1. Housing Supply—Housing Infrastructure FundDAVID BENNETT (National—Hamilton East) to the Minister of FinanceORAL QUESTIONSQUESTIONS TO MINISTERSHousing Supply—Housing Infrastructure Fund1. DAVID BENNETT (National—Hamilton East) to the Minister of Finance: What recent announcements has the Government made to accelerate the supply of new housing where it is needed the most?Hon BILL ENGLISH (Minister of Finance): On Sunday the Prime Minister announced a new $1 billion Housing Infrastructure Fund to help bring forward the new roads and water infrastructure needed for new housing where financing is a constraint. It is the next step in the Government's comprehensive housing plan. The contestable fund will be open to applications in high-growth areas. It will be available only for substantial new infrastructure that supports new housing not to replace existing infrastructure. To access the fund local councils must outline how many new houses will be built where they will be built and when they will be available.David Bennett: What current constraints to infrastructure provision will the fund help to overcome?Hon BILL ENGLISH: As part of its comprehensive plan the Government recently proposed a national policy statement on urban development capacity that will require councils to ensure land supply for housing and business keeps ahead of growth. Feedback on the national policy statement has been positive. The councils have told us that the infrastructure and its financing is one of the key constraints where more supply is required. Some councils have strict debt limits which means they lack headroom to invest in infrastructure. The fund will provide more infrastructure sooner by aligning the cost to councils with the timing of revenue from development contributions and rates of newly built houses.Denis O'Rourke: Does the Minister agree with home builder Mike Greer on the new $1 billion housing infrastructure loan fund: It will all be used in Auckland. There won't be a dollar leaves Auckland for sure."; if not will he give an assurance that other centres will get some?Mr SPEAKER: Either of those two supplementary questions.Hon BILL ENGLISH: The high-growth areas covered by the fund are Christchurch Queenstown Tauranga Hamilton and Auckland but of course we would expect more houses will be built in Auckland where the highest demand is occurring.David Seymour: What proportion or percentage of funds awarded to councils through this fund will need to be repaid in the long run?Hon BILL ENGLISH: In the long run the councils will repay whatever assistance the Government offers.David Bennett: What options is the Government considering for how the fund could be implemented?Hon BILL ENGLISH: The intent of the policy is to provide upfront cash flow to councils in a way that does not accrue as debt on their balance sheets. One option for achieving this is the Crown Fibre Holdings model where the Government finances and owns the infrastructure upfront. There would then be an arrangement where the infrastructure is purchased from the Government as houses are built in the same way that Crown Fibre Holdings repays the Government when new subscribers sign up to ultra-fast broadband. Another option is to use the financial assistance rate for councils in the National Land Transport Fund—a tool that has been used before. These options mean the Government would face some uptake risk if houses are not built which is why the proposals from the councils need to be very clear about when and where new houses will be built.Denis O'Rourke: Does the Minister agree with Mike Greer on what the Government funding is really needed for when he says: "Government has to pay for the land and provide the housing otherwise it's too hard to do it."; if not why not?Mr SPEAKER: Again there are two supplementary questions there. The Minister the Hon Bill English can address one of them.Hon BILL ENGLISH: There are many developers who would like the Government to pay for the land so they do not have to take any of that kind of development risk but we are not going to do that. We are going to help councils with the timing of the revenue they need for core trunk infrastructure that will open up a new supply of new houses. David Bennett: How is the fund expected to impact on the Government's finances? Hon BILL ENGLISH: Depending on the number and timing of applications the fund will require the Government to temporarily borrow up to but not necessarily actually $1 billion increasing net debt until the infrastructure is sold. Because the infrastructure is expected to be sold or financed in the future when councils can benefit from the greater revenue flows it is not expected to impact on the Budget capital allowance—any impact on the surplus will depend on the nature of the infrastructure project itself. Denis O'Rourke: What difference will a $1 billion loan fund really make when a new Waterview to Māngere sewer pipe alone will cost $950 million?Hon BILL ENGLISH: It will make the difference that councils say it should make. Councils already have in their long-term plans significant investment in infrastructure. We have discussed in detail what the constraints are for further spending on top of the growth they have already anticipated which in this case is over 10 percent—in the case of each of these cities—and this is the constraint that the council tells us can be dealt with.David Bennett: What other constraints are there to getting more houses built aside from infrastructure?Hon BILL ENGLISH: The reason the Government has a comprehensive plan on housing is that there are a considerable number of constraints: for instance the speed of the planning process which is run by the councils; the consenting requirements—which consents are issued by the councils; the need to consult local communities which is a job to be carried out by the councils. And now that the building industry is running so fast it is becoming apparent that there are constraints in the building industry as to the availability of labour and building materials.Rt Hon Winston Peters: If any of that is true why on earth has he not told the chairperson of the Finance and Expenditure Committee the facts rather than having him get up here asking these innocent stupid questions?Hon Gerry Brownlee: I raise a point of order Mr Speaker. How can you take that question as being a reasonable question for the House? The member asked "if any of that is true why hasn't he conveyed the facts?". The two do not mix. It is one or the other.Mr SPEAKER: I was going to allow the question to stand to give the Minister a fairly wide chance to answer it but in this case there is no responsibility by the Minister for a member of Parliament who happens to chair a select committee."