Speech to Infrastructure NZ Symposium
Tena Koutou, Tena Koutou and thank you for inviting me to speak to you today.
This is a critical time for New Zealand as we respond to the damage wreaked by the global COVID-19 pandemic.
It is vital that investment in our economic recovery is well thought through, and makes the most of the opportunity to build a better future which puts people and sustainability at its heart.
As we observe the worsening pandemic from our relatively comfortable position of stamping out its spread, we remain committed to fending off a resurgence that can threaten our safety, wellbeing and our way of life.
It has been a difficult year for many people and businesses and the shadow of COVID affects our actions in ways we could not have predicted this time a last year.
It has also turned up some unexpected results; as we came out of lockdown I was acutely aware of a collective fear of a GFCesque housing downturn; but we have seen the opposite.
Our economic recovery has been stronger than we anticipated; we are seeing house prices rise further and demand for housing outstrip the rate at which supply is increasing.
This has negative impacts on things like homelessness, the public housing waiting list, rental stress and people struggling to buy properties.
As Minister of Housing I am acutely aware of how decades of under-investment in infrastructure and the building of affordable homes has led us to where we are today.
There is currently a lot of discussion about what levers can be used to address house price rises; today I am going to talk to you about the most significant lever we have – increasing supply.
This is reliant on ensuring we can do something about where we put housing, how we build and pay for it. Today I’ll outline the significant work we have done and where we have significant work to do.
There is no quick fix.
There is no one change that will make this housing crisis go away in a hurry.
It will take years to increase housing supply and affordability to the point where - as this Government believes - every New Zealander has a warm, dry home.
Let’s talk about the barriers..
The reasons why we are in this position are well known:
- Decades of failure to invest in infrastructure to service and grow our communities
- a clunky, expensive resource consenting process that favours incumbents and resists intensification
- a deficit of investment in the building of public and affordable housing
So what is our strategy?
The starting point for housing is where it goes, and enabling projects to go ahead without being bogged down with restrictions that have little to do with environmental values, is critical.
We are committed to the repeal and reform of the Resource Management Act to reduce the timeframes and expense of the consenting process and enable more housing developments to get going. This is work Minister Parker is doing.
Ensuring we have the workforce and are sufficiently training people to build homes is another key factor.
As we assessed what the greatest risks are to the building sector as we anticipated a recession we only had to look at what happened following the GFC to know what we could NOT allow; to let the building of affordable housing to fall down a hole.
This would not be in line with our strategic direction.
The $350 m Residential Development Response Fund we announced earlier this year was a direct response to this; by giving developers options to finance developments if and when needed. We will have more to say on this soon.
But I want to remind you of other aspects of the significant body of work we have done to fix housing and homelessness which we will be building on further; in short our housing strategy.
We have laid the groundwork for a substantial change in the financing and planning of infrastructure that enables communities to grow and thrive.
In our first term we’ve established Te Tūāpapa Kura Kāinga – Ministry of Housing and Urban Development to lead the Housing and Urban system work programme and reform.
And we’ve also established Kāinga Ora – Homes and Communities as the Government’s public housing landlord and urban development authority.
These agencies are enabling a more cohesive, strategic and joined-up approach to delivering the Government’s vision for housing and urban development in New Zealand.
We are building more public housing than there has been in a generation – 5,670 new public housing places, 4,342 new builds - and we’re on track to deliver over 18 thousand public housing and transitional places by 2024.
We are working with the building industry on the Construction Sector Accord, to increase productivity and capability, improve resilience and restore confidence.
We are investing $3 billion in projects through the ‘shovel ready’ process that will stimulate urban and provincial economies.
The completion of nearly 700 KiwiBuild homes and one thousand more under construction has enabled two thousand market homes to be built through Government initiatives.
We are supporting people to buy their own affordable homes through first home loans and grants and a progressive home ownership scheme
We launched the Aotearoa / New Zealand homelessness action plan that has enabled the rapid rehousing of rough sleepers when COVID-19 hit, and will support people to get into and stay in, stable accommodation
And we are working with Maori to respond to whānau needs and aspirations.
And what those changes mean…
The most significant levers to accelerate and support more housing are those that fundamentally change the way infrastructure is financed, planned and consented.
You heard from the Finance Minister Grant Robertson yesterday about the Infrastructure Funding and Financing Act to enable private sector finance to be used to construct infrastructure for housing and urban development, and keep debt off council's balance sheets.
This will help resolve the impasse of local councils being unable to finance the infrastructure our communities need.
The Urban Development Act creates a streamlined process to facilitate developments that put the interests of Māori, councils, developers and diverse communities at the heart of developments, and considers housing, transport and recreational needs.
The National Policy Statement – Urban Development requires councils to reduce planning constraints and plan for growth, allowing for greater intensification.
Fast tracking of projects that can boost employment and economic recovery will be enabled through the Covid-19 fast-track recovery legislation.
These substantial law changes will change the way we plan and pay for infrastructure growth.
We encourage industry, local councils, iwi and communities to consider how to use them to deliver developments that prioritise the well-being of people, address climate change and provide services and amenities for generations to come.
I am especially proud of our record on public housing – this year we committed funding to build another 8,000 public and transitional homes, which will bring the total to 18,350 by 2024.
These developments led by the Government agency Kāinga Ora encourage other developments through significant infrastructure improvements.
Kāinga Ora has planned spending of $9.8 billion over the next four years.
Its seven Large Scale Projects are changing the infrastructure and housing landscape, and will result in approximately 40,000 homes being built over the next 10-15 years.
Kāinga Ora’s use of Off Site Manufacturing is allowing both speed and more volume to be built into developments, with approximately 12% of houses being built in this way.
This is demonstrating the value of OSM technology to the sector and what is possible to upscale production and build scale.
Kāinga Ora is also demonstrating leadership in the building sector on lowering emissions and reducing waste with a commitment to 6 Homestar standards for new builds.
It is this kind of approach that allows us to build back better; investment that reduces our impact on the environment and helps deliver a low-carbon future.
Our work with councils to assess barriers and opportunities for housing developments in high need areas through the Ministry of Housing and Development’s place-based programme is identifying what kind of momentum we can achieve and the next steps on a regional basis.
Infrastructure to increase housing supply…
A lack of investment over many decades in critical areas like transport, and crucial three waters infrastructure has been a vexing problem.
Central and Local Government share responsibility for providing the significant investment required to fix failing or aging infrastructure, and to provide new infrastructure for expected population growth, to meet environmental standards, and address climate change.
Strong investment in infrastructure is needed to address the current deficit, support growth and to improve wellbeing of New Zealanders
This Government has shown an enormous commitment to infrastructure spending, with a commitment of 42.2 billion over the next four years, on top of $25.1 billion already invested over the past three years.
This includes the $3 billion COVID Recovery and Response Fund, the $6.8 billion New Zealand Upgrade programme on transport and over $750 million on three waters infrastructure.
Any central government spending on infrastructure must deliver on multiple fronts; the project must be enduring and future-focussed, it must create jobs and it must represent good value for money.
What we’re focused on now…
We have a lot of good work to build on, but there is more to do.
Implementing the existing urban development initiatives, and reform of the RMA to reduce costs and complexity while supporting environmental outcomes will make a big difference to how our urban areas perform in the future.
Minister Mahuta has outlined to the Symposium the three waters reform programme that will be crucial to ensuring we have system-wide enduring solutions to the quality of our water, security, management and delivery.
We are continuing to work with our partners in the Construction Sector Accord to maintain momentum in the construction pipeline and forge new ways forward to meet environmental and climate change goals.
We will also be undertaking work with the residential construction sector and investors to better understand the appetite for Build to Rent projects which can provide a positive investment option that also grows supply and provides people with much needed housing.
While the construction pipeline for residential properties is currently strong, we are well prepared to support future developments with the impact of Covid-19 through our $350 million Residential Development Response Fund.
We will be releasing an updated Public Housing Plan in the coming months. This will provide not only more much needed public housing but the certainty of a secure pipeline of work.
Directing Kāinga Ora and Community Housing Providers to build in specific locations will better support those in urgent need of housing.
The Government will continue working with Community Housing Providers who can add value by building new properties, deliver social services or operate in areas where the Government is not.
We will investigate ways to address high building and construction costs with the proposed Commerce Commission market study into building supplies late next year, and working with MBIE to explore further ways to reduce building and construction costs
We will also address remaining legislative barriers that add unnecessary costs, risks and delays to development, with a particular focus on land use constraints, such as restrictive covenants.
I also want to look at ways we can innovatively use the accommodation supplement to drive investment.
As I’ve already noted, addressing the key barriers to urban development is not a quick fix, and it is costly.
While we have laid the groundwork for changes, the biggest results will emerge in the medium to longer term.
As we recover from the initial impact of COVID-19 we are yet to see its longer term implications.
We need to keep up the momentum on the settings we have shifted and do further work with local councils, communities, developers and iwi to accelerate the building of new, affordable housing.
The housing shortage is a critical issue for New Zealand and remains a key priority for this Government to fix.
We are committed to using all available levers to get more housing built and I look forward to working with the infrastructure and construction sectors to make that happen.