Prepared speech notes for LGNZ Metro Sector Meeting

Greetings

I’ve gotten to know many of you over the past three years as Finance Minister.

I have really valued the engagement and connections with local government, especially on infrastructure because we know that with the right investments we really will make a difference for New Zealanders.

Would like to introduce myself in my new Cabinet role – Infrastructure Minister.

The Prime Minister has given me clear instructions as Finance Minister and Deputy Prime Minister, to lead the economic group of Ministers and to accelerate our recovery and rebuild.

In that context it makes sense for me to take on the Infrastructure portfolio.  We all know how critical the right mix and level of infrastructure investment will be to our recovery.

In fact the role of infrastructure in delivering our wellbeing agenda is not always well appreciated.  In all four capitals of our Living Standards Framework quality infrastructure is an essential factor.

I see three main jobs for me to get on with as Infrastructure Minister

• To make sure the settings are right and the pipeline clear to allow for increased infrastructure development and investment.
• To make sure that key projects across Government are being delivered.
• That we’re working with all partners, in particular local government, iwi and the private sector to develop new opportunities.

I have a strong team of economic Ministers who’ll be focussed on their individual portfolios for infrastructure: Andrew Little in Health, Chris Hipkins in Education, the new Transport Minister, Michael Wood, Megan Woods in Housing, and your Minister Nanaia Mahuta in Local Government.

Under those Ministers, we have the majority of the $42 billion of infrastructure investments that are booked and planned for the next four years – on top of the $25 billion of infrastructure investment made over the previous three years.

My job is to ensure that what we say we’ll build – we’ll build.  As part of that role we will lead out of my office a team which liaises with the Treasury and the Prime Minister’s office to have an oversight of delivery of our key goals, including in infrastructure.

I know Infrastructure - and how we fund it - is top of mind for you as leaders in local government too.

There are already some tools in place that I want to urge you to participate in –

Infrastructure Commission

You’ll all be aware of the work that the Infrastructure Commission is doing creating a 30 year infrastructure strategy for New Zealand. The Commission’s work will prove invaluable, and I urge you to be as involved as possible in their process. Local government voice is absolutely crucial in this. We have an opportunity to get this right. 

Infrastructure Funding and Financing Act

I think the IFF has enormous potential to enable greater investment in infrastructure development. But it is going to require levels of partnership, creativity and innovation that we have not seen before to make it work

This is the mechanism to create SPVs to leverage the input of Government, Council and private sector investments while taking debt off Crown and Council balance sheets.

Using an SPV can ensure long-term debt financing is available to developers willing to build trunk infrastructure financed over a longer term, rather than – to take housing as an example – having to line up up-front purchase price of new homes to get a development underway.

It allows costs to be paid off over the life of an asset – rather than having to be included in the upfront cost like the sale price of a house.

As Minister for Infrastructure I will be responsible for making the decisions of whether a levy can be charged for new infrastructure.

Once I receive a recommendation that a project developer wants to use the mechanisms under the Act, CIP – as the ‘facilitator’ will carry out the work required to assess the proposal and I will agree to and Order in Council for it to progress.

Many of you will be aware of the Milldale development. This was CIP’s first infrastructure financing transaction back in 2018. Under the new law, projects are able to follow a similar model, but with the ability to apply a statutory charge to spread out the cost of the development over time.

CIP is currently focussed on the potential of a number of other urban development projects: Drury in South Auckland, Rotokauri in Hamilton, and Tauriko – West Tauranga.

So we are looking for more of this. I urge you to think about whether your projects are right for this financing. It will require all parties to trust one another, and to take a leap of faith into a new funding arrangement.  We are ready and willing to do that.

Fast track consenting

I encourage local government to consider the fast track consenting process for your projects. This is an excellent opportunity to bring projects forward. The Ministry for the Environment is running these, so please be in touch with them if you’d like to know more.

Thank you also to those councils who have assisted in this process by commenting on applications fast tracking. This is a critical part of the process and local knowledge is vital to the Minister’s decision making.

Infrastructure Reference Group (IRG) shovel-ready programme

The Government has now announced 170 projects representing $2,6bn of government funding and $4.6bn in total project value across the country.

Local government has been a major direct beneficiary of this programme, with over $750m in funding going towards Council projects so far, with $1,2b in total project value.

Further projects will be announced as the remaining due diligence and negotiations are completed by CIP.

RMA reform

You will have heard David Parker’s announcement on Wednesday about our Government’s plan for RMA reform.

All of us recognise that the RMA has not adequately protected the natural environment or enabled the development we need – especially in urban areas.

Following the Randerson Review last term, we’ve announced that the Resource Management Act 1991 (RMA) will be repealed and replaced with new laws this parliamentary term

• Natural and Built Environments Act (NBA) to provide for land use and environmental regulation (this would be the primary replacement for the RMA)
• Strategic Planning Act (SPA) to integrate with other legislation relevant to development, and require long-term regional spatial strategies
• Climate Change Adaptation Act (CAA) to address complex issues associated with managed retreat and funding and financing adaptation. 

The new laws will improve the natural environment, enable more development within environmental limits, provide an effective role for Māori, and improve housing supply and affordability.

I know you will be delighted to hear that planning processes will be simplified and costs and times reduced.

For example, one of the proposals is to provide for a single planning document for each region under the NBA. This will consolidate over 100 existing regional and district planning documents into about 14 – and provisionally called Natural and Built Environments Plans.

The complete NBA and the SPA will be formally introduced into Parliament by the end of 2021, with the NBA passed by the end of 2022.

Again, local government engagement is crucial. Cabinet has directed officials to engage with you on that.

Housing

In regards to housing, there are some critical tools we created in our first term to boost housing supply, including the National Policy Statement – Urban Development or NPS-UD.

The NPS-UD directs local councils to plan better for growth and to enable more intensification in urban areas, with affordable housing that is well-connected to jobs, public transport, community facilities and green spaces

Central Government alone cannot fix the housing crisis; New Zealand needs local councils to use the NPS-UD to help increase the supply of new and affordable housing by lowering barriers to housing development.

We appreciate it is a sizeable task. But given the magnitude of the housing crisis it is both necessary and urgent to do what can and should be done, to encourage more housing to be built.

I understand that councils have begun the process of implementation. This includes removing minimum car-parking rules, which make development more expensive. This is great to see and I look forward to further progress.

The NPS-UD will be pivotal as the Government progresses RMA reform, which should cement in the changes enabled through the NPS-UD. 

Climate Change

Through the NPS-UD, councils are also directed to give greater consideration to climate change, along with access and housing affordability, when pulling together their plans.

They also have to help ensure more people live in areas with good public and active transport links, which will help more people leave the car at home, freeing up our roads and reducing emissions.

On top of this, Waka Kotahi along with local councils, now has to consider how each and every transport investment they make contributes to tackling climate change thanks to the Government Policy Statement on land transport 2021.

Please keep this in mind when you all are putting together your Regional Land Transport Plans as reducing emissions will be a key focus for investment decisions, alongside saving lives on the road, better transport choices to unclog our cities, moving freight more efficiently to support business.

Three waters Reform

Last year, the Government provided $523.1 million in stimulus funding for councils to invest in three waters service delivery and infrastructure.

This was supplemented by a further $117.3 million in local government co-funding, bringing the total value of three waters investment to $640.4 million.

By December last year, all councils had received an initial 50 percent allocation of Crown funding so that critical works could get underway.

I’m pleased to hear that this money is already being put to good use towards projects that enhance public health, improve environmental outcomes, improve service levels and resilience, extend service provision, address deferred maintenance and renewals, and accommodate and enable growth.

Significantly, these works are expected to generate approximately 1,900 jobs across New Zealand.

Further funding from the three waters package will be released to councils over the next 12 months as project milestones are reached.

I want to thank local government for the constructive approach you have taken to providing the complex and detailed information on the state of council water assets and services through the Three Waters Reform Programme’s Request for Information. I know it is a big task for you but I believe the time is now to try to sort this issue out as much as we can

Far-reaching change to essential services, such as drinking water wastewater and stormwater networks, needs to be based on the best possible knowledge base – and the RfI will greatly assist us in making the right decisions as we go forward on these transformational reforms.

The proposal to create a small number of publicly-owned multi-regional water entities with balance sheet separation from councils will enable the advantages of scale, and more advantageous borrowing terms to fund infrastructure and services.

At the same time, it will create debt headroom for councils to invest in otherwise in their communities.

I know there is concern in some quarters about the potential impact on councils of such significant reform. Our government is committed to strong, robust and effective local democracy – and I know that my colleague the Minister of Local Government has work underway, alongside initiatives by LGNZ and Taituarā, on the future of local government. I’m sure you will be hearing more about this soon.

Conclusion

Central and local government have always had strong relationships in building infrastructure for NZ. If we want to build back better, we need to ensure those relationships are even stronger. We need to do this together.