The Government’s re-election campaign is now moving at a break neck speed as it issues spending announcement after spending announcement in the lead-up to the Budget.

And yesterday it unveiled one of its biggest announcements in Auckland with a clear eye to addressing the city’s housing crisis, a potential political worry for National. 

Amy Adams announced that Housing NZ would build an additional 24,0000 new houses in Auckland over the next ten years.

This will include an additional 24,000 Housing New Zealand houses beyond the 10,000  already planned or being constructed in the city.

The houses would be financed off the HNZ’s balance sheet, by borrowing and by the Government forgoing dividends from HNZ.

The proceeds of the sale of  Housing NZ properties would also be used to finance the programme.

However HNZ is already not paying dividends and the Minister of Social Housing and Housing NZ, Amy Adams, was not answering media questions seeking more detail on the funding path.

All she said was that phase one of the Auckland Housing Programme, which covered the next four years, would cost $2.23 billion and would be funded through Housing NZ’s balance sheet and new borrowing of $1.1 billion that the Government has approved as part of the business case.

Phase two in the latter years will be funded through the market housing development part of the programme and rental returns.

But her announcement has also raised questions about whether aiming to build an additional 34000 houses a year in Auckland is either realistic or practical.


Infrastructure NZ CEO, Stephen Selwood said a 34,000 home development was a city of 100,000 people.

“The Government earlier this month signalled it was going to come to the party with an $11 billion commitment to infrastructure through Budget 2017, but it is still not clear how the Auckland Council will meet its growth obligations.

“A 2015 study by the Centre for International Economics on the cost of residential infrastructure estimated that a new home built on redeveloped land costs the Auckland Council on average $30,000.

“ This figure excludes big city-shaping investments like the City Rail Link.

“The Government’s announcement today adds a $1 billion bill to a council which is already at the limit of what it can borrow.

“If new development triggers the need for regional scale infrastructures like light rail or a new busway, the cost to the Auckland Council will easily be two, three or four times this figure.

“The city really is at a critical juncture. Infrastructure is urgently needed to address the backlog and accommodate new growth. “

Selwood proposed a range of solutions which included introducing road pricing “ sooner rather than later”, a more extensive use of public-private partnerships, recycling capital tied up in existing assets into new infrastructure and enabling the promised urban development agencies to rezone, acquire and aggregate land and use the increased value to fund infrastructure.

The Government announcement looked like a response to Labour’s “Kiwibuild” proposal to build 50,000 affordable houses in Auckland over ten years.

Labour Leader Andrew Little, however, said the Government proposal was not a serious response to the housing crisis in Auckland.

“For a city like Auckland which is 40,000 houses short of what it needs at the moment, to then say we will fiddle around with 26,000 over ten years, but we can’t tell you who is going to be able to buy them, is not a credible response,” he said.

Little was clearly angry over the Government’s proposal which was obviously intended to steal some of Labour’s thunder from its Kiwibuild policy which has been one of its key policies for the past year and is the party’s usual response when asked how it would solve Auckland’s housing crisis.

But it is also another indication that the Government is looking to spend and buy its way through the coming election campaign.

A stream of pre-Budget announcements has been rolling out of the Beehive including the $11 billion Infrastructure spend over the next four yearsand  and the $2 billion million Terra Nova wage settlement over the next four years.

Over the past seven days alone the Government  has announced:

  • An additional $74.6 million in funding through the Innovative New Zealand programme for Callaghan Innovation’s research and development (R&D) Growth Grants.
  • A new $102 million Tourism Infrastructure Fund which has been launched alongside $76 million in new funding for the DOC Estate.
  • An additional $59.2 million over four years to ensure all road ambulance call outs are double crewed.
  • $21.3 million of new operating funding in the 2016/17 financial year to undertake  what Conservation Minister Maggie Barry called “one of the largest predator control programmes in our history, across more than 800,000 hectares of land.”
  • $8 million of operating funding over the next two years and $2.1 million of capital funding in Budget 2017 to safeguard New Zealand’s heritage collections and record of Government.

All ot his raises the question whether there will be anything left to announce in the Budget. Next Thursday we will know.