Government has new sense of urgency over Auckland

The Government has plans to make an earlier start on some Auckland infrastructure  projects – including roads – as a way of stimulating more house construction to deal with the city’s housing crisis.

Finance Minister Steven Joyce confirmed to POLITIK last night that a group of Ministers was working on the proposal and their work was well advanced.

He said the group was also looking at whether the Government could help Councils who were approaching their debt limits if that was hindering their ability to provide infrastructure.

“I think it is quite possible that we will have announcements before the election,” he said.

“The main focus at the moment is on the housing infrastructure fund, and we are looking at the concerns some councils have as they approach their debt limits as to whether there are any other methods by which we can help them accelerate infrastructure.”

But the Ministerial group is also looking at introducing the idea of “value capture” from “value uplift”.

This is essentially higher rates in areas which are likely to benefit from infrastructure, such as new roads, and which would, therefore, see a windfall rise in their land values.

The extra money would not go into Council funds but into a separate stand-alone entity which would be charged with building the infrastructure.

It is a system which has been used to fund London’s Crossrail project and which has plainly impressed Ministers here.

The Ministerial group consists of Joyce, Transport Minister, Simon Bridges, Local Government Minister Anne Tolley and Environment and Building Construction Minister, Nick Smith.

They meet under the umbrella of the Business Growth Agenda which has been led by Joyce. But now Joyce chairs three of its committees and Bridges also chairs three.

Obviously, Bridges and both his Ministry and the NZTA are leading much of the work on transport.

Joyce suggested in a speech earlier this year that Penlink, the four-lane toll road from the Whangaparaoa Peninsula to the Northern Gateway motorway might be one project that is brought forward.

POLITIK understands that is now a distinct possibility with funding not only from tolls but also from targeted rates because of the likelihood that it would bring new housing developments into play.

Currently, under the Auckland Transport Alignment Project (ATAP) Penlink is not intended to start until 2028.

Other projects on the drawing board include the city-airport busway which with buses is estimated to cost over $1 billion.

The busway will be for buses only and like the North Shore busway will resemble a rail line with “stations”. Cars will not be allowed in it.

However, the busway is also intended to push out the date for any city-airport train or light rail for 30 years.

Though the Council has estimated the cost of that at $1.4 billion, officials in Wellington are not so convinced it could be built within that figure which along with the fact that the Council can’t provide any funding, is the reason it has been put on the back burner.

What this new approach underlines is a major change in Government thinking and that is that immigration is unlikely to slow and that Auckland is going to continue to grow as fast as it is now.

As recently as December last year, Treasury was suggesting that net migration was forecast  to decline slightly,  to  66,000 more people in the four years to 2020.

But in the February year, net migration was 71,300

It is this continuing pressure on Auckland that the Government appears to have now developed a sense of urgency to address.

But Ministers are frustrated with the Auckland Council’s failure so far to come up with more funding for transport.

“They’re not looking at rates increases, they are not prepared to put an interim transport levy on (rates), and they are not looking at their other options,” one Minister told POLITIK.

By next year around 70% of the city’s transport budget will be committed to the Central Rail Loop.

“We’re happy to do more but they need to do a bit too,” said the Minister.

Ministers were particularly frustrated by the Auckland Mayor, Phil Goff’s continued advocacy of a regional petrol tax which they have been adamant they would not agree to.

There are also suggestions that congestion charging is going to be hurried along though the former Prime Minister, John Key, made a commitment that this would not be used as a revenue raiser rather it is intended to manage demand.

The immediate relief for Auckland will be some form of financing which allows it to raise its debt limits while at the same time projects which can be funded with “new” money from schemes like “value capture” are likely to move ahead faster.

The Government will keep the pressure on the Council because it urgently needs more housing in Auckland.

It’s as simple as that.