9. Housing Auckland—Housing Infrastructure Fund and Infrastructure BondsPHIL TWYFORD (Labour—Te Atatū) to the Minister for InfrastructureHousing Auckland—Housing Infrastructure Fund and Infrastructure Bonds9. PHIL TWYFORD (Labour—Te Atatū) to the Minister for Infrastructure: Why does his Housing Infrastructure Fund offer more debt to councils when the biggest high-growth local authority Auckland Council is already close to its debt ceiling? Hon STEVEN JOYCE (Minister for Infrastructure): The Government has put a billion dollars on the table through the Housing Infrastructure Fund to help fast-growing councils fund their water and transport infrastructure. Can I point out to the member that the transport part of that funding does not increase council debt because it is a change in the funding assistance rate. The water infrastructure element does increase council debt. Although Auckland Council has indicated some concern around its debt constraints its income each year is nearly $4 billion which is up about half a billion dollars in just the last 2 years—in the last 2 years a half-billion-dollar increase. That would normally provide the council quite a bit of headroom to provide its share of the infrastructure needed for growth. However we are working with the council on further options that may mean some of its debt is not held on its balance sheet. Phil Twyford: How can he claim his $1 billion line of credit is a credible policy when only one-third of it is earmarked for Auckland which alone needs $20 billion to fund the infrastructure for essential housing developments? Hon STEVEN JOYCE: Well I am not sure where the member gets his one-third earmarked for Auckland from because it is based around the applications that are received from the fast-growth councils and actually they will be assessed irrespective of which council they come from. Again I think—and I speak as an Auckland ratepayer—it is important to point out that actually Auckland's income has grown a lot in the last couple of years. It is $4 billion worth of turnover this year. Two years ago it was around $3.5 billion. If the council had have held its cost structure—and I appreciate it is not Mr Goff's lookout because he has only just come into the job—to what it was 2 years ago then it would be generating half a billion dollars' worth of money that it could use against its debt today based on 2 years ago. Phil Twyford: Is he aware that only 10000 new homes were consented in Auckland in the last year adding to his growing deficit of 40000 new homes needed and will he now accept that Labour's plan for infrastructure bonds paid back by a targeted rate will make infrastructure financing fairer cheaper and most importantly will open up the flow of finance that new housing developments desperately need? Mr SPEAKER: There are again two supplementary questions. The Minister can address one or both. Hon STEVEN JOYCE: In terms of the construction rate in Auckland I know the member does not want to know this but actually we are in the middle of a massive building boom in Auckland. In the suburb where I live for example there are literally a couple of thousand apartments being built around now and actually the consent figures for the last year were around 10000 and also there was a similar number the year before. By any standards more houses are being built in Auckland now than at any time since about 2004. The member might want to ignore that but actually most Aucklanders who know and see the subbies and the contractors around know that it is actually happening. Phil Twyford: Why would he not pass on to homeowners the Government's ability to borrow on the international bond market more cheaply than anyone else and spread that cost over the lifetime of the asset instead of loading it all on to the price tag of a new home which is what currently happens? Hon STEVEN JOYCE: Well I am sorry but the member is simply incorrect. That is not what currently happens. In fact councils borrow money and push it out over 20 or 30 years precisely for the reasons that the member identifies so that it does not all fall on today's homeowners. So he is just completely wrong. The other issue he has got with his bond model is that it depends very much on how it is structured in terms of whether the debt still ends up on the councils. There is a thing called international accounting standards which means that if you have a debt it ends up on your balance sheet. It ends upon your balance sheet. So we are actually working with Auckland Council and other councils on some opportunities around special purpose vehicles but the member is wrong if he thinks that just allowing the council to borrow the Government's money and pay it back would actually solve the issue. Phil Twyford: Does he stand by Nick Smith's dismissal of Labour's infrastructure bonds plan as creative accounting" given that the idea is supported by the Productivity Commission the Property Council and Infrastructure New Zealand? Hon STEVEN JOYCE: The member's proposal around infrastructure bonds as I said before depends completely on who holds the debt. Somebody has to hold the debt and the council has to dedicate a stream of income against that debt and that is what we are working on—Hon David Parker: No it's a targeted rate. Hon STEVEN JOYCE: Well actually it is still a stream of income. You can call it a targeted rate but it is still some of the rates income of the council dedicated against that debt. We are looking at something called special purpose vehicles which might help in this regard but you cannot just pretend the debt goes on the council. Mr SPEAKER: Question No. 10—Hon Member: Come on keep going. Mr SPEAKER: Order! No we are not keeping going."