The Auckland deal will create 60,000 houses, for sure. But at the moment the city needs 14,000 more a year. (Photo \ Getty Images)

Andrew Dickens: NZ housing crisis only just getting started

Author: Andrew Dickens,
Publish Date: Thu, 13 Jul 2017, 7:19AM

I was watching the television the other day when the government announced the cities that received their share of the $1 billion infrastructure handout that government decided to grant a year ago.

There were pictures of happy Waikato councillors saying that now they can build a $100 million bridge across the river. In Auckland beaming politicians talked about how this money will help ease the housing crisis.

So I've waited a couple of days to see whether the reality sinks in and it hasn't.

I don't think a lot of people realise that this is not government spending but a loan. An interest free loan, admittedly, so don't look that gift horse in the mouth. But a loan nevertheless.

So in Auckland's case the ratepayers will have to pay back that $300 million in 10 years time. The council is now even in more debt and I'm not sure many ratepayers will like that. The debt will sit around glowering on the books and be noticed by all the other lenders to the city. Same with Hamilton's bridge. This is not free money. Their only contribution is some interest in a low interest environment. It's a bit whoopy do.

The Auckland deal will create 60,000 houses, for sure. But at the moment the city needs 14,000 more a year so in 5 years the problem is right back where it started from. Auckland gets $300 mill for some suburban roads, water and drains but what it really needs is $4.5 billion. And it doesn't look at transport which in the next 10 to 15 years years needs over $20 billion.

There's other strange things about the handout. All the developments in Auckland, Hamilton, Tauranga and Queenstown involve developments on the edge of the cities which has ramifications for congestion and roading, which the government and council will have to pick up the bill for down the track. For instance the Papamoa development will further stress State Highway 2, so this is not the end of the government's liability. In Hamilton it's going to be spent on a suburb called Peacocke at the very southern edge of the city. State Highway 1 to the south is going need a load of cash to cope.

In Auckland the money will be spent on an area called Redhills in the West. Surprisingly that area was never part of the Unitary Plan. So is the government over-riding the council's plans? The other thing about Redhills is that the government will have to throw cash at State Highway 16 to cope with that development. If they threw money at southern Special Housing Accords they wouldn't have that problem.

The point I'm making is that this fund really is some sticky tape over a festering wound. It's actually a pretty pathetic response to some plain realities. After some breathless headlines about Auckland's house prices that suggested the housing bubble is deflating I have a word of warning.

The housing crisis in New Zealand has only just started. And we will all have to pay for it. Sooner or later. And we are not learning our lessons.