Media release: Report calls for infrastructure financing shift
Wellington (Tuesday, 11 July 2023) – The New Zealand Initiative’s new report suggests better tools for infrastructure funding and financing.
Chief economist Dr Eric Crampton argues infrastructure funding and financing are a root cause of New Zealand’s housing shortage. Better debt funding would let those benefitting from new and renewed infrastructure cover its cost over the long term. And it would give communities more options to come together to support necessary projects.
Strengthening the Infrastructure Funding and Financing Act to enable more project-based financing would help to unlock the infrastructure needed to support housing growth.
The report also recommends expanding existing Business Improvement District Policies to allow other groups to establish similar districts and to take on debt to finance needed works.
These revisions would empower local communities to initiate and finance their projects, such as local flood protection, without sole dependence on council or government support. It provides an alternative to waiting for council-initiated projects, unlocking the potential for more locally-focused works that truly serve community needs.
"Communities are often best-placed to know what works are needed. If they had the tools to spread the cost over time, they would be able to take the lead," Dr Crampton states.
Dr Crampton continued, “A century ago, the Ngaio Progressive Residents Association, a local community group, wanted a town hall. It didn’t have to beg Wellington Council to build it. Instead, the Association’s members voted to pay higher rates over the next decade to repay the loan that funded the project.”
A century later, Ngaio’s Hall still serves its community.
Better infrastructure funding and financing is not a silver bullet for solving the housing shortage. But it would help. Councils would have one less reason to say no to urban growth. And it would also help communities needing to fund and finance other long-term infrastructure.
ENDS
Read our research note: Funding the Future: The case for special purpose bonds here
Dr Eric Crampton is available for comment. To schedule an interview, please contact:
Dr Eric Crampton, Chief Economist
E: eric.crampton@nzinitiative.org.nz
P: 021 233 4527
Amanda Boyd, Marketing & Communications Manager
E: amanda.boyd@nzinitiative.org.nz
P: 04 499 0790