The Auckland Mayor is elated with a new initiative to sort out infrastructure issues that are holding up housing development.

The government is setting up a company called Crown Infrastructure Partners to fund transport and water connections to new housing areas, which is being kicked off with a fund of $600 million.

Phil Goff said that cash will bring forward the construction of more than 23,000 new homes in South and North Auckland, much earlier than would otherwise be possible. It will also be used to pay for things such as transport and water links for new developments.

"It means that we can get on, we can get the houses built, we can build them more quickly and we can restrain the pressure on house prices."

The cash will come from charging new residents a special targeted rate and higher water bills over a 20 to 30-year period.The 

Mr Goff explains there are constraints on any further Council borrowing.

"If we borrow at a higher ratio than we are now, we lose our credit rating and every council across New Zealand likewise will lose their credit rating."

Phil Goff says the new company allows for infrastructure spending, without putting debt on councils' books.

"If we borrow at a higher ratio than we are now, we lose our credit rating and every council across New Zealand likewise will lose their credit rating."

Property Council CEO Connal Townsend explained councils have tight debt rules, which this solves, as the Crown will retain the legal ownership of the debt.

Mr Townsend said this "solves an insurmountable problem."

"It's neat, it's elegant, it should be effective and it should really start to get things moving."

Connal Townsend said it should help to solve the problems currently holding up developers.

"We've got developers looking at sites, we're all set to go but Watercare in Auckland for example are just unable to bring the water onto site, because they simply just don't have the money."

There's also support, of a sort, from the Labour party for the new approach.

Labour MP Phil Twyford said it's worth having a crack at making this model work.

"It's a way of trying to keep the infrastructure debt off the Council's balance sheet and off the central government's balance sheet and I think it's got to be applauded as a step in the right direction."

But Mr Twyford wants to know why it's taken the Government so long to come up with the plan.

"Auckland Council's been saying for the last five years, 'Look, the city can't grow because we don't have enough new infrastructure and we don't have a way of financing it.'

"And now, a few weeks out from an election, the Government finally comes up with something."

Meanwhile ACT Party Leader David Seymour called it a weak response to the country's infrastructure and housing shortfall.

"It's a Labour Party solution of creating more bureaucracy, rather than allowing free markets to function."

Mr Seymour said the approach is too convoluted and is suggesting another option.

"What they should be doing is giving half the GST on construction costs to councils, no strings attached."