Shake-up of council infrastructure funding announced

The government has announced changes to make it easier for local councils to finance the infrastructure needed to support local housing growth.

That's things like sewage lines and local streets.

In a speech to the Local Government New Zealand conference on Friday, Infrastructure Minister Chris Bishop, said councils not zoning enough housing land was one problem, but so is the cost of infrastructure to support housing expansion.

Watch the announcement here

A regulator will be set up to govern new pre-set levies - replacing 'Development Contributions' that currently don't allow councils to recover the full costs of associated infrastructure.

Ratepayers have been left picking up the bill instead of the beneficiaries of the infrastructure, Bishop said.

"Put simply, you can't have housing without land, water, transport, and other community infrastructure. It's a package," he said.

"However, under the status quo, councils and developers face significant challenges to fund and finance enabling infrastructure for housing."

Bishop said it's crucial the country move to a system where a "responsive supply of infrastructure" is funded to make it "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."

On Thursday, Bishop announced five key changes to infrastructure funding settings that he says will get more houses built:

• The first is replacing Development Contributions with a Development Levy System
• The second is establishing regulatory oversight of Development Levies to ensure charges are fair and appropriate
• The third is increasing the flexibility of targeted rates
• The fourth is improving the Infrastructure Funding and Financing Act, and
• The fifth is broadening existing tools to support value capture

"Under this new system, councils and other infrastructure providers will be able to charge developers for their share of aggregate infrastructure growth costs across an urban area over the long-term," Bishop said.

"Development Levies will provide far more flexibility for councils and other infrastructure providers to recover costs for any in-sequence development - whether it planned and costed, or not."