On Sunday Bill English announced a co-investment of up to $600m for network infrastructure needed to support more greenfield growth in north and south of Auckland. This will be through a Crown company called Crown Infrastructure Partners (CIP), formally Crown Fibre Holdings. CIP is a special purpose vehicle (SPV) that has the power to set up companies to build and own the trunk infrastructure needed for housing developments. It can then recoup revenue over a longer time period from from councils through targeted rates and volumetric charging. The SPV’s will not be limited to Auckland, however, it made sense to roll them out here first.
The creation of a SPV was needed as the announcement of the Housing Infrastructure Fund (HIF) just over a week ago were loans from Central Government. This was an issue, particularly for Auckland due to the Council already being close to the revenue to debt ratio limit. This meant that Council could not take on too much debt, thus limiting the potential impact of the HIF for Auckland. With this new structure the debt sits on the SPV’s balance sheet rather than the Councils and the revenue is from those direct sources so the debt limits don’t become an issue. This funding is needed as without the trunk infrastructure, many developments simply cannot feasibly go ahead. Its homes built not consents issued that really matter.
The government believe the SPV’s will give more confidence for the private sector to invest with Joyce saying:
“We learnt from the ultra-fast broadband programme that if we de-risk some of the early stages of the investment, we can bring in private sector investors to take on much of the heavy lifting as the investments mature,” Mr Joyce says. “We would expect the Crown’s investment in each project to be matched with at least one to one with private sector investment over time.”
The Government believes this investment will accelerate the development of 23,300 homes, including 5,500 homes in the north in the greenfields at Wainui and 17,800 homes in the south across Pukekohe, Paerata and Drury. In addition they claim it will facilitate 5,000 jobs in a business park development adjacent to the Stevenson Drury Quarry itself out of around 15,400 jobs across Auckland as the wider impact of this development. This is exected to add $2.3 billion in total to the regional economy every year. The projects mirror closely what we have already seen mentioned for Transport for Future Urban Growth (TFUG).
Of the up to $600m total, $387m of the funding would go to projects Pukekohe, Paerata and Drury area. About $215m of that would be for transport and $172m for water. This spending is broken down across the following projects:
- New Paerata water main – $30m
- New Paerata sewer – $40m
- Drury West wastewater reticulation – $20m
- Drury South pump station – $25m
- Bremner Road sewers – $2m
- Bremner Road pump station – $20m
- Paerata storm water – $1m
- Pukekohe storm water – $26m
- Rail stations at Paerata and Drury West – $60m
- Paerata rail crossing – $20m
- Bremner upgrade – $38m
- Mill Road, Great South Road/Spine Road – $97m
It is great to see a commitment to new rail stations at Paerata and Drury West which will provide a congestion free alternative for these new residents instead of the gridlocked Southern Motorway. These stations will be timely too, and work in combination with Auckland Transport buying battery trains to extend the electric services to Pukekohe. The $60m for two the stations does seem fairly expensive though given I would assume these would be pretty standard suburban stations. It’s also unclear why the other new station planned in the area, at Drury (east of the motorway) is not being built at the same time. It is also good to see the removal of a level crossing seen as a priority and hope that this is only the first bit of funding to eventually remove all of Auckland’s level crossings.
In the north at Wainui, $201m of the funding is expected to go to the following projects:
- New Wainui Reservoir – $15m
- New water supply booster pump station – $10m
- New Wainui sewer and pump station – $25m
- Wainui Storm water – $2m
- Wainui Arterial Road – $60m (Hopefully this will be a multi-modal street rather than just a road)
- Curley Ave Bridge – $89m
Like with the HIF, the sole focus of the Government seems to be on greenfield growth with nothing to help enable large urban redevelopments. Further, a large percentage of the funding still going to roads. Where is extending the Busway further north from Albany for example?
It is very clear Sprawl is still King for this Government.