30 November 2021
DOIA21/22110661
Craig Innes
[FYI request #17425 email] Tēnā koe Craig
Thank you for your correspondence received 2 November 2021 requesting the following
information under the Official Information Act 1982 (the Act):
Please supply an uncensored version of the following document:
Cabinet-paper-Advancing-the-housing-supply-and-affordability-package
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Nāku noa, nā
Hilary Eade
Kaiaki – Housing Supply and Affordability
2
S E N S I T I V E
Office of the Minister of Housing
Office of the Associate Minister of Housing (Māori Housing)
Cabinet
Advancing the housing supply and affordability package
Proposal
1
This paper reports back on supply-side initiatives agreed to by Cabinet in
March to increase housing supply and improve affordability for first home
buyers and renters [CAB-21-SUB-0045, CAB-21-MIN-0070 and CAB-21-MIN-
0061 refers].
2
The paper’s primary purpose is to report back on the Housing Acceleration
Fund, and seek agreement to the design of the Infrastructure Fund (the key
component of the Housing Acceleration Fund).
3
It also provides updates on:
3.1 the additional funding for the Land for Housing Programme (which will
under the
be provided through the Housing Acceleration Fund);
3.2 the Kāinga Ora Land Programme, including the scope of further design
and implementation decisions to be made by the Ministers of Finance
and Housing; and
3.3 the refocused Residential Development Response Fund, s 9(2)(f)(iv)
Relation to government priorities
4
Our Government has three overarching objectives; to keep New Zealanders
safe from COVID-19, to accelerate our recovery, and lay the foundations for a
better future, through reducing inequality and addressing child poverty,
reducing carbon emissions and improving housing affordability [CAB-20-MIN-
0525].
Released
Executive Summary
5
With New Zealanders facing unsustainable house price increases, while rents
are also increasing, this Government recently announced a suite of demand
and supply-side measures to address housing affordability, support first home
buyers and better incentivise investment in new homes [CAB-21-SUB-0045,
CAB-21-MIN-0070 and CAB-21-MIN-0061 refers].
6
The central component of our supply-side response is the $3.8 billion Housing
Official Information Act 1982
Acceleration Fund, which both establishes an Infrastructure Fund ($3.73
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billion) to unlock a mix of private-sector and government-led developments
and provides $50 million of additional funding for the Land for Housing
Programme. This is complemented by a Kāinga Ora Land Programme for
strategic land purchases, and a refocused $350 million Residential
Development Response Fund
s 9(2)(f)(iv)
.
7
Cabinet sought a report back on the design of the Infrastructure Fund [CAB-
21-MIN-0061 refers], which this paper fulfils.
8
We are proposing that the Infrastructure Fund has the following three
components:
8.1 Kāinga Ora large scale projects
s 9(2)(j)
8.2 a competitive fund – to support projects from around the country which
have infrastructure constraints and are facing the biggest housing
supply and affordability issues;
8.3 infrastructure for Māori housing – to enable Māori-led investments in
infrastructure for Māori housing outcomes.
9
We are seeking Cabinet’s agreement:
under the
9.1 to the approach
s 9(2)(j)
for the Kāinga Ora
large scale projects;
9.2 to the design parameters for the competitive component of the
Infrastructure Fund; and
9.3 to the high-level settings for the recently agreed $350 million Māori
Infrastructure Fund [CAB-21-MIN 0173 refers].
10
Given the pressing nature of our housing issues, it is important that the
Infrastructure Fund is up and running as soon as possible. It is my expectation
that the competitive component of the Infrastructure Fund will be open for
expressions of interest from interested parties by July this year.
11
The additional funding for the Land for Housing Programme, the Kāinga Ora
Released
Land Programme and
s 9(2)(f)(iv)
also form a very important
part of our supply-side response. This paper provides updates on those
initiatives.
Background
12
Access to affordable housing is one of New Zealand’s persistent long-term
challenges, and these issues have been amplified in recent months. We are
currently facing unsustainable house price growth, with rents also increasing.
Lower income households are facing increasing challenges to obtain
Official Information Act 1982
affordable and appropriate long-term rental housing. As a result, the public
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housing register is continuing to increase and there is high demand for
emergency housing.
13
One of the key structural reasons for increasing house prices is that not
enough houses are being built in the places they are needed. Those that are
being built are not at prices that low- to moderate-income households can
afford (whether for rent or home ownership). We’re not seeing the volume or
kind of supply we need for a number of reasons including limited access to
land for development, inadequate infrastructure capacity, and the fact that in
many places it is not financially viable to build houses – whether for rent or
home ownership – at prices that people can afford.
14
In March, Cabinet agreed to a suite of demand and supply-side measures to
address housing affordability, support first home buyers and better incentivise
investment in new homes [CAB-21-SUB-0045, CAB-21-MIN-0070 and CAB-
21-MIN-0061 refers].
15
To increase the pace and scale of housing supply, and increase the number
of homes that are affordable for low- to moderate-income households to own
or rent, Cabinet agreed [CAB-21-MIN-0061 refers] to establish a Housing
Acceleration Fund, which will:
15.1 create an Infrastructure Fund to provide infrastructure to unlock land for
housing developments, including existing large scale projects, and
under the
directly overcome funding and financing constraints faced by councils
and other infrastructure providers;
15.2 provide additional funding for the Land for Housing Programme to
speed up development on vacant or underutilised Crown-owned land,
operate in more regions, and deliver a broader range of affordable
housing options for rental and home ownership; and
15.3 establish a Kāinga Ora Land programme for strategic purchases to
increase the pace, scale and mix of housing developments, including
more affordable housing. In the associated public communications
material, the Kāinga Ora Land programme was announced as a
separate programme, and is now considered as being complementary
to the Housing Acceleration Fund.
16
Subsequently, Cabinet agreed to commit $3.8 billion to the Housing
Released
Acceleration Fund, with approximately $3.75 billion for the Infrastructure
Fund1, and $50 million of additional funding for the Land for Housing
Programme [CAB-21-MIN-0016.15 refers]. The Kāinga Ora Land Programme
will be financed through an additional $2 billion of Kāinga Ora borrowing for
land acquisition and development, complemented by $46 million per annum of
Official Information Act 1982
1 This includes $21 million of staffing costs to monitor and implement the package.
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operating funding to be provided through Budget 2021 [CAB-MIN-0116.15
refers].2
17
Cabinet sought a report back on the design parameters for the Infrastructure
Fund, including on alignment with existing infrastructure processes (in
particular three waters and transport) and ongoing collective ministerial
oversight across alignment with the Treasury, Ministry of Transport, Waka
Kotahi New Zealand Transport Agency, Department of Internal Affairs and
Kāinga Ora [CAB-21-MIN-0061 refers].
18
This paper contains that report back. It also provides updates on
complementary supply-side initiatives including additional funding for the Land
for Housing Programme, the Kāinga Ora Land Programme and the refocused
Residential Development Response Fund,
s 9(2)(f)(iv)
.
19
In relation to the Government’s supply package, Cabinet also sought a report
back on how the government can further support increased delivery of high-
quality rentals at both market and subsidised rent, including the impact of the
Overseas Investment Act and tax treatment [CAB-21-MIN-0061 refers]. The
Minister of Housing intends to come back to Cabinet in the middle of the year
to provide the report back on how we can further support purpose-built
rentals.
under the
The Infrastructure Fund
20
Decades of underinvestment in infrastructure has contributed to limiting both
the amount of land that can be used for residential development, and the
density at which that land may be developed.
21
The Infrastructure Fund (the Fund) forms the key component of the Housing
Acceleration Fund. It is intended to directly overcome funding and financing
constraints faced by councils and other infrastructure providers to support the
provision of infrastructure that unlocks housing development in the short- to
medium-term.
22
The key purpose of the Infrastructure Fund is to increase the supply of build
ready land. To the extent possible, we also want to ensure that it:
22.1 increases the pace, scale and density of housing development;
Released
22.2 increases the proportion of homes that are affordable for low- to
moderate-income households (whether to rent or own); and
22.3 supports good access to public transport, jobs, education and
amenities.
Official Information Act 1982
2 This operating funding will be used to service the Kāinga Ora borrowing, meet holdings costs, allow for
development risks and expense any land value write-downs (e.g. as a means of subsidising non-market housing
outcomes).
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23
We want to secure the greatest impact from this Fund by prioritising those
locations that have infrastructure constraints and are facing the biggest
housing supply and affordability issues, while also ensuring that there is an
ability for quality projects from anywhere in New Zealand to receive funding.
24
This Fund will complement, rather than displace, private (e.g. via the
Infrastructure Funding and Financing (IFF) Act) and local government
infrastructure investment. We are also expecting that local councils will play
their part by opening up land and enabling intensification, particularly through
implementation of the National Policy Statement on Urban Development.
25
Given the significant and pressing housing challenges that currently exist in
our communities, we want to move quickly with some of the investment
decisions for well understood and well validated projects through this Fund.
26
However, we will need to take longer in other cases so that we can achieve
better value for money, secure complementary actions from local councils and
other players, and create a pipeline for the construction sector that ramps up
sustainably.
27
In particular, we need to ensure we are directing infrastructure funding to
where we have the highest confidence in the ability of homes to be built. To
do this, we will work with those, including local government, developers and
mana whenua that have a shared ambition for momentum in making housing
under the
more available.
28
The design parameters for the Fund set out in this paper reflect and balance
what we want this Fund to achieve.
29
It is important that this Fund complements other central Government
investment in infrastructure. Some specific approaches to alignment are
discussed with respect to the components of the Fund below. Additionally, we
intend to work closely with the Minister of Local Government and the Minister
of Transport as we progress this initiative.
30
We also intend that the Urban Development Ministers group include relevant
progress as part of the Housing Acceleration Fund as part of their tracking of
progress within Urban Growth Partnerships.
Objective for the Infrastructure Fund
Released
31
We propose that Infrastructure Fund has the following objective:
31.1 The purpose of the Infrastructure Fund is to invest in infrastructure that
unlocks housing development. This infrastructure investment will:
31.1.1 enable brownfield intensification and greenfield expansion in
locations with access to amenity and opportunity;
31.1.2 be limited to investments that would not otherwise be funded,
Official Information Act 1982
or not funded fast enough to meet demand for housing;
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31.1.3 maximise value for money including through co-funding,
contributions, and commitments from local government and
third parties;
31.1.4 enable the building of homes that are affordable for low-to
moderate- income households;
31.1.5 incentivise councils to use non-funding levers that enable
housing development;
31.1.6 create a pipeline of investment including near-term and
medium-term activity that ramps up sustainably to allow the
construction sector to steadily increase its capacity and
absorb the investment without price escalation;
31.1.7 align with wider government objectives, such as ensuring
good urban form, partnerships with iwi and Māori, and the
transition to a net-zero emissions economy; and
31.1.8 be spread across multiple regions and include both large
urban areas and regional centres.
Investment Criteria
32
To ensure that we invest in projects that best meet the Fund’s objective, we
under the
propose that potential investments are evaluated against the following criteria
(each of which include weighting and a set of key factors for assessment) in
the table below.
33
Where investment includes complementary actions the local authority,
developers commit to (e.g. planning changes), or that central Government is
able to make alongside the investment, these would be accounted for in the
assessment, particularly under the ‘housing benefits’ criterion.
Criteria
Key factors to be assessed
Housing benefits
of the proposal
• The number of additional dwellings that the funding wil enable
(40%) – How wil
relative to demand in that area.
the proposals, if
• The proportion of lower-cost houses expected to be enabled by
delivered,
the infrastructure (primarily informed by typology of housing
Released
contribute to the
expected to be built).3
housing outcomes
that are the
• The extent to which the location where housing wil be enabled
purpose of the
has unmet demand and provides access to amenity and
Fund?
opportunity.
• The extent to which the infrastructure supports intensification, in
particular that required to be enabled by councils under the
National Policy Statement on Urban Development (i.e. typology
and density).
Official Information Act 1982
3 Where there is an agreed spatial plan for the areas developed through the Urban Growth Partnerships, this is to
be used to guide assessment of this factor.
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• The extent to which the proposal supports housing development
on land owned by Māori and to which mana whenua have been
involved in developing the proposed solution.
• The extent to which the proposal supports housing development
that is environmental y sustainable including through reduced
private vehicle use, lower risks from climate change (such as
coastal inundation), and supporting water quality and
biodiversity.
Impact of funding
(additionality)
• The impact that this funding wil have on the housing
(20%) –
How
development advancing, or on the pace and scale at which it wil
critical is this
advance compared to what is currently expected.
funding to
• Demonstration that other means to fund the infrastructure
advancing the
without displacement of investment elsewhere (i.e. rate rises,
infrastructure and
prudent borrowing, or use of the IFF framework) have been
housing
exhausted.
development?
Cost and co-
funding (20%) –
• The average whole-of-government cost per dwel ing expected to
How cost effective
be enabled by the infrastructure.
is the proposal and • Alignment with co-funding principles for the Fund (set out below).
is everyone paying
their fair share?
Capability and
readiness (20%) –
• The extent to which there are other barriers to housing
under the
If funding is
development that the infrastructure wil serve (and how they wil
approved, how
be removed if funding is approved).
certain is it that the • The degree of developer commitment or interest in building
project wil
housing quickly.
advance, and at
what pace?
• Demonstrated alignment between al parties including Territorial
Authorities, Regional Councils, mana whenua and developers
needed to advance the housing development.
• Confidence in the ability of all parties to deliver the infrastructure
and housing as proposed.
34
We propose that there be three components to the Infrastructure Fund (with
the following indicative funding), each discussed below:
34.1 Kainga Ora Large Scale Projects s 9(2)(j)
Released
34.2 Contestable fund
s 9(2)(j)
34.3 Infrastructure for Māori housing ($350 million).
35
All three components will have regard to the investment criteria, but will
operate within different processes in applying these.
Official Information Act 1982
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Infrastructure Fund Component 1: Large scale projects
36
s 9(2)(j)
Kāinga Ora is uniquely placed to deliver a step-change in housing and well-being
outcomes
37
Kāinga Ora, as the Government’s urban development delivery agency, has a
unique opportunity through these projects to accelerate the pace and scale of
housing delivery and significantly improve well-being outcomes in areas of
most need. Large scale projects are the Government’s best bet for delivering
accelerated housing outcomes. No other agency or council in New Zealand is
set up to manage the scale and pace of development proposed.
Good alignment with objectives and criteria for the Infrastructure Fund
38
The large scale projects have a natural alignment with the objectives and
criteria for the Infrastructure Fund proposed above. Specifically, large scale
projects:
under the
38.1 Will contribute significantly to housing outcomes. With funding certainty
over the next five years, the large scale projects are expected to
provide build-ready land that will enable the delivery of 14,000 new
additional homes and 4,000 replacement public homes on Kāinga Ora
land over the next five to ten years. The additional infrastructure
capacity provided by the funding has the potential to unlock a further
11,000 homes on surrounding privately owned land.
38.2 Are ‘shovel-ready.’ The projects are underway and the key
infrastructure projects needed for delivery in the early years are well
understood and agreed by both councils and Kāinga Ora.
38.3
s 9(2)(j)
Released
38.4 Will enable the Government to increase the pace and scale of housing
development in areas of high social need. Large scale projects are
located in areas where existing public homes are reaching the end of
their useful lives in communities experiencing high levels of social
deprivation. These are significant urban regeneration projects which
will improve outcomes in deprived neighbourhoods and provide
Official Information Act 1982
opportunities for intensification in strategically important areas of
Auckland and Porirua.
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39
s 9(2)(j)
Expectation of council contributions
40
s 9(2)(j)
41
P i
Ci C
il i l
i
s 9(2)(j)
l $30 illi i
i
f
C
il
i
i f P i
i l
l
42
s 9(2)(j)
under the
The Auckland draft Long-Term Plan
foreshadows up to $733 million over ten years (including transport funding),
however due to existing commitments and pressures, the majority of funding
is not expected to be available until the latter part of the decade.
43
s 9(2)(j)
44
s 9(2)(j)
Released
Critical need for funding certainty to maintain momentum
45
Large scale projects are complex projects with multiple operational and
funding processes and interdependencies.
46
Large scale projects require significant infrastructure upgrades at both the
precinct (network) and neighbourhood level, which have multiple
dependencies and can take time to plan and deliver. A neighbourhood
infrastructure plan takes a minimum of 12 months to develop and a further six
Official Information Act 1982
months to consent.
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47
Individual projects often have multiple dependencies and require significant
pre-work before housing delivery can occur.
s 9(2)(b)(ii)
48
s 9(2)(j)
49
The construction sector also requires pipeline certainty to upskill and scale
up operations to deliver the programme
s 9(2)(j)
under the
50
s 9(2)(j)
s 9(2)(j)
51
s 9(2)(j)
52
s 9(2)(j)
Released
52.1
52.2 a broader funding commitment for Eastern Porirua to deliver key
precinct wide trunk water infrastructure currently subject to the fast-
track consenting application ($65 million).
53
s 9(2)(j)
Official Information Act 1982
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Further funding decisions
54
We propose that Cabinet decide on funding for each large scale project (five
in Auckland – Mount Roskill, Mangere, Tāmaki, Oranga and Northcote, and
one in Porirua) individually through programme business cases. The
programme business cases will consider funding against the objectives and
criteria of the Infrastructure Fund. The programme business cases will also
set out how the investment will accelerate housing outcomes.
55
s 9(2)(j)
s 9(2)(j)
56
s 9(2)(j)
under the
57
The Porirua large scale project has unique partnership and governance
arrangements in place with Ngāti Toa, Porirua City Council and the Te Pae
community advisory panel.
s 9(2)(j)
Infrastructure Fund Component 2: Infrastructure Acceleration Fund
(Competitive Fund)
58
To support investment in a wider range of projects throughout New Zealand
Released
that can contribute to the objectives of the Infrastructure Fund, we propose
that a competitive fund be the second component
s 9(2)(j)
59
The competitive fund will be operated as a distinct public-facing initiative, and
therefore requires distinct branding. We propose to name the initiative the
Infrastructure Acceleration Fund.
60
Outside of the large scale projects, a contestable process is best suited to
identifying and selecting most projects. Demand for this fund will almost
Official Information Act 1982
certainly exceed what is available at this time and it’s important that we have
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a clear process with proposals evaluated on a common basis. Nevertheless,
given the complexity of the investments, negotiation will still play a large role.
61
We considered identifying specific maximum funding envelopes at the outset
to ensure regional spread, but don’t consider this the right approach. We do
not consider that we would have a sufficiently sound basis for identifying
envelopes and the loss of competitive pressure would significantly reduce our
ability to negotiate for the best housing outcomes.
62
In order to get greatest value for money from this investment, we propose that
funding may be provided across multiple funding rounds if an insufficient
number of high-quality proposals are identified in the initial round.
63
We are not proposing specific priority areas for the contestable fund. The
proposed criteria and evaluation approach reflect the different needs and
intended impact of investment across the country. For example, in the main
centres, our investment is likely to be targeted to projects that bring forward
spending and increase the supply of build ready land. The impact will come
through sustaining growth in construction activity.
64
In many regions, such as Gisborne and Rotorua, the limited expectations of
population growth until quite recently means there is limited available growth
capacity. To catch up with past and anticipated growth many are proposing
significant increases in renewals and growth capacity. In these locations the
under the
Infrastructure Fund could unlock specific projects and bring forward needed
investment in network capacity.
Eligible projects and expenditure
65
Given the overriding purpose of this Fund is to unlock housing development,
it’s important that that the funding focuses on infrastructure projects that are
genuinely critical for enabling housing development and addresses the critical
local government funding gap.
66
On that basis, we are proposing the scope of eligible projects for the
competitive fund be limited to:
66.1 new or upgraded enabling infrastructure in the form of transport
(including local roading, state highways, public transport infrastructure,
footpaths and cycleways), three waters (water supply, wastewater and
Released
stormwater) and flood-management infrastructure; and
66.2 which are wholly or primarily for the purpose of enabling the building of
new or additional dwellings in the short- to medium-term; and
66.3 which are expected to enable at least:
66.3.1 200 additional dwellings in tier one urban environments
(under the National Policy Statement on Urban Development)
Official Information Act 1982
66.3.2 100 additional dwellings in tier two urban environments (under
the National Policy Statement on Urban Development)
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66.3.3 30 additional dwellings elsewhere.
67
Infrastructure investments that have purposes beyond supporting housing
development (e.g. commercial development or improved resilience) are
eligible, but funding could only be sought for proportion of the project
reasonably attributable to enabling housing development.
68
We do not propose that energy transmission infrastructure,
telecommunications infrastructure, and social infrastructure (such as libraries,
parks or recreation facilities) be eligible for funding. While transmission and
telecommunications infrastructure can be essential to enabling some new
development, they are funded by utility companies and do not face the same
financial constraints. We acknowledge that social infrastructure is important to
providing amenity in areas of development. However, it does not represent as
critical a factor as the proposed eligible infrastructure set out above4.
69
The funding provided through this Fund should be limited to one-off costs
necessary to enable the types of projects set out above, rather than funding
ongoing, business-as-usual activities. We are therefore proposing that the
eligible costs include:
69.1 costs of feasibility studies and other early-stage development work5;
69.2 costs of designing, consenting, tendering and acquiring land (where it
under the
is wholly required for eligible infrastructure projects);
69.3 constructing eligible infrastructure projects; and
69.4 in limited situations, non-capital administrative costs where these are
necessary to establishing complementary financing.
Applicants for the competitive fund
70
We propose that, in most cases, Territorial Authorities (TAs) be the lead
applicants for funding because TAs:
70.1 are typically best placed to bring together multiple parties (for example,
iwi and developers) on specific potential infrastructure investments;
70.2 hold most of the critical planning levers (for example, opening up or re-
Released
zoning of land) that are needed to align with infrastructure investment
in order for developments to proceed at pace; and
70.3 will, in most cases, be the ultimate owners of assets created by this
Fund.
71
It is my expectation that TAs will work with all relevant parties, including
developers and Regional Councils when applying for funding. We also expect
Official Information Act 1982
4 Additionally, in recent years, the Government has made very significant investments in social infrastructure,
particularly through the Provincial Growth Fund and Shovel Ready Projects.
5 This is not intended to be a significant proportion of funding, but may be a small component of larger projects.
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that TAs will respect their statutory obligations for engaging and working with
Māori when submitting proposals.
72
We are also proposing, however, that iwi and developers (which includes
Community Housing Providers) have an ability to apply directly to the Fund
(with more detail about how they can do this set out below) for projects that
fall within the scope of eligible projects set out above. In the case of iwi, this is
to recognise that they are Treaty partners and have a direct relationship with
the Crown.
73
For developers more broadly, it will provide a pathway to advance
developments which would align closely with central government housing
objectives, but where the relevant TA has chosen not to prioritise it. However,
developers will be encouraged to work through TAs where possible, and it will
be important for the developer to demonstrate the degree of engagement and
support from local government that the development has.
74
Kāinga Ora will not be able to apply directly to the Fund given, as we are
proposing below, they will administer the competitive fund. However, there are
likely to be cases where applications from TAs relate to Kāinga Ora-owned
land and/or relate to areas where they are working in partnership with others.
Two-path model
under the
75
To allow all regions in New Zealand to apply for investment, while also setting
up a process that can appropriately account for the varying levels of
complexity in different regions, we are proposing a ‘two-path model’ for the
Fund:
75.1 a ‘programme path’ for main urban areas where infrastructure
investment is more complex;
75.2 a ‘project path’ for all other parts of New Zealand with a lower expected
scale and complexity of housing infrastructure investment.
76
The distinction between the paths is based on complexity of potential
infrastructure investment and is not intended to indicate whether regions or
places are inherently a high priority for the Fund. The criteria and evaluation
approach set out above have been designed to drive investment from both
paths towards the areas that have the greatest need for infrastructure to
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support housing development.
77
We propose the programme path will be limited to those areas covered by our
current and emerging Urban Growth Partnerships (the Urban Growth
Partnership areas also include all Tier 1 Councils under the National Policy
Statement on Urban Development). These areas are characterised by
complex infrastructure needs across multiple development areas (including
greenfield and brownfield), have significant transport investment
requirements, and are places where a number of different funding and
financing mechanisms are being considered.
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78
Taking a joined-up programme approach for these places aligns with the
Government’s broader intent under the Urban Growth Agenda to partner with
local governments and iwi to ensure that government investment in
infrastructure is aligned to help deliver connected, thriving and sustainable
urban communities through Urban Growth Partnerships (progress with our
Urban Growth Partnerships is set out in Annex Two).
79
Accordingly, we propose the following groups of TAs are invited to participate
in the programme path:
79.1 Auckland Council6;
79.2 Smart Growth: Tauranga City Council and Western Bay of Plenty
District Council;
79.3 Future Proof: Waikato Regional Council, Waipa District Council,
Waikato District Council, and Hamilton City Council;
79.4 Wellington Regional Growth Framework: Wellington City Council, Hutt
City Council, Upper Hutt City Council, Porirua City Council, Kāpiti
Coast District Council, Horowhenua District Council, South Wairarapa
District Council, Carterton District Council, and Masterton District
Council;
79.5 Greater Christchurch Partnership: Christchurch City Council, Selwyn
under the
District Council and Waimakariri District Council;
79.6 Queenstown Lakes District Council.
80
We expect that these TAs would engage with their relevant UGP partners
including iwi and Regional Councils and submit a single proposal to the Fund
which would bring together a number of interdependent infrastructure
projects, multiple funders, and different potential funding and financing
mechanisms, including the key trade-offs involved. We anticipate that
proposals through this path will involve greater time for developing proposals,
evaluation and negotiation.
81
All other TAs would be eligible to apply through the project path, which will
have a faster process (given lower levels of complexity, and significantly
reduced levels of negotiation). Eligible applicants would be invited to apply for
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funding contributions towards infrastructure projects required to enable a
specific housing development area (although eligible applicants could submit
multiple proposals).
82
As we have noted above, the programme path TAs are not intended to be
prioritised over other TAs. There is no guarantee that any particular TA or
group of TAs receive any funding if it is not justified under the investment
criteria.
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6 Includes council-controlled organisations.
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83
Where iwi and/or developers apply directly to the Fund, they will do so
through the project path. However, to the extent the infrastructure project is
within a region covered by the programme path, their proposal will typically be
considered alongside the broader proposal for that region when funding
decisions are made
Two-stage process
84
To ensure a more efficient overall process for both central government and
applicants, while also encouraging a wide range of councils and parties to
engage with the process, we propose that both the programme and project
paths operate on a two-stage basis. This will involve applicants providing a
relatively straightforward initial expression of interest in respect of the
infrastructure developments they propose (stage one), following which, a
reduced number of full proposals will be sought (stage two) based on
indicative alignment with the investment criteria.
Fast-track process
85
We also want to ensure that there is sufficient flexibility within the Fund to
progress decisions quickly where this makes sense and enable investments
to be committed to this year. We anticipate that there will be few of these
‘quick win’ projects, but we want to ensure we can move at pace if and when
there are.
under the
86
We propose that both the programme and project paths include a fast-track
process where some first-stage proposals can progress quickly to decisions,
subject to some additional detail being provided. Proposals going through the
fast-track process would be subject to the Kāinga Ora committee’s7
satisfaction that:
86.1 the quality of the opportunity has already been well validated, typically
through a previous central government process; and
86.2 the proposal aligns very well to the Fund’s criteria.
Co-funding requirements and developer commitments
87
Through this Fund, we want to maximise value for money through, for
example, co-funding, contributions, and non-financial commitments, including
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incentivising councils to use non-funding levers that enable housing
development. We also want to avoid the risk that our investment:
87.1 simply leads to increases in land values that manifest as windfall gains
for current owners; and
87.2 crowds out investment by councils or developers, including
disincentivising the use of new financing mechanisms under the IFF
Act.
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7 The role of the committee is discussed further below
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88
We therefore propose that the following principles apply to developers and
relevant landowners to the greatest extent possible:
88.1 developers and landowners should be paying a similar share of the
costs of the infrastructure as would be the case if the infrastructure
project was funded by traditional means through the local authority.
This is generally the reasonable ‘growth’ portion of the total
infrastructure cost;
88.2 in some cases this contribution can be non-financial (e.g. land or
commitments to sub-market housing), but any such contribution should
be similar in value to the foregone financial contribution.
89
s 9(2)(j)
90
s 9(2)(j)
91
s 9(2)(f)(iv)
under the
92
s 9(2)(j)
s 9(2)(f)(iv)
93
While developers and landowners will be expected to contribute to
infrastructure costs, we propose that the Fund provides for infrastructure
traditionally paid for by local authorities and ultimately funded by rates. While
it will not be a requirement that this funding be recovered, co-investment from
Local Authorities will be sought in many cases.
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94
Providing this subsidy to local government will overcome a barrier to those
councils unable to fund additional infrastructure investment, and it will also act
as an incentive to pro-actively support unlocking housing development.
95
The decision-making criteria will drive applications and our investment
choices towards supporting housing outcomes aligned to the objectives of the
Fund, including with regard to factors like affordability, pace and confidence in
housing outcomes. Kāinga Ora will also seek to secure commitments which
are as specific as is possible with respect to housing development following
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infrastructure investment.
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96
However, in many cases it will not be possible to secure enforceable
commitments from developers, particularly in relation to the pace of
development, due to inherent uncertainty about market conditions outside
their control. Officials are continuing to explore which legal and other
mechanisms we can employ to give greatest possible certainty of housing
outcomes before committing funding.
Decision-making processes for the Fund
97
We propose that Kāinga Ora administers the competitive component of the
Infrastructure Fund, a role which the Minister of Housing signalled in the
earlier Cabinet paper “Increasing Housing Supply and Improving Affordability
for First Home Buyers and Renters”. This role involves Kāinga Ora carrying
out the primary analysis and assessment (supported by relevant cross-agency
officials), supporting the advisory group, developing detailed agreements and
undertaking ongoing contract management and monitoring.
98
In light of the scale of investment anticipated, and that this is an investment by
the Crown (rather than from Kāinga Ora’s balance sheet), we propose the
Minister of Finance and the Minister of Housing be the final decision makers
on investments.
99
We further propose that those decisions would be informed by advice from a
committee of the Kāinga Ora board, subject to the Board establishing a
under the
committee that has the following expertise represented (if these cannot be
found within current Kāinga Ora Board members then additional independent
members may be appointed to achieve this):
99.1 Housing development;
99.2 Māori housing
99.3 Infrastructure delivery
99.4 Local government
99.5 Finance and risk management.
100 The committee would be supported by Kāinga Ora and independent technical
experts when needed. It would also be responsible for agreeing which
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proposals advance past the initial expressions of interest stage (in the two-
stage process).
101 In proposing that it is a committee of the Kāinga Ora Board that provides
advice to Ministers, we note that this is on the basis that Kāinga Ora is not
able to apply directly to the competitive component of the Fund.
102 To ensure that the advice from the Kainga Ora Board reflects the intent of the
Fund and broader government priorities the Minister of Housing will set out
her expectations for the advice in a letter to the Chair of the Board.
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103 Additionally, we propose that the committee will be required in its advice to
identify how input from the cross-agency reference group proposed in
paragraph 106.5 has informed its advice, including with respect aligning with
other infrastructure funding process such as Three Waters Reform incentives,
land transport funding and processes under the Infrastructure Funding
Finance Act.
104 We further propose that, where the committee recommends Ministers
consider proposals in which Kāinga Ora has a material interest, then Ministers
also be provided with independent second-opinion advice from HUD, and any
other entity as directed by Ministers, in order to manage any conflict of
interest risks.
Aligning with other infrastructure funding processes
105 Across government, we are investing heavily in different forms of
infrastructure (e.g. three waters and transport), and it is important to ensure
general alignment across infrastructure processes as far as possible. It is my
expectation that a number of practical measures will be put in place at a policy
and operational level to align the Fund with other key infrastructure
processes.
106 We propose that these steps include:
under the
106.1 requiring proposals to identify where central government funding has
previously been sought or received in relation to the project and
dependencies between the proposal and other processes;
106.2 inviting applicants to identify how non-financial powers of local
government and central government (e.g. Ministerial RMA powers,
RMA fast-track, Urban Development Act powers) could complement
funding to maximise the impact. Where these are identified, Kainga
Ora will work with relevant agencies and portfolio Ministers to progress;
106.3 using existing cross-agency groups, particularly for the programme
path proposals, including the Urban Growth Partnership and place-
based partnership structures;
106.4 triaging all proposals for where review by another agency is required;
and
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106.5 establishing an interagency infrastructure officials reference group to
inform the decisions and advice from the Kainga committee (at both the
first stage and full proposals) with the following entities represented:
106.5.1 Treasury
106.5.2 Ministry of Housing and Urban Development
106.5.3 Department of Internal Affairs
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106.5.4 Ministry of Transport
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106.5.5 Waka Kotahi
106.5.6 Infrastructure Commission
106.5.7 Crown Infrastructure Partners.
107 Given this Fund can be used to fund transport infrastructure, it will have a
critical interface with the central government land transport funding system.
More detailed consideration needs to be given to a number of issues,
including:
107.1 how to align with land transport planning and funding processes (noting
that the 2021-2024 National Land Transport Programme is soon to be
finalised) as well as Government transport objectives;
107.2 financial treatment when funding flows to Waka Kotahi and whether
this is more appropriately structured as grants or loans; and
107.3 management of conflicts of interests.
108 We propose that decisions on the alignment with the land transport funding
system are delegated to the Minister of Finance, the Minister of Housing and
the Minister of Transport with advice provided in June 2021.
109 Negotiations relating to the Three Waters Reform incentive packages for
under the
Councils are expected to occur in June 2021, well before proposals for the
Fund will be evaluated. Including the competitive fund in the scope of these
negotiations would essentially require pre-determining envelopes for various
local authorities in advance of assessing specific proposals. This would
significantly reduce our ability to drive the highest value for money housing
outcomes.
Outstanding matters
110 There are two further outstanding matters relating to the competitive fund on
which we are seeking delegations from Cabinet to the Minister of Finance and
me, because there has been insufficient time to resolve them:
110.1 Whether it is necessary to provide operational funding for Kāinga Ora
to administer the competitive fund and, if so, at what level. Ensuring
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this does not duplicate any funding provided through the Kāinga Ora
Sustainable Funding Budget 2021 Initiative agreed by Cabinet will form
part of this assessment [CAB-21-MIN-0116.15];
110.2 The monitoring, reporting and evaluation requirements for the
competitive fund.
111 We also seek a delegation for any further minor design decisions and
technical adjustments to the settings proposed in this paper relating to the
competitive fund, and for any further implementation decisions.
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Infrastructure Fund Component 3: Māori Infrastructure Fund
112 In line with the objectives of the Fund, it’s important that the Fund enable
Māori-led investments in infrastructure for Māori housing outcomes. Achieving
this will require that:
112.1 Māori have a direct path to receiving investment through the Fund
that’s consistent with the Te Maihi o te Whare Māori – Māori and Iwi
Housing Innovation Framework for Action;
112.2 settings enable smaller and often remote developments, with a wider
range of investment needs than will typically be the case elsewhere;
and
112.3 the process for considering these smaller Māori-led investments be
specifically designed to meet their needs and avoids unrealistic
competition with larger commercial developments.
113 While the competitive Infrastructure Acceleration Fund described above is
well suited to supporting larger Māori-led commercially oriented investments,
it is not the right solution for smaller Māori-led investments, including
papakāinga developments or rural investment with onsite infrastructure.
114 Cabinet has agreed to provide $380 million toward increasing Māori housing
supply through Whai Kāinga Whai Oranga (Māori Housing Budget 2021
under the
initiative). However, this funding is only sufficient for provision of houses, and
not infrastructure, which is also required in many cases. Additionally, there are
Māori housing opportunities where infrastructure is the primary constraint
[CAB- 21 MIN 0116.15 refers].
115 On 17 May 2021 Cabinet agreed that the most effective way to provide
infrastructure funding to Māori-led housing projects is to make a separate
pathway tailored to Māori. To achieve this $350 million has been made
available through the Fund for a Māori Infrastructure Fund [CAB-21-MIN 0173
refers].
High-level settings for Māori infrastructure investment.
116 In addition to the objectives of the Fund the Māori Infrastructure Fund will
have two additional objectives of:
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116.1 supporting new iwi led housing delivery models that sustainably
increase Māori housing delivery in the medium to long-term; and
116.2 enabling development on whenua Māori (but not be restricted to
whenua Māori).
117 To give effect to this we propose the Māori Infrastructure Fund operates a
‘two path model’ similar to the Infrastructure Acceleration Fund:
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117.1 a ‘project path’ for small scale developments across Aotearoa; and
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117.2 an ‘iwi programme path’ for multi-year delivery programmes by
Regional/Tribal Development Entities.
118 The iwi programme path will create an infrastructure pipeline that supports
new delivery models being established under Whai Kāinga Whai Oranga. I
expect a significant portion of Māori infrastructure funding will support the iwi
programme pathway, but do not propose to specify a breakdown in funding
between the two paths.
119 We consider the investment criteria for the Infrastructure Acceleration Fund to
be relevant for the Māori Infrastructure Fund but before confirming these
criteria they will need to be aligned to investment criteria being developed for
Whai Kāinga Whai Oranga. We therefore request a delegation from Cabinet
to the Minister of Finance, Minister of Housing and Associate Minister of
Housing (Māori housing) to determine the final criteria.
Project Pathway – Expanding existing Māori housing programmes to address
immediate housing need
120 For the project pathway, we propose Māori entities and/or housing providers
be the lead applicants (including developers and Regional/Tribal Development
Entities). Where projects include trunk infrastructure, Māori entities will be
encouraged to work alongside territorial authorities where possible. These
projects will closely align with supply projects being progressed under Whai
under the
Kāinga Whai Oranga.
121 This pathway will be contestable using an on demand model similar to
existing Te Puni Kōkiri and Te Tūāpapa Kura Kāinga Māori housing funding
models. Proposals will be prioritised based on investment criteria with a
particular emphasis on readiness balanced by the place and need. There is
no pre-determined target spend for particular places in this model.
Iwi Programme pathway- Shifting the scale of impact and long-term sustainability of
Māori housing delivery
122 This pathway focuses on regional housing delivery co-ordinated by
Regional/Tribal Development Entities. The development entities will be made
up by one or more iwi and deliver multi-year programmes of housing delivery
covering a range of tenures and typologies. In many cases projects will
involve multiple funding sources, landowners and other stakeholders.
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123 Establishing Regional/Tribal Development Entities will be a new approach to
partnering with Māori for housing delivery. Iwi governance structures for
Regional/Tribal Development entities will be essential to ensure funding is
prudently managed. We expect our partnership with these new entities will
continue to evolve and shift the scale of impact and long-term sustainability of
Māori housing delivery.
124 Whai Kāinga Whai Oranga funding will support the establishment of these
regional entities through capability and supply funding. Further detail on this
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approach is being developed as part of Whai Kāinga Whai Oranga.
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125 In the first instance we intend funding to be allocated to Regional/Tribal
Development Entities in the following areas:
125.1 Te Tai Tokerau
125.2 Tairāwhiti
125.3 Kahungunu
125.4 Taranaki
125.5 Bay of Plenty/Rotorua
126 These areas have a high Māori population, communities with high housing
needs and whānau in emergency accommodation (motels, campervans, etc),
and where there are concentrations of whenua Māori. In the longer term, we
expect further regional development entities will be established across
Aotearoa and request delegated authority to add regions based on housing
need.
127 To focus on these priority regions, we intend to run a closed negotiation
model. Under this model the Government first determines maximum
investment (envelopes) for each region and then, in partnership with the
regional development entity, agrees on a multi-year delivery programme and
the infrastructure needs to support that.
under the
128 Determining investment envelopes will require discussion with iwi and Māori
partners and further analysis on need and readiness. We therefore request
delegated authority to the Minister of Finance, Minister of Housing and
Associate Minister of Housing (Māori housing) to determine final investment
envelopes.
129 Some regions/tribal areas are establishing regional entities and intend to start
negotiations from 1 July 2021. We anticipate the iwi programme pathway to
be operational by next year. In the meantime we expect early projects to be
progressed under the project delivery pathway while the programme pathway
is being developed.
Eligible projects and expenditure
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130 We propose the same rules for eligible projects applied to the Infrastructure
Acceleration Fund be applied to the Māori infrastructure pathway with the
following changes to enable smaller and rural developments:
130.1 onsite infrastructure (i.e. non-enabling infrastructure), including site
remediation, onsite civils and foundations, onsite three waters including
septic tanks, is eligible for funding;
130.2 no minimum dwelling requirements for projects, to enable rural and
smaller developments; and
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130.3 transmission infrastructure and telecommunications infrastructure are
eligible for funding where the costs won’t be met by utility companies
for example rural sites where utility companies provide infrastructure
only within 100m of trunk infrastructure.
Co-funding requirements and developer commitments
131 The funding proposed in the Māori Infrastructure Fund differs from investment
through the Infrastructure Acceleration Fund in the following key ways:
131.1 Many developments will be on Whenua Māori under Te Ture Whenua
Māori Land Act 1993 which face funding and financing barriers specific
to their land status.
131.2 Based on existing proposals made to Te Tūāpapa Kura Kāinga, we
expect the majority of Māori infrastructure proposals will not be strictly
commercial in nature. The proposals create long-term assets that
enhance social and economic wellbeing.
131.3 The Māori Infrastructure Fund will focus on regional locations,
particularly rural environments, most of which are unlikely to have
significant housing delivery without subsidies because house sale
prices are below the cost to build.
131.4 The majority of projects will require onsite infrastructure rather than
under the
trunk infrastructure so investment is less likely to displace local
authority investment.
132 On this basis, we do not expect developers and landowners should be paying
a similar share of the costs of the infrastructure as would be the case if the
project was funded by traditional means through the local authority. Where
proposals have commercial elements, officials will seek to avoid subsiding the
commercial activity. We also expect that many larger, commercially-oriented
projects backed by Māori will often use the Infrastructure Acceleration Fund.
Decision-making processes for the Māori Infrastructure Fund
133 Cabinet agreed that before funds through Whai Kāinga Whai Oranga be
spent, key settings be approved by the Minister of Finance, the Minister of
Housing, the Minister of Māori Development and the Associate Minister of
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Housing (Māori Housing) [CAB-21-MIN-0116].
134 Following initial approval by the above Ministers, we expect the following
Ministers to have ongoing oversight of Whai Kāinga Whai Oranga housing
programme (Whai Kāinga Whai Oranga Ministers):
134.1 Associate Minister of Housing (Māori housing);
134.2 Minister of Māori Development; and
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134.3 Associate Minister of Housing (Homelessness).
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135 To ensure alignment between the Māori Infrastructure Fund, the Infrastructure
Acceleration Fund and Whai Kāinga Whai Oranga housing investment, we will
retain final decision making for the Māori Infrastructure Fund among the
Minister of Housing, the Minister of Finance and the Associate Minister of
Housing (Māori Housing).
136 We propose that Te Tūāpapa Kura Kāinga administers the Māori
Infrastructure Investment Fund. This role involves Te Tūāpapa Kura Kāinga
carrying out the primary analysis and assessment (supported by relevant
cross-agency officials), supporting the advisory group, developing detailed
agreements and undertaking ongoing contract management and monitoring.
137 We expect any Māori infrastructure investment proposals to go through a
Chief Executive led MAIHI governance group and for this group to provide
advice to decision-making Ministers on investment decisions.
138 Additionally, the Whai Kāinga Whai Oranga ministers will provide comment to
decision-making Ministers on alignment of infrastructure projects to Whai
Kāinga Whai Oranga projects.
139 Following initial approval, we expect the Associate Minister of Housing (Māori
housing) to be responsible for the ongoing monitoring, reporting and
evaluation requirements for the Māori Infrastructure Fund.
under the
Outstanding matters
140 Outlined above are high-level investment settings for the Māori Infrastructure
Fund and details on delegations we are seeking from Cabinet to the Minister
of Finance, Minister of Housing and Associate Minister of Housing (Māori
Housing). In particular:
140.1 Final investment criteria
140.2 Funding envelopes for the Iwi programme pathway
140.3 The monitoring, reporting and evaluation requirements for the Māori
Investment Fund.
141 We also seek a delegation to the Associate Minister of Housing (Māori
Housing) for any further minor design decisions and technical adjustments to
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the settings proposed in this paper relating to the Māori infrastructure
pathway, and for any further implementation decisions.
Update on other funds
142 Updates are provided below on the Kāinga Ora Land Programme, Land for
Housing Programme, and refocused Residential Development Response
Fund
s 9(2)(f)(iv)
. The emerging
Purpose-Built Rentals sector (also known as build to rent) will be supported to
some degree by each of these funds. A more comprehensive report back will
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be provided in mid-2021 on this sector, focused on how the Government can
support purpose-built rentals in places experiencing acute rental stress, and
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where rental demand is high such as areas close to public transport, amenity,
and jobs.
143 Increasing rental supply is a key focus of these funds, however there will be
trade-offs between volume and affordability. Large scale developments with
limited subsidies can increase rental supply but are likely to deliver rental
housing at or above median rents. Delivering new rentals that are af ordable
to low- to moderate-income households will require greater subsidies per
dwelling, and therefore reduce the volumes able to be supplied through the
funds. The mid-year report back on purpose-built rentals will set out these
trade-offs reflecting engagement with the sector and the parameters of the
funds.
Kāinga Ora Land Programme
144 Cabinet has agreed to establish a Kāinga Ora Land Programme for strategic
land purchases to increase the pace, scale and mix of housing developments,
including more affordable housing (both for rental and home ownership). The
Programme will be financed through an additional $2 billion of Kāinga Ora
borrowing, and supported by $46 million of operating funding per annum
provided by Government.
145 Kāinga Ora was established with an express mandate to be both a world
class public housing landlord and to partner with others to deliver a range of
under the
urban development projects catering to diverse housing needs and
aspirations. The Programme will provide Kāinga Ora with the additional
financial resources it needs to fulfil this dual mandate, including through taking
advantage of the unique land acquisition and development powers available
to it under the Urban Development Act where appropriate.8
146 The key measure of success will be the extent to which the Programme
facilitates housing provision that is genuinely additional to, and more
affordable than, what the market might otherwise have delivered. It will need
to pursue a mix of smaller, more straightforward developments that can be
progressed at pace; and larger, more complex projects that will have longer
lead times (e.g. because of more complex planning and infrastructure
requirements) but will make a greater difference over the medium- to long-
term.
147 Officials are currently preparing further advice on the detailed parameters of
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the Programme, which will be provided to the Ministers of Finance and
Housing by mid-June. The scope of this advice includes:
147.1 Programme objectives and investment principles;
8 This includes the ability to acquire land by compulsion where necessary (e.g. to assemble fragmented land
parcels for comprehensive, integrated development close to jobs, amenities and transport); and a toolkit of
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powers relating to land use planning, consenting, infrastructure provision and reserves, that Kāinga Ora and its
development partners can access when undertaking Specified Development Projects.
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147.2 The site assessment and prioritisation framework;
147.3 Governance and decision making9;
147.4 Monitoring, reporting and evaluation;
147.5 Mechanisms to protect Māori interests and support Māori aspirations in
relation to housing and urban development; and
147.6 How the fund could support purpose-built rental housing.
148 Kāinga Ora is already investing in a mix of brownfield and greenfield land
acquisition opportunities, which will be assessed against the detailed
Programme parameters once finalised. The Programme has been sized on
the assumption that, in most cases, Kāinga Ora will purchase and assemble
land, install key infrastructure (where necessary), and on-sell the land to
development partners on condition they complete the development in
accordance with the Government’s housing priorities (pace, density, tenure
mix, etc). Other approaches may be considered on a case-by-case basis.
Land for Housing Programme
149 An additional $50 million of funding from the Housing Acceleration Fund has
been added to Land for Housing Programme funding to expand the
opportunities for land able to be acquired by the Programme for housing, and
under the
the range of public good outcomes able to be achieved on that land (such as
by increasing the pace of development, or the extent of affordable housing or
purpose-built rentals able to be delivered).
150 Cabinet has delegated authority to Ministers to agree new programme level
targets and investment principles to broaden the range of non-market
outcomes that the Programme can deliver. The funding will complement these
new settings, as it will assist the Programme to better tailor its delivery to
regional housing demands, supporting both our urban growth partnerships
and place-based initiatives. As the Programme acquires land at market value,
land price inflation is making the outcomes the Government seeks from the
Programme progressively less achievable, particularly in places with more
challenging development economics. The funding addresses this difficulty in
two key ways, by assisting with the purchase of land that is suitable for
development but needs to be discounted for housing to be commercially
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feasible, and by expanding the range, tenure and types of housing that can be
delivered on the land.
151
s 9(2)(i)
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9 This will reflect the specific expectations set out in Cabinet Office Circular CO (19) 6
Investment Management
and Asset Performance in the State Services, along with any specific statutory functions and decision rights set
out in relevant legislation.
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151.1
151.2
151.3
Refocused Residential Development Response Fund
s 9(2)(f)(iv)
152 The Residential Development Response Fund was established to support
residential construction activity during COVID-19, responding to concerns
about a potential decline in new house building and construction sector jobs.
Given that this risk has not materialised, with the pipeline of future work
remaining strong, it will now focus on supporting the sector to deliver
affordable housing for purchase and rent on private land.
s 9(2)(f)(iv)
153
s 9(2)(f)(iv)
153.1
under the
153.2
153.3
153.4
153.5
Released
154 The funding for
s 9(2)(f)(iv)
was created through Budget
2020 with $250 million originally appropriated for KiwiBuild, and with $100
million of operational funding. The funding from the KiwiBuild appropriation
must be returned to the Crown within 10 years.
155
s 9(2)(f)(iv)
l
i i i i
C P
C P
i i
i i
ll
i i
f
i
i
ffi i l
i l
l i
f
fi
i i
C P i i
ā i
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s 9(2)(f)(iv)
156 The requirement to return the $250 million of funding from the KiwiBuild
appropriation introduces some challenges for delivering rental housing that is
below market rents. Officials are investigating options for how best to use this
recyclable funding and the $100 million non-recyclable funding s 9(2)(f)(iv)
.
157 Proposals that deliver affordable market housing (typically for more moderate-
income earners), rather than rental dwellings affordable to low-income
households, may be easier to fund with the recyclable funding. Projects like
this are not likely to be affordable for low-income households though would
still deliver a needed increase to our housing stock.
158 Further detailed design work is required
s 9(2)(f)(iv)
i f
f
i i
f Fi
i i
f
i
l
fi l
l f
f
i
i i
f
Implementation
under the
159 The table below sets out the key indicative timeframes for the Infrastructure
Fund.
Infrastructure Fund
s 9(2)(j)
i
Competitive Fund
Fund launched
First fast-tracked
Remaining 1st
(Infrastructure
(Expression of interest decision announced: r ound funding
Acceleration Fund)
released
): Late June
Nov - Dec 2021
decisions
2021
announced:
April - Oct
Released
2022
Māori Infrastructure
Initial project-path
Iwi programme
Fund
investments
pathway
announced: July –
operational: Jan
Sept 2021
2022
Other Funds and Programmes
Kāinga Ora Land
Detailed programme
First sites under
Programme
parameters agreed by conditional contract:
Joint Minsters:
Mid-
Jul – Sep 2021
June 2021
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s 9(2)(f)(iv)
Financial Implications
160 There are no additional financial implications arising from this paper because
the funding for the $3.8 billion Housing Acceleration Fund has already been
agreed, the operational funding of $46 million per annum over the next four
years and outyears for the Kāinga Ora Land programme was secured through
Budget 21, and the funding
s 9(2)(f)(iv)
has already been appropriated.
Legislative Implications
161 This paper does not have any direct legislative implications.
Impact Analysis
Regulatory Impact Statement
under the
162 The impact analysis requirements do not apply.
Climate Implications of Policy Assessment
163 The Housing Acceleration Fund,
s 9(2)(f)(iv)
and Kāinga Ora
Land Programme will support higher density housing and greater public and
active transport use, supporting our transition to a net carbon neutral
economy. Proposed investment in large scale projects in Auckland will
increase housing density and improve amenity in and around town centres
and public transport nodes. In addition to advancing our climate objectives,
these measures will also help to increase social connection and improve
access to employment and recreation.
Population Implications
164 By taking measures to increase the supply of affordable housing (whether for
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home ownership or rental), these proposals are likely to positively impact
those groups that are currently renting and/or unable to buy a home, in
particular it should benefit:
164.1 Māori and Pacific people who are less likely to own their own home. In
2018, the proportion of Māori and Pacific people living in owner-
occupied homes were 47.2 per cent and 35.1 per cent respectively,
compared to the total population figure of 64.3 per cent. Government is
also taking other measures to improve housing for Māori and Pacific,
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including through Progressive Home Ownership, MAIHI partnerships
and our public housing build programme.
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164.2 Younger people where declining home ownership rates have been
sharper.
164.3 Disabled people, particularly those with accessibility needs, who often
experience more difficulty finding a home. The actions should positively
impact on disabled people through increasing the supply of affordable
housing for ownership and rent.
165 More broadly, assessments about aligning with need will be considered in
decisions made through
s 9(2)(f)(iv)
, the Kāinga Ora Land
programme, and Land for Housing Programme.
Human Rights
166 There is no inconsistency with the Bill of Rights or Human Rights Act.
Consultation
167 Consultation has occurred across the Treasury, Kāinga Ora, the Ministry of
Transport, the Department of Internal Affairs, and Waka Kotahi New Zealand
Transport Agency. The Department of the Prime Minister and Cabinet has
been informed.
168 However the section relating to
Infrastructure Fund Component 3:
Infrastructure for Māori has not been consulted on due to time constraints.
under the
Treasury comment
169 The Treasury does not consider that Kāinga Ora’s board, or a committee
thereof, should lead the decision-making process for a competitive Crown
investment program in which their organisation has an interest. Kāinga Ora
will be responsible for administering the Infrastructure Fund, and could also
provide technical input to the advisory group, but recommendations for Crown
investment should come from an independently-chaired advisory board
appointed by Ministers. It is also important for the administrative and advisory
functions of the Fund to be adequately resourced for their respective roles.
Communications
170 We intend to announce further details about the Infrastructure Fund including
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for example, its three component parts, who is eligible to apply, and when it
will open, at a time agreed with the Prime Minister’s Office.
171 Key details will also be made available on the Kāinga Ora and HUD websites.
Proactive Release
172 The Minister of Housing intends to proactively release this paper at, or
around, the time that further public announcements are made. Sections that
would undermine the Government’s position in negotiations with local
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government, iwi and development partners will be withheld. s 9(2)(i), s 9(2)(j)
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Recommendations
The Minister for Housing and the Associate Minister of Housing (Māori Housing)
recommend that the Committee:
1
note in March 2021 Cabinet agreed to a suite of demand and supply-side
measures to address housing affordability, support first home buyers and
better incentivise investment in new homes [CAB-21-SUB-0045, CAB-21-
MIN-0070 and CAB-21-MIN-0061 refers];
2
note that the supply measures included establishing a Housing Acceleration
Fund, which would comprise the Infrastructure Fund, changes to Land for
Housing], and the Kāinga Ora Land Programme [CAB-21-MIN-0061 refers];
3
note that Cabinet has agreed to commit $3.8 billion to the Housing
Acceleration Fund, with approximately $3.75 billion for the Infrastructure
Fund, and $50 million of additional funding for the Land for Housing
Programme [CAB-21-MIN-0116-15 refers];
4
note that the operating costs associated with servicing the Kāinga Ora
under the
borrowing required to implement the Kāinga Ora Land Programme of $46
million per annum over the next four years and outyears was agreed as part
of Budget 21;
5
note that Cabinet sought a report back on the design parameters for the
Infrastructure Fund, including on alignment with existing infrastructure
processes (in particular three waters and transport) and ongoing collective
ministerial oversight across alignment with the Treasury, Ministry of Transport,
Waka Kotahi New Zealand Transport Agency, Department of Internal Affairs
and Kāinga Ora [CAB-21-MIN-0061 refers];
Infrastructure Fund
6
note that the Infrastructure Fund forms the key component of the Housing
Acceleration Fund;
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7
agree that the objective for Infrastructure Fund is to invest in infrastructure
that unlocks housing development. This infrastructure investment will:
7.1 enable brownfield intensification and greenfield expansion in locations
with access to amenity and opportunity;
7.2 be limited to investments that would not otherwise be funded, or not
funded fast enough to meet demand for housing;
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7.3 maximise value for money including through co-funding, contributions,
and commitments from local government and third parties;
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7.4 enable the building of homes that are affordable for low-to-moderate
income households;
7.5 incentivise councils to use non-funding levers that enable housing
development;
7.6 create a pipeline of investment including near-term and medium-term
activity that ramps up sustainably to allow the construction sector to
steadily increase its capacity and absorb the investment without price
escalation;
7.7 align with wider government objectives, such as ensuring good urban
form, partnerships with iwi and Māori, and the transition to a net-zero
emissions economy; and
7.8 be spread across multiple regions and include both large urban areas
and regional centres.
8
agree to the following investment criteria and weightings for the Infrastructure
Fund (described in more detail in paragraph 33):
8.1 Housing benefits (40%);
8.2 Impact of funding (20%); under the
8.3 Cost and co-funding (20%);
8.4 Capability and readiness (20%);
9
note there are three components to the Infrastructure Fund, with the following
indicative funding:
9.1 Kainga Ora Large Scale Projects s 9(2)(j)
9.2 Contestable fund
s 9(2)(j)
9.3 Infrastructure for Māori housing ($350 million);
Large scale projects
10
note the Kāinga Ora Large Scale projects align well with the objectives and
Released
criteria for the Fund, in particular by enabling brownfield intensification and
redevelopment to occur at pace and scale in areas of high need with access
to amenity and opportunity;
11
s 9(2)(j)
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11.1
11.2 a broader funding commitment for Eastern Porirua to deliver key
precinct wide trunk water infrastructure currently subject to the fast-
track consenting application ($65 million).
12
s 9(2)(j)
13
s 9(2)(j)
14
s 9(2)(j)
15
s 9(2)(j)
Infrastructure Fund Component 2: Infrastructure Acceleration Fund (competitive
under the
fund)
16
agree that for most other infrastructure investments a contestable process is
most appropriate given the wide range of potential projects and the need to
provide for maximum impact;
17
agree that the competitive fund may include multiple funding rounds;
18
agree that the scope of eligible projects in the competitive fund be limited to:
18.1 new or upgraded enabling infrastructure in the form of transport
(including local roading, state highways, public transport infrastructure,
footpaths and cycleways), three waters (water supply, wastewater and
stormwater) and flood-management infrastructure; and
18.2 which are wholly or primarily for the purpose of enabling the building of
Released
new or additional dwellings in the short to medium term; and
18.3 which are expected to enable at least:
18.3.1 200 additional dwellings in tier one urban environments
(under the National Policy Statement on Urban Development)
18.3.2 100 additional dwellings in tier two urban environments
18.3.3 30 additional dwellings elsewhere;
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19
agree that eligible costs include:
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19.1 costs of feasibility studies and other early-stage development work;
19.2 costs of designing, consenting, tendering and acquiring land (where it
is wholly required for eligible infrastructure projects and broader large
scale project activities);
19.3 constructing eligible infrastructure projects;
19.4 in limited situations, non-capital administrative costs where these are
necessary to establishing complementary financing;
20
agree the lead applicants on proposals may be territorial authorities,
developers or iwi, with developers encouraged to work through territorial
authorities where possible;
21
note that Kāinga Ora will not be able to apply directly to the competitive fund;
22
agree to a two-path structure for the Fund with the following paths:
22.1 a ‘Programme path’ for main urban areas with where infrastructure
investment is more complex;
22.2 a ‘Project path’ for all other parts of New Zealand with a lower expected
scale and complexity of housing infrastructure investment.
under the
23
agree that the following groups of Territorial Authorities, should they wish to
apply to the Fund, must apply through the programme path as a group:
23.1 Auckland Council;
23.2 Smart Growth: Tauranga City Council and Western Bay of Plenty
District Council;
23.3 Future Proof: Waikato Regional Council, Waipa District Council,
Waikato District Council, and Hamilton City Council;
23.4 Wellington Regional Growth Framework: Wellington City Council, Hutt
City Council, Upper Hutt City Council, Porirua City Council, Kāpiti
Coast District Council, Horowhenua District Council, South Wairarapa
District Council, Carterton District Council, and Masterton District
Released
Council;
23.5 Greater Christchurch Partnership: Christchurch City Council, Selwyn
District Council and Waimakariri District Council;
23.6 Queenstown Lakes District Council;
24
agree that all other Territorial Authorities (not listed in recommendation in
recommendation 23) are eligible to apply under the Project Path;
25
agree that both paths operate primarily as a two-stage process;
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26
agree that some projects may be fast-tracked through a one-stage process
subject to the satisfaction of the Kāinga Ora Board committee that:
26.1 the quality of the opportunity has already been well validated, in many
cases through a previous central Government process; and
26.2 the proposal aligns very well to the Fund’s criteria;
27
agree the following principles apply to co-funding requirements for developers
and relevant landowners to the greatest extent possible:
27.1 Developers and landowners should be paying a similar share of the
costs of the infrastructure as would be the case if the infrastructure
project was funded by traditional means through the local authority.
This is generally the reasonable ‘growth’ portion of the total
infrastructure cost;
27.2 In some cases this contribution can be non-financial (e.g. land or
commitments to sub-market housing), but any such contribution should
be similar in value to the foregone financial contribution;
28
s 9(2)(j)
under the
29
agree that the competitive fund will provide for infrastructure traditionally paid
for by local authorities and ultimately funded by rates, without requiring that
this funding be recovered (although co-investment from Local Authorities will
be sought in many cases);
30
agree that Kāinga Ora will administer the competitive fund;
31
agree that final decisions on investments within the competitive fund be made
by the Minister of Finance and the Minster of Housing;
32
agree that Ministerial decisions be informed by advice from a committee of the
Kāinga Ora Board, subject to the Board establishing a committee with the
following expertise represented:
Released
32.1.1 Housing development;
32.1.2 Māori housing
32.1.3 Infrastructure delivery
32.1.4 Local government
32.1.5 Finance and risk management;
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33
note that to ensure that the advice from the Kainga Ora Board reflects the
intent of the Fund and broader government priorities the Minister of Housing
will set out her expectations for the advice in a letter to the Chair of the Board.
34
agree that the committee be required in its advice to identify how input from
the interagency reference group has informed its advice;
35
agree that where the committee recommends Ministers consider proposals in
which Kāinga Ora has a material interest, then Ministers also be provided with
independent second-opinion advice from HUD, and any other entities as
directed by Ministers;
36
agree to the following steps we have identified to support alignment between
this Fund and other central government infrastructure funding processes:
36.1 requiring proposals to identify where central government funding has
previously been sought or received in relation to the project and
dependencies between this proposals and other processes
36.2 inviting applicants to also identify how non-financial powers of central
government (e.g. Ministerial RMA powers, RMA fast-track, Urban
Development Act powers) or local government could complement
funding to maximise the impact;
36.3 utilising cross-agency groups, particularly for the programme path
under the
proposals, including the Urban Growth Partnership and place-based
partnership structures;
36.4 triaging all proposals for where review by another agency is required;
36.5 establishing an interagency infrastructure officials reference group to
inform the recommendations of the advisory group with the following
entities represented (Treasury, Ministry of Housing and Urban
Development, Department of Internal Affairs, Ministry of Transport,
Waka Kotahi, Infrastructure Commission, and Crown Infrastructure
Partners);
37
note that further consideration is required for how to integrate the competitive
fund with land transport funding process and Waka Kotahi investments
including the role for grants versus loans and management of conflicts of
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interest;
38
agree to delegate decisions on alignment between the land transport funding
and the competitive fund to the Minister of Finance, the Minister of Housing
and the Minister of Transport;
39
note including the competitive fund in negotiations relating to the Three
Waters Reform incentive packages for Councils are expected to occur in the
June 2021, would essentially require pre-determining envelopes for various
local authorities and significantly reduce the ability to drive the highest value
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for money housing outcomes;
37
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40
agree to delegate monitoring, reporting and evaluation requirements and any
further implementation decisions for the competitive fund to the Minister of
Finance and the Minister of Housing;
41
agree to delegate decisions on administration funding for Kāinga Ora to
deliver the competitive component of the infrastructure fund and to the
Minister of Housing and the Minister of Finance, ensuring this does not
duplicate any funding provided through the Kāinga Ora Sustainable Funding
Budget Initiative;
42
agree to delegate further minor design decisions, technical adjustments to the
settings proposed in this paper and implementation decisions relating to the
competitive fund to the Minister of Housing;
Infrastructure Fund Component 3: Infrastructure for Māori Housing
43
note that while the competitive Infrastructure Acceleration Fund is well suited
to supporting larger Māori-led commercially oriented investments; it is not the
right solution for smaller Māori-led investments including papakāinga
developments or rural investment with onsite infrastructure;
44
note Cabinet has agreed to provide $380 million toward increasing Māori
housing supply through Whai Kāinga Whai Oranga (Māori Housing Budget
2021 initiative). However, this funding is only sufficient for provision of houses,
under the
and not infrastructure which is also required in many cases. Additionally, there
are Māori housing opportunities where infrastructure is the primary constraint;
45
note on 17 May Cabinet agreed that $350 million be made available through
the Housing Acceleration Fund for a Māori Infrastructure Fund [CAB-21-MIN
0173 refers.];
46
agree that in addition to the objectives of the Infrastructure Fund the Māori
Infrastructure Fund will have two additional objectives of:
46.1 supporting new housing iwi led delivery models that sustainably
increase Māori housing delivery in the medium to long-term
46.2 enable development on whenua Māori (but not be restricted to whenua
Māori);
Released
47
note investment criteria for the Infrastructure Fund are relevant for the Māori
Infrastructure Fund but before confirming these criteria they will need to be
aligned to investment criteria being developed for Whai Kāinga Whai Oranga;
48
agree to delegate authority to the Minister of Finance, Minister of Housing and
Associate Minister of Housing (Māori housing) to determine final investment
criteria for the Māori Infrastructure Fund;
49
agree that the same rules for eligible projects and costs applied to the
Infrastructure Acceleration Fund be applied to the Māori Infrastructure Fund
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with the following changes to enable smaller and rural developments:
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49.1 onsite infrastructure (ie non-enabling infrastructure) including site
remediation, onsite civils and foundations, onsite three waters including
septic tanks is eligible for funding
49.2 no minimum dwelling requirements for projects to enable rural and
smaller developments
49.3 transmission infrastructure and telecommunications infrastructure are
eligible for funding where the costs won’t be met by utility companies
for example rural sites beyond the maximum distance from trunk
infrastructure serviced by utility companies;
50
agree the lead applicants on proposals be Māori entities and housing
providers (including developers and Regional/Tribal Development Entities);
51
agree to a two-path structure for the Māori Infrastructure Fund with the
following paths:
51.1 a ‘project path’ for small scale developments across Aotearoa
51.2 a ‘Iwi programme path’ for multi-year delivery programmes by
Regional/Tribal Development Entities;
52
agree that the project pathway will be contestable using an on demand model
opening on 1 July 2021, with proposals prioritised based on investment
under the
criteria with a particular emphasis on readiness balance by place and need.
There is no pre-determined target spend for particular places in this model;
53
note the programme pathway focuses on regional housing delivery co-
ordinated by Regional/Tribal Development Entities. The development entities
will be made up by one or more iwi and deliver multiyear programmes of
housing delivery covering a range of tenures and typologies. In many cases
projects will involve multiple funding sources, landowners and other
stakeholders;
54
note Whai Kāinga Whai Oranga funding will support the establishment of
these regional entities through capability and supply funding. We anticipate
the programme pathway to be operational next year;
55
agree that the iwi programme pathway run a closed negotiation model with
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maximum investment (envelopes) allocated to Regional/Tribal Development
Entities in the following areas:
55.1 Te Tai Tokerau
55.2 Tairāwhiti
55.3 Kahungunu
55.4 Taranaki
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55.5 Bay of Plenty/Rotorua;
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56
note determining investment envelopes will require discussion with iwi and
Māori partners and further analysis on need and readiness;
57
agree to delegate authority to determine final investment envelopes and the
ability to add further regions to the Minister of Finance, Minister of Housing
and Associate Minister of Housing (Māori housing);
58
agree that developers and landowners do not pay a similar share of the costs
of the infrastructure as would be the case if the project was funded by
traditional means through the local authority;
59
agree that the Ministry of Housing and Urban Development will administer the
Māori Infrastructure Fund;
60
agree that final decisions on investments within the Māori Infrastructure Fund
be made by the Minister of Finance, the Minster of Housing and the Associate
Minister of Housing (Māori Housing);
61
agree that Ministerial decisions be informed by advice from a Chief Executive
lead MAIHI governance group;
62
note that Cabinet agreed that before funds through Whai Kāinga Whai Oranga
be spent, key settings be approved by the Minister of Finance, the Minister of
Housing, the Minister of Māori Development and the Associate Minister of
Housing (Māori Housing) [CAB-21-MIN-0116];
under the
63
note that following initial decision making the following Ministers will oversee
Whai Kāinga Whai Oranga delivery:
63.1 Associate Minister of Housing (Māori housing)
63.2 Minister of Māori Development
63.3 Associate Minister of Housing (Homelessness);
64
note that the Chief Executive lead MAIHI governance group will enable Whai
Kāinga Whai Oranga Ministers to comment on alignment between Māori
Infrastructure Fund projects and Whai Kāinga Whai Oranga projects;
65
agree to delegate monitoring, reporting and evaluation requirements and any
Released
further implementation decisions for the Māori Infrastructure Fund to the
Minister of Finance, the Minster of Housing and the Associate Minister of
Housing (Māori Housing);
66
agree to delegate further minor design decisions, technical adjustments to the
settings proposed in this paper, implementation decisions and ongoing
responsibility for monitoring and evaluation relating to the Māori Infrastructure
Fund to the Associate Minister of Housing (Māori Housing);
Kāinga Ora Land Programme
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67
note that the Kāinga Ora Land Programme will enable it to strategically
purchase land to increase the pace, scale and mix of housing developments,
including more affordable housing [CAB-21-MIN-0061 refers];
68
note that officials are currently preparing further advice on the detailed
parameters of the Kāinga Ora Land Programme for approval by the Ministers
of Finance and Housing in mid-June;
Land for Housing Programme
69
note the additional $50 million of funding for the Land for Housing Programme
will allow the Government to acquire land in more places, at prices that will
increase affordable supply, and a wider range of housing tenures;
70
note that Cabinet has authorised the Ministers of Finance and Housing to
agree new programme level targets and investment principles for the Land for
Housing Programme [CAB-21-MIN-0061 refers] that will further refine
priorities for the funding;
Refocused Residential Development Response Fund –
s 9(2)(f)(iv)
71
note that the Residential Development Response Fund was originally
established to support residential construction activity during COVID-19, but
that the risk of a potential decline in new house building and construction
sector jobs has not materialised; under the
72
s 9(2)(f)(iv)
73
s 9(2)(f)(iv)
74
s 9(2)(f)(iv)
Purpose-built rentals
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75
note that Cabinet sought a report back on how government can further
support increased delivery of high-quality rentals at both market and
subsidised rent, including the impact of the Overseas Investment Act and tax
treatment [CAB-21-MIN-0061 refers], and I intend to provide that report back
in the middle of the year.
Authorised for lodgement
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Hon Dr Megan Woods
Minister of Housing
Hon Peeni Henare
Associate Minister of Housing (Māori Housing)
under the
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42
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s 9(2)(f)(iv)
under the
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43
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under the
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44
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under the
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45
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46
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47
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under the
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48
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under the
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under the
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50
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