The Government has launched a $400 million fund over four years to incentivise councils to enable housing growth and cover infrastructure costs associated with new developments.
Deputy Prime Minister David Seymour, Housing and Infrastructure Minister Chris Bishop and Local Government Minister Simon Watts announced the Incentives for Growth Fund, which will distribute $400 million over four years through a tagged contingency.
How the fund works
Councils will receive payments based on a proportion of the national average new dwelling consent value, with payments structured to be higher for councils that enable higher rates of growth.
For each new home consented up to 1% of a council's existing dwellings, councils will receive 0.25% of the national average consent value. For consents between 1% and 2% of existing dwellings, the payment rises to 0.5%.
Beyond 2% of existing dwellings, each new consent will generate a payment of 1.25% of the national average consent value.
Payments will commence from 1 April 2027 for consents granted in the year to 31 January 2027.
Addressing infrastructure costs
The fund aims to address a barrier to housing development: new housing developments can involve costs to existing ratepayers to provide infrastructure and services before houses can start construction, which acts as a disincentive for councils to approve new homes.
Seymour said the fund "transforms development from being a source of cost to a source of revenue".
He added: "The only time you get prompt service from a council is when they're issuing a parking ticket. They'll come to you, anywhere, anytime, because there's money in it. Imagine how many consents they'd issue if there was money in it for them?"
Part of broader housing programme
The Incentives for Growth Fund is part of the ACT-National Coalition Agreement and forms the third pillar of the Government's Going for Housing Growth programme.
The programme has three pillars: freeing up land through RMA reform, improving infrastructure funding and financing tools, and improving incentives for councils to support growth.