and development contributions paid.”

Councils can already borrow money, of course. Unless they’re hitting their debt limits. So National could have just allowed high-growth councils to apply to exceed their debt limits for greenfields infrastructure development. But then the headlines about the announcement wouldn’t have been all like ‘National’s billion dollar solution to housing crisis!’

If the government put as much effort and ingenuity into doing something about housing as they put into their clever media strategies designed to be seen to be doing something, without really doing anything, then our homeless families would all be living in cheap eco-friendly replicas of Versailles by now.

16 Comments »

  1. Brilliant retail politics.
    Also, the way they list the four other locations first, starting with the south island, and list Auckland last almost like it’s an afterthought and not the centrepeice of the whole policy.
    Because, “Government spends 1 Billion subsidising houses for Aucklanders” doesn’t play that well with the National party’s core demographic…

    Comment by Richard29 — July 4, 2016 @ 8:11 am

  2. Also, this isn’t an original idea. ASB did this back in 2009 in response to the financial crisis.
    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10558445
    Of course a 1Bn ‘pool’ from which to draw discounted lending subject to lending assessment and special qualifying criteria is not quite the same thing as spending 1Bn on solving the problem. But it makes a fantastic headline. Labour should just offer a 20Bn pool of discounted lending, it makes an even better headline and won’t dramatically change the uptake as its basically still a ‘leave it to the market’ solution…

    Comment by Richard29 — July 4, 2016 @ 8:23 am

  3. I suspect that if councils exceed their debt limits, their credit ratings would decrease and their cost of borrowing across the board would go up.

    Comment by Robert Singers — July 4, 2016 @ 9:13 am

  4. This is a loan to local councils, to be paid back in a decade. The Govt’s cost of borrowing is 2% (that’s what 10 year NZ Govt Bonds are paying at the moment). If the whole amount is drawn down, then that’s $20 million a year in interest. So, really the headline should be “Govt puts up to $20 million a year into infrastructure development to combat Auckland’s housing not-crisis-but-something-less-scarey-sounding”.

    Comment by Andrew Geddis — July 4, 2016 @ 9:33 am

  5. Whatever happened to the Future Investment Fund, which was supposed to build all this infrastructure? Has the Future been and gone already?

    Comment by sammy 3.0 — July 4, 2016 @ 9:33 am

  6. What does $1 billion buy anyway when it comes to roads, sewerage and so on, and has to be split between 5 cities? It kind of reminds me of that scene in Austin Powers where Dr Evil threatens to blow up the world unless someone pays him $100k…

    Comment by Nick R — July 4, 2016 @ 9:34 am

  7. Whatever happened to the Future Investment Fund …

    It is being spent subsidising the cost of new 10-year passports and paying administration fees for non-existent water storage developments that farmers can’t afford to join.

    It kind of reminds me of that scene in Austin Powers where Dr Evil threatens to blow up the world unless someone pays him $100k…

    Hence Danyl’s post’s title.

    Comment by Andrew Geddis — July 4, 2016 @ 9:49 am

  8. “Whatever happened to the Future Investment Fund, which was supposed to build all this infrastructure?”

    The same thing that will have happened to this initiative in 2019 when National wants another big-sounding announcement

    Comment by Ortvin Sarapuu — July 4, 2016 @ 10:50 am

  9. Also, the way they list the four other locations first, starting with the south island, and list Auckland last almost like it’s an afterthought and not the centrepeice of the whole policy.

    They need the other towns, because the “glorious solution” will only work for normal cities – like Queenstown, Christchurch, Tauranga and Hamilton. Those are all normal places that expand in the normal manner by allowing growth at their outskirts, that sort of growth that allows people/businesses to move outwards and free up land for upwards growth/intensification.

    The initiative is doomed to fail in the Super City of Auckland, because instead of expanding the city of Auckland, this council builds mostly infrastructure for Warkworth, Silverdale, Kumeu and Pukekohe.

    Overall Auckland Council builds way more infrastructure (in weird places) than any normal city of our size would and this overspend takes the form of massive sprawl. Giving Auckland more money to waste on sprawl is not helpful.

    Comment by unaha-closp — July 4, 2016 @ 1:06 pm

  10. Nick R, that was one MILLION dollars.

    Comment by Clunking Fist — July 4, 2016 @ 1:30 pm

  11. I love the way UK tech The Register pokes fun at this number every time it runs a story about a BEELION dollars.

    http://search.theregister.co.uk/?q=beelion&advanced=1&author=&date=the+dawn+of+time&site=0&results_per_page=20

    Comment by Bill Bennett — July 4, 2016 @ 1:36 pm

  12. Andrew Geddis is quite right that the real cost of this policy is, at most, c$20m a year. But it won’t even be that. No council will want to borrow from this “fund”. It will never happen. And then the money, which does not in fact exist and would need to be borrowed, can be “re-used” at next year’s National Party conference as “$1 billion fund for health initiatives” none of which will happen either. Isn’t it brilliant in its own way?

    Comment by Matthew Hooton — July 4, 2016 @ 2:07 pm

  13. Now watch the National Party sock puppets on Auckland Council, and their tame Mayoral and Council candidates scream about how Council’s borrowing is out of control!

    Comment by Lindsey — July 4, 2016 @ 2:09 pm

  14. Andrew Geddis is quite right…

    The Devil must be freezing his/her ass off at the moment.

    Comment by Andrew Geddis — July 4, 2016 @ 4:20 pm

  15. “will only work for normal cities – like Queenstown, Christchurch, Tauranga and Hamilton.”

    Queenstown?

    Comment by Ortvin Sarapuu — July 4, 2016 @ 6:03 pm

  16. Queenstown is ridiculously fucking expensive.

    Comment by Phil — July 5, 2016 @ 1:19 pm


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