Twyford PhilThird ReadingHon PHIL TWYFORD (Minister for Urban Development): I move That the Infrastructure Funding and Financing Bill be now read a third time. It's with pleasure I rise for the third reading of this bill. It's a bill that has achieved cross-party support in this House and I want to acknowledge the efforts of all parties in ensuring that this piece of legislation has reached its final reading today. I want to conclude the Parliament's consideration of the bill by talking about one of the most pressing public policy failures in our national life and how this bill supports the efforts to address that public policy failure. The housing crisis has many interrelated causes. However it's our Government's view that one of those causes is the failure to ground land-use planning in economics. Over the last two decades our housing market has experienced an accumulation of demand pressures—mainly population growth but compounded by tax settings and lower-cost mortgage credit—that have together encouraged a generation of investors to see rental properties as a uniquely desirable asset class. Now if our land and housing markets were elastic as they would ideally be and able to respond to demand when it occurs we might've seen the supply of new housing ramp up. Unfortunately those markets have not responded to demand. Now for our cities to grow there needs to be land that is ready to be developed in order to build houses on it. We need to remove restrictive planning rules that stop our city expanding on the fringes which creates an artificial scarcity of land and drives house prices up and remove height and density rules that stop the city growing up which effectively rations floor space. Local authorities need to plan ahead and make room for growth. This newly zoned land needs to be serviced by core infrastructure such as three waters roading and infrastructure for environmental resilience and yet the provision of infrastructure by local government in New Zealand has been heavily constrained particularly in our high-growth areas such as Auckland Hamilton Tauranga and Queenstown. Hamstrung by financing constraints local councils' inability to zone sufficient land and invest in infrastructure to meet housing demand is driving up the price of urban land and compromising housing affordability. These financing constraints are exacerbated by community opposition to borrowing for growth and mandated debt covenants. High-growth councils are in large part already up against their debt ceilings and that stymies the efforts of our cities to keep up with the population growth that they're experiencing. What this means is that our cities are not building the houses that we need. That's why fundamentally we have a shortfall of 70000 homes in New Zealand right now and over the last decade we've seen a housing cycle that has seen housing prices in a number of our communities double in the last decade. Last year PricewaterhouseCoopers released a report on cities that showed that Auckland was the only city in Australasia to have experienced a significant drop in discretionary income at the household level over the last decade—an average drop of some $5000 per household per year—at a time of sustained economic growth and that is largely because of increasing housing and transport costs. The upshot is that it leads to increasing homelessness and rising rents and it pushes the dream of homeownership further and further out of reach. It all is driven by a failure to let the market respond to growth. This bill is part of our Government's policy response to that public policy failure. It's one step towards fixing a broken funding and financing system to support more and better urban development. It's complemented by the National Policy Statement on Urban Development gazetted this week joint spatial planning work with local government in our six high-growth metro cities and the Hon David Parker's review of the Resource Management Act. Now to make progress on housing we need to give councils and developers a range of tools to support them to efficiently deliver the infrastructure that is so desperately needed in our high-growth cities. This bill is another tool in the tool kit for funding and financing urban growth. The flexible and permissive nature of the legislation allows its use to evolve over time. It provides a framework that can coordinate multiple landowners and developers along with the local councils to deliver the infrastructure their communities need. Allowing for a third party other than a council to finance the construction of infrastructure will overcome the constraints of debt limits and high upfront infrastructure costs. Instead under this law a special purpose vehicle or an SPV will be responsible for raising the necessary finance and building the infrastructure. Once constructed the infrastructure whether it's community facilities whether it's three waters or roads will be transferred to the council who will then be responsible for its operations and maintenance. The raising of finance will be possible because of a long-term levy paid by beneficiaries of the infrastructure to the special purpose vehicle over the life of the asset which is very similar to a targeted rate. Flexibility of beneficiary identification and the levy liability within the bill means that the costs of each project are allocated on a case by case basis with options to ramp up or vary the levy over time depending on the extent to which a homeowner is affected by the development project. These levying powers are not provided lightly and I want to reinforce the extensive monitoring reporting and disclosure regimes within the bill which will ensure that the SPV's use of these powers is appropriate and is monitored. The success of this programme won't be seen tomorrow or the next day—success will take time. By overcoming technical financing constraints and speeding up the provision of housing-related infrastructure we're tackling one of the fundamental problems that have been driving up house prices: a lack of serviced urban land. Increased land and development capacity available for housing will support a more competitive urban land market ultimately bringing down the cost of urban land. The bipartisan support in the House on this bill's introduction and the general support from submitters and local government sends a strong signal that resolving local government funding and financing challenges are a priority of this Parliament and that is something we can be proud of. Ultimately this bill will support a system where the viability of a project is a key determinant of whether it proceeds—that is is it commercially viable and is it environmentally sustainable and not whether or not the council's balance sheet can sustain it. That will be the key determinant. It's part of a suite of reforms which are in my view the most substantive changes to land-use planning in a generation. I would like to make several acknowledgments with respect to the development of this bill and its progression through the House. First I want to thank the Transport and Infrastructure Committee for its work on the bill and those individuals and organisations who provided submissions. It was fantastic to see support from all sides of the House during the bill's first and second readings and the bill is stronger because of the work that was done by the select committee. I also would like to acknowledge the efforts of the local government and the wider infrastructure sector in developing this legislation especially Crown Infrastructure Partners whose work with Fulton Hogan at Milldale north of Auckland along with the efforts of Auckland Council was the proof of concept for this reform. That experience was invaluable in developing the policy and this bill. The high-growth councils—Auckland Hamilton Tauranga Wellington Christchurch and Queenstown—have partnered with agencies to help develop and test this legislation to ensure that it is fit for purpose. All in all the Infrastructure Funding and Financing Bill represents a first for New Zealand. It will provide increased certainty to councils and developers about their ability to provide the infrastructure needed to support growing communities. It will be instrumental in the improvement and functioning of urban land markets with a long-term view to bringing down the cost of serviced urban land in high-growth cities. This will deliver homes and communities sooner than would've otherwise happened and will give New Zealanders greater opportunities to be decently and affordably housed and that is something I know that all sides of this House strive for. I commend this bill to the House.