- Hon Chris Bishop
- Hon Simon Watts
New and improved infrastructure funding and financing tools will help get more houses built and address New Zealand's housing crisis, Housing Minister Chris Bishop and Local Government Minister Simon Watts say.
"Fixing New Zealand's housing crisis will help lift economic growth, boost productivity and lift our living standards.
"The Government's Going for Housing Growth programme focuses on fixing the fundamentals of our housing crisis: land supply, infrastructure, and incentives for growth."
Going for Housing Growth is split into three pillars:
Pillar 1: Freeing up land for development and removing unnecessary planning barriers,
Pillar 2: Improving infrastructure funding and financing to support growth, and
Pillar 3: Providing incentives for communities and councils to support growth.
"In July, the Government announced decisions on Pillar 1 which will make it much easier for our cities to grow both up and out
"We are not a small country by land mass, but our planning system has made it difficult for our cities to grow. As a result, we have excessively high land prices driven by market expectations of an ongoing shortage of developable urban land to meet demand.
"But, on its own, freeing up land is not enough to support more housing. We also need the timely delivery of infrastructure. Put simply, you can't have housing without water, transport, and community facilities.
Pillar 2: Improving funding and financing tools
"The changes we are announcing today respond to the calls from councils and developers to make it much simpler and easier to fund and finance enabling infrastructure for housing.
"In short, the Government's changes will create a flexible funding and financing system to match a new, flexible, planning system.
"Our infrastructure funding system for housing is broken, with councils unable to effectively recover the costs of enabling infrastructure for urban growth. This leads either to existing ratepayers picking up the tab (which is unfair), or it stops more houses being built (which perpetuates the problem).
"Our core objective is to create a system where "growth pays for growth". We want to move to a future state where funding and financing tools enable a responsive supply of infrastructure in places where it is commercially viable to build new houses.
"This will shift market expectations of future scarcity, bring down the cost of land for new housing, and improve incentives to develop land sooner instead of land banking."
The Government will make five key changes to New Zealand's funding and financing toolkit that will support urban growth:
- Replacing Development Contributions with a Development Levy system, which enables councils and other infrastructure providers to charge developers a proportionate amount of the total cost of capital expenditure necessary to service growth over the long term. Separate levies will be maintained for each infrastructure service, with levy zones expected to cover a pre-defined urban area. Levies will be calculated based on overall growth costs and expected levels of growth.
- Establishing regulatory oversight of Development Levies to ensure charges are fair and appropriate by restricting local authority discretion about various matters, such as setting the methodology used to allocate project costs.
- Increasing the flexibility of targeted rates by allowing councils to set targeted rates that only apply to new developments, and enabling targeted rates and levies to be used together where projects benefit existing residents and provide for growth.
- Improving the effectiveness of the Infrastructure Funding and Financing (IFF) Act, particularly for developer-led projects. This work is being led by Parliamentary Under-Secretary Simon Court.
- Broadening existing tools to support value capture and cost recovery by enabling the IFF Act to be used for major transport projects (such as those led by NZTA).
"These are big changes to the infrastructure funding system for urban growth, but they will be worth it. Shifting to Development Levies will give developers more certainty around costs and give councils more flexibility to recover the actual costs of growth. The changes will increase transparency and reduce administrative complexity for councils.
"Most importantly, they mean that councils can properly cover the costs of housing growth.
"These changes, combined with the Government's Local Water Done Well reforms, will help ease the constraints on local government, developers, and other infrastructure providers and enable the delivery of infrastructure to land zoned for housing development.
"Detailed design work around the new system is underway now and there will be engagement by government officials with councils and developers in advance of legislation being introduced to Parliament in the second half of 2025. Our aim is to enact the legislation in mid-2026 for the new system to begin in 2027."
Note to Editors:
Four fact sheets are attached.
