What Woods’ $3.8b housing fund has done
Every few months, Housing Minister Megan Woods has been announcing multimillion-dollar projects for a suburb or town near you.
The latest tranche of funding, in the name of the Infrastructure Acceleration Fund, totalled $540 million. She announced 13 projects all up. They ranged from a big spend of $150.6m for better water and cycling infrastructure in central Hamilton, to $880,000 for better storm water protections to allow 30 homes to be built at a Rāngitane papakāinga in Pahiatua.
The fund itself is huge. It was established in March last year, promising $3.8 billion for projects that could help build more houses.
The specific projects that have come from the fund lend themselves well to politics, because Woods is able to announce the funding at event such as the one this week in Hamilton. At these events, the minister can show a tangible connection to the projects being backed in various communities. But it has also led to criticism from the Opposition that this is akin to NZ First’s Provincial Growth Fund, where projects were able to get funding – but the reasoning for the funding wasn’t always clear.
This Government says there is a clear funding criteria, with the money meant to be used on major housing developments that are ready to start immediately – and would otherwise take years to begin.
The fund does not actually pay for houses. It is focused on: clearing under-developed ‘‘brownfield’’ lands to build more houses, paying for pipes to service would-be housing, and upgrading roads or cycleways so that people can access proposed houses.
Of the $3.8b, $1b has been open to any council or developer to make bids for. This contestable fund is now almost entirely spent,
with Woods saying that as of yesterday $916.3 million had been committed. That leaves just $83.7m of the contestable funding left.
The other $2.8b has been earmarked to fund Kāinga Ora’s own large-scale projects, developing Crown-owned land, and $350m was ring-fenced for a Māori Infrastructure Fund to support papakāinga development.
Much of the $2.8b has also been committed.
In April, Woods confirmed half of it would be spent on brownfields clearing and infrastructure development on Crown-owned land in Auckland.
She estimated it would unlock the land for 16,000 new builds, which would have meant an average cost of $87,500 per house.
However, Woods said the new roads and pipes would also support 11,000 new houses on private land – taking the average cost to $51,851.
Of the $916m already spent, Woods estimated between 30,000 to 50,000 houses would be built.
The rather large range is due to the fact this fund doesn’t actually pay for houses.
Going by the lower target, that means each house’s infrastructure is getting a $30,543 Government subsidy. Or, at the upper target, it’s costing taxpayers $18,326 for the road and pipe infrastructure of each promised house.
Typically, the cost of building roads and pipes falls on councils or developers.
However, Woods said the extra funding source was needed to get houses built faster, with councils across the country saying they were unable to afford upgrades to their infrastructure.
‘‘Laying the literal groundwork . . . means new housing projects that include affordable housing, can get under way faster,’’ she said yesterday.
But National said that rather than picking which projects to back, the Government should set a formula to increase funding for councils which consent higher numbers of new houses.
A prime piece of land that has been home to a derelict hospital for more than two decades is destined to be part of a 50-hectare block containing something like 950 new houses in Waipukurau.
Development of the site, not far from the town’s centre, is possible after the Central Hawke’s Bay District Council learnt yesterday that it will receive $10.9 million from the Government’s Infrastructure Acceleration Fund to fund infrastructure on the land.
Mayor Alex Walker said the funding would go towards transport improvements, kilometres of new pipeline for wastewater and water supply, a new water reservoir and major stormwater upgrades.
This will enable the owners of various parts of the block to proceed with developments.
Among those landowners are the Deakin brothers, Gary and Russell, who bought the sprawling decrepit Waipukurau hospital and its 3.4ha of land back in 2015.
Waipukurau is 50km southwest of Hastings and has a population of about 4700.
Walker said up to 950 homes could be built on the 50ha, which had been zoned residential for more than two decades.
The area – also known as the Waipukurau South Growth Precinct – will support a range of dwellings from retirement housing to larger blocks open to the market, and smaller homes.
‘‘For years we’ve shared the community’s frustration that this prime residential land has sat empty while housing is so scarce,’’ Walker said.
‘‘Now, truly smart growth – one of our strategic priorities – has become possible in the heart of Waipukurau.
‘‘A mix of housing for whānau, retirees, established residents and people new to Central Hawke’s Bay will become an exciting reality thanks to this Government funding, landowners and our partners,’’ she said.
Another landowner, the HeretaungaTamatea Settlement Trust, said it was an exciting development.
The partnership created unique opportunities for investment and housing outcomes ‘‘in the widest sense’’, said trust chief executive Darryn Russell.
A public preview of the developments will be held on site at the Pakeke Centre in Pōrangahau Rd on November 26 between 9am and 11am.