Building Minister says Cabinet considering granting compulsory acquisition powers for Urban Development Authorities; initially says could be used to combat land-bankers, but then back-tracks; Reaction mixed

By Bernard Hickey

Housing and Building Minister Nick Smith has signalled Cabinet will consider creating Urban Development Authorities (UDAs) with the power to compulsorily acquire land, including from land-bankers.

However, he has cautioned that compulsory acquisition would not be used specifically as a tool to target land-bankers.

Smith was reported as telling reporters on the fringes of the National Party Annual conference in Christchurch after Prime Minister John Key’s announcement on Sunday of a NZ$1 billion Housing Infrastructure Fund that Cabinet would consider whether to use the acquisition powers of UDAs to buy back land off land-bankers.

“Obviously the issue of overriding private title for development is a big call, but my view is if we are going to get the quality of urban development, particularly in the redevelopment area where you can often have a real mix of little titles that makes doing a sensible development difficult, in my view it’s one of things we’ll need to consider,” he said.

However, he later told The NZ Herald that a UDA would not be specifically aimed at land-bankers.

“You can have an area of redevelopment where there may be 50 or 100 titles, and the bulk of the landowners want to be part of the redevelopment, but you can have a small number holding out,” he said.

Reaction to Fund mixed

Meanwhile, Auckland Council figures argued the fund may not be big enough and may need to be used to beef up existing infrastructure, as opposed to just building new infrastructure.

Labour MP and Auckland Mayoral Candidate Phil Goff welcomed the fund, but indicated it would not be enough.

“The amount itself is not very much when split five ways and will be used quickly,” he said.

Outgoing Auckland Mayor Len Brown challenged the Government’s assurance that the Fund would only be spent on brand new infrastructure, suggesting the potential for the fund to be used on the new 13 km central ‘Interceptor’ waste water tunnel from Western Springs to Mangere, which is scheduled to begin construction in 2018 at a cost of NZ$950 million.

“In the brownfields areas we need to in effect re-constitute some of our underground water and waste water supplies, so for example the major ‘Interceptor’, the work going on there through the isthmus area,” Brown told Susie Ferguson on RNZ Morning Report.

“We would be looking to say to the Government, it is within existing infrastructure, but we’re completely re-configuring and re-boring it to enable much greater development,” he said.

“We know there’s a lot of discussion to be had on how it will be interpreted, the definition of various parts of it. In amongst that, we most definitely want to apply some of this billion to really ensure the development of brownfields activity.”

‘Piecemeal, centralised and not enough’

Labour Leader Andrew Little accused the Government of launching “rushed and piecemeal” policy that would not sustainably address the NZ$19 billion infrastructure bill hanging over Auckland.

“Instead of on-lending a billion dollars to Councils, the Government should reform the way infrastructure is funded by adopting Labour’s plan for bond-financing paid back by targeted rates,” he said.

Green Co-Leader James Shaw said the Fund was a subsidy for developers and too focused on building roads between houses, rather than the houses themselves. He also questioned how many affordable houses would be built, given houses built on the fringes tended to be larger and much less affordable stand-alone homes.

“The market typically builds bigger houses that target high-income earners, so the Government needs to put conditions on its loan to ensure affordable housing actually gets built,” he said.

ACT MP David Seymour described the policy as a “paper tiger” that aimed to create a bureaucratic new fund that centralised power.

“A more substantial policy would be a rule that gives Councils a share of the GST collected from new construction projects in their district. That would give Councils the funds and incentives to build infrastructure, without adding the bureaucracy of a contestable fund,” he said, referring to the NZ Initiative’s recent proposals for new funding techniques to encourage Council to enable development.

There was also debate over the number of new houses that the fund could enable.

John Key told reporters it could be tens of thousands, but Brown said it would be more like hundreds or thousands than tens of thousands.

Key did not answer a question in the above interview on RNZ about why the Government did not simply build the houses itself, saying there was no shortage of private capital for developers.