The Government announced:
The Government will co-invest up to $600 million alongside local councils and private investors in network infrastructure for big new housing developments through a re-purposed ultra-fast broadband company, Finance Minister Steven Joyce and Local Government Minister Anne Tolley say.
“Crown Fibre Holdings will be re-named Crown Infrastructure Partners, and bring the investment skills and experience gained through the Government’s world-leading ultra-fast broadband rollout to the job of attracting private investment in roading and water infrastructure that open up big new tracts of land for more housing development,” Mr Joyce says.
Sensible to use Crown Fibre Holdings (which has done a good job) rather than set up a new entity.
“Crown Infrastructure Partners will set up special purpose companies to build and own new trunk infrastructure for housing developments in return for dedicated long term revenue streams from councils through targeted rates and volumetric charging for use of the infrastructure by new residents.”
“This innovative new funding method will be made available to cash-strapped councils who are struggling to fund new long-term infrastructure from their own balance sheets,” Mrs Tolley says.
“Councils will have the option of buying back the infrastructure at some point in the future, but won’t have to commit to doing so. This is all about introducing outside capital to build this infrastructure, so current ratepayers don’t get burdened with all the costs of growth.”
This is really important and something I have championed for some time, since the NZ Initiative proposed it. Phil Twyford has also been calling for a way for housing infrastructure to be funded outside current ratepayers.
Currently Councils are incentivisied to not build houses as the infrastructure costs them money, and they sometimes have debt limits. This initiative will cover the costs of the initial infrastructure, and recoup them over time from the new residents (ie user pays).
Two of the earliest projects to be assessed by Crown Infrastructure Partners for investment will be the Auckland North and Auckland South projects previously submitted by Auckland Council as requiring investment outside the Council’s own balance sheet.
“These two large projects can provide an additional 5,500 homes in Wainui to the north of Auckland, and 17,800 homes across Pukekohe, Paerata and Drury to the south of the city,” Mrs Tolley says.
Mr Joyce says the Government is prepared to be an investor alongside the private sector and take up some of the early uptake risk.
“We learnt from the ultra-fast broadband programme that if we de-risk some of the early stages of the investment, we can bring in private sector investors to take on much of the heavy lifting as the investments mature,” Mr Joyce says. “We would expect the Crown’s investment in each project to be matched with at least one to one with private sector investment over time.”
A private-public partnership looks good to me.