On Newshub Nation: Simon Shepherd interviews Housing and Urban Development Minister Phil Twyford

• Housing and Urban Development Minister Phil Twyford says the new Housing and Urban Development Authority (HUDA) will act "in partnership" with local iwi, councils and the private sector. “We’re creating a really joined-up one-stop shop that can sit alongside the council and unlock these big developments and allow us to crack into it with pace and scale.”

• Mr Twyford said while the agency will also contain Housing New Zealand subsidiary HLC, becoming the Government's primary provider for housing, there would be no change for HNZ tenants. “There will be no significant difference for those people. I want to reassure them that their rent, their tenancy arrangements, their houses - that's not going to change at all."

• The HUDA will have broad powers, including being able to ignore existing council designations, amend or write its own by-laws and grant its own resource consent, and councils will have no veto power. "It's going to be a tooled-up agency that can cut through the red tape," said Mr Twyford.

• He said land use regulation and the rules that govern development projects had been solely in the hands of councils and that was "not working". “We have to change things, and we’re putting central government in there to work alongside councils.”

• He said he hoped the authority will mean developments could go “from concept to building within 12 months”.

• Mr Twyford said the HUDA will have a $100 million injection to get it started but will also have access to Kiwibuild and Housing NZ Funds, because state homes and Kiwibuild funds would be part of the projects.

• The HUDA will also have the power of forced acquisition, where private land owners can be can be forced to sell to make way for a development - but the minister says the powers are just "in the back pocket". "I don't think it's likely at all that someone's private property or their house will be acquired for one of these projects."

• Mr Twyford said the cost of Kiwibuild had not been underestimated, and he would not be asking for more funds in the next budget. He said the point of the $2 billion fund was to be "recycled over and over”.

• He said victims of the meth testing debacle would soon be compensated. “Every tenant who has come forward and has their eligibility for payment under the scheme we set up, we will get their payments [to them] before Christmas.” He said Housing New Zealand was proactively working with MSD to try and track down people eligible for compensation who haven’t yet come forward.

• He said those who had been unfairly kicked out of homes were being prioritised on the HNZ waiting list. “People should not be living in cars. And my advice is that Housing New Zealand is doing everything it can to make sure that people who were affected in that way, that that situation is put right.”

Simon Shepherd: A new super-agency with so-called ‘cut-through powers’ is to be set up to fast-track major developments to tackle the housing crisis. Legislation will be introduced to parliament next year to establish the Housing and Urban Development Authority, with its first projects up and running by early 2020. Housing and Urban Development Minister Phil Twyford joins me now. Good morning, Minister. Thanks for your time.

Phil Twyford: Good morning.

What exactly will this new Crown authority do?

It’s a new organisation designed to partner with the private sector, with councils and with iwi to do large-scale urban development at pace and with quality. We have to build a lot of houses. We’ve inherited a 70,000 shortfall of dwellings, a construction industry that is really struggling, lack of workforce, a planning system that gets in the way of development instead of encouraging it. And this Urban Development Authority we’re announcing today is designed to lift the level of ambition to allow us to build whole new communities with great transport connections, good urban design — all the things that strong communities need — with lots of affordable housing.

Okay, so one of the key roles, it’s going to be a public landlord. Does that mean it’s going to consume Housing New Zealand and replace it?

Yeah. Housing New Zealand — our government public housing landlord — is going to sit within this new organisation. It’s going to be a group, really, the organisation, that is the government’s delivery agency for housing, for building whole new communities and the built environment. And Housing New Zealand, who are landlords to some 68,000 tenants around the country, also have built up in recent years a pretty impressive developer capability and the ability to develop land with infrastructure for housing. We need those capabilities within this new authority, and rather than have a whole lot of different competing agencies, we’re bringing them together in one very capable, very focused organisation.

Okay, well, let’s talk about Housing New Zealand. It’s going to sit under this development authority umbrella. Is that a reaction to the way it’s handled the meth-testing crisis? Does it need more supervision?

No, not at all. Housing New Zealand is actually in very good shape at the moment. It’s well-led, it’s come through that meth-testing fiasco on the front foot, and it’s well on the way to becoming a 21st century public housing landlord.

Does it mean anything different for Housing New Zealand tenants?

For Housing New Zealand tenants, this will mean no change. There is no significant difference for those people, and I want to reassure them that their rent, their tenancy arrangements, their houses — that’s not going to change at all as a result of today’s announcement.

All right. So the other key role, as you just pointed out, was the urban development work. Basically, this is a vote of no confidence in local council’s ability to develop their own cities. Is that right?

Well, we want to partner. We’re putting central government in there to work alongside councils and the private sector and iwi, who are very keen to be part of the solution with these big developments. You know, there are so many things that slow down and get in the way of development, and it’s not just the planning system. Often, developers have to deal with 10 or 15 different local government and central government agencies. It’s a nightmare for them. You’ve got issues of aging infrastructure and often multiple land titles, so we’re creating a really joined-up one-stop shop that can sit alongside the council and unlock these big developments and allow us to crack into it with pace and scale.

‘Pace and scale’ is your catchphrase for this. Essentially, this new agency can do everything, as you’re saying. It can ignore existing council designations, grant its own resource consent for developments, build infrastructure, change reserves, amend, suspend or write its own by-laws. What checks are there going to be on this agency?

It is going to be a tooled-up agency to do this job and cut through the red tape and the roadblocks that are stopping housing being built, but we have put checks and balances around it. They are, for example, a number of decisions will end up having to go to be signed off by the relevant Cabinet minister. The plan for a given project will be open for public submissions, just like the Auckland Unitary Plan was, with an independent hearings panel headed by an Environment Court judge.

OK, so there is that consultation. The relevant minister is you, isn’t it?

Well, if it’s a parks and reserves issue, it goes to the Minister of Conservation; if it’s a matter that affects Maori property rights and interests, it would go to the Minister of Maori-Crown Relations.

But the overall decision is done by you, as to whether particular development goes ahead?

It would go to Cabinet, so it’s a collective. So it really— they get signed off at the highest level of government.

You’re talking about consultation. What about consultation with councils? You want to do this at pace and scale, so you’re going to be shortening this process, aren’t you?

Yeah, we are shortening the process, but we need to. You know, Simon, at the moment, typically, a large project like this could take anything up to five years to go from concept to building. We want to shorten that to one year, but we are structuring into this the necessity for the Urban Development Authority to seek the agreement of, and negotiate with, councils on these plans.

Will councils have the power to veto any proposals?

No, they will not.

So you are riding roughshod over councils in their own backyards.

Well, we’re changing the settings. Up to now, land use regulation and the rules that govern development projects basically have been the sole domain of councils. That’s not working. We have to change things, and we’re putting central government in there to work alongside councils.

Okay.

We have to build a lot of houses.

You talk about consultation. I’ve been told that the consultation period’s going to be six months only. That’s an extreme shortening. Is that correct?

Well, I hope that we can go from concept to building within 12 months with this new process.

So the consultation period is going to be six months?

We haven’t set a timeline on a number of months on the consultation process, but it is likely to be a number of months where the public will have a say before this independent hearings panel, and there are a couple of other public consultation opportunities that are built into the process — right at the beginning, when the concept is first floated, and then when the draft plan is first put on the table.

One of the powers that this agency will have is compulsory acquisition, so you can go in and buy private land for development or on-sell it. Under what circumstances are you going to go in and buy somebody’s house to make way for a development?

So we’re not proposing to make any changes to the current powers that exist within the Public Works Act, and I don’t think that it’s likely at all that someone’s private property or their house would be acquired for one of these development projects.

What if it’s in the way of a parcel of land that you’re trying to develop?

Yeah, well, I think that the international experience shows and the former government, when they were looking at this Urban Development Authority proposal, they took advice on this, and they concluded, and I agree with them, that you need to have those public works act powers in your back pocket so that you don’t get a single landowner blocking a large development in order to make a windfall gain. But, look, I don’t think the public of New Zealand would be prepared to tolerate wholesale acquisition of lots of private property and people’s homes to then go into a development project that would produce commercial or private outcomes, but you’ve got to have the powers there in your back pocket.

Okay, so what about green spaces? Now, it says here that you can take and amend reserves, all sorts of land, even historic land. So if you take those green spaces away from council, do you have to replace them?

Yeah, so imagine 30 hectares of land — like the Unitec block in Mount Albert that will be one of the first of these urban development projects — if you’re going to produce, for example, more density, more apartment blocks and so on, you’ve got to have high quality open space and parks. Now, the existing parks in a project area might not be suitable. They might have been designed 80 years ago. So the authorities have got to have the ability to reconfigure those spaces. But any changes that are made to the parks in a project area will have to be signed off by the Minister of Conservation. We recognise that the public rightly cherish open spaces and reserves.

So the Minister of Conservation can sign off on that, but what about council parks?

Well, the council will be consulted and part of the planning process that determines the layout of the parks, the roads, the neighbourhoods in a given project.

All right. So how much— I mean, this is about easing the housing shortage. How much difference do you think it will make to the country’s housing crisis?

I think it’s got the potential to make a massive difference. So in Auckland, for example, if you get 12 or 15 of these large scale projects happening in places like Unitec, alongside the light rail corridor across the isthmus, places like Roskill and Mangere, these big projects have the potential to generate, say, 500 new homes each project per year. We get 10 of those projects going. That’s a pretty significant contribution of new housing and new affordable housing.

Well, that’s great, but who’s going to build them? The construction industry’s already really full of capacity at the moment. You don’t have enough workers.

So we’ve inherited big constraints in that area, and we’re working to fix them. And one of the main ways that we can fix them is by giving firms confidence and certainty over multiple years that there is a pipeline of work available to them. These large projects is one of the ways that we aggregate supply. We’re building thousands of new homes and contracting large volumes of that work to firms that can scale up and build their workforce.

How are you going to fund this new agency? Who’s going to pay for it?

Well, we’ve tagged $100 million to get it started. But it’s also going to have access to KiwiBuild. A lot of KiwiBuild homes are going to be built in these projects, and that has its own independent finance through the $2 billion fund— recycling fund. Also, Housing New Zealand will be using its balance sheet to build homes. But critically, this is about, above all, partnering with the private sector. And they, of course, bring their own capital, their own ability to invest.

All right, so you just mentioned KiwiBuild. It’s coming under this new authority. Do you still think that you’re going to have 1000 KiwiBuild houses completed by July, which is your target?

Well, that’s what we’re aiming for. We’re working flat out to do that. And I’m very hopeful that we will achieve that target.

You’re still very hopeful? Because at the moment, that means you’re going to have to complete four houses every day until July next year. That doesn’t seem feasible.

So don’t forget, the excavation season is only just beginning, where you can do earthworks to prepare sections for development. So you’re going to see an exponential growth in the latter years of the season towards the end of the financial year. But, look, we’re starting from a standing start here. The former government didn’t do any of this. We’re building affordable homes for first home buyers, and we’re starting from scratch, so that—

And this is your target. This is your target, and you’ve got to get another 900 built by July next year.

Yeah. And it’s not easy, but that’s why there’s a ramp up — 1000 in the first year; 5000 in the second; 10,000 in the third.

Two billion allocated for KiwiBuild. Have you underestimated what it’s going to cost? Are you going to have to go back to the Budget next year and say, ‘Give me some more billions’.

No, we’re not going to have to do that. The point about the $2 billion fund is that a) it’s recycled over and over.

Okay.

And b) many of the KiwiBuild houses that we’re building don’t require the government to spend a dollar, and that’s why we’re doing it through a buy-off-the-plan scheme. We’re underwriting, taking the risk out of building affordable homes for private developers. In most cases, we’re not going to have to spend a dollar to do that. Also, through the Land for Housing channel — one of the other ways that we’re building KiwiBuild homes — we provide a block of land to a developer, they build affordable homes on it, they don’t have to buy the land until at the end of the project, so that’s a much smaller investment to build a larger number of homes.

Are you building these places in the right places? So, for example, the Marfell development in New Plymouth — $450,000 homes being built in the middle of homes that have CVs of $200,000. That population there isn’t going to afford a $450,000 home.

So in New Plymouth, we’re building— those KiwiBuild homes are going to be under $400,000. There’ll be a number of them that will be $380,000. That is way under the average for New Plymouth as a whole. That’s an investment of about $23 million to revitalise a community in New Plymouth that was left ravaged and vacant by the last government.

But they can’t afford them though, can they?

But people in New Plymouth can. There’s a real shortage of high quality affordable homes for first home buyers in New Plymouth, and we’re building them.

So you’re replacing one poorer community with a rich community. Are you pushing people out of their communities?

No, not at all. That community has largely been left vacant. The houses were demolished years ago, and that suburb has been left empty with a few old state houses that were sold into private ownership under National. We’re revitalising that community. And we’re building 30 new state houses in other parts of New Plymouth.

All right, I want to quickly move on to Housing New Zealand and the meth-testing debacle — evicted 800 tenants over the faulty meth testing; 200 are eligible for compensation. Are they going to get that compensation as promised before Christmas?

So I promised that every tenant who has come forward and has their eligibility for payment under the scheme we set up, we will get their payment before Christmas. And Housing New Zealand is now working overtime not only with people who have come forward and said, ‘Look, I was affected by this. I was kicked out. It wasn’t fair’; Housing New Zealand is also trying to track down people who haven’t come forward by working through MSD to find out where those people are and let them know that they could be eligible.

And to give them that compensation and make sure that it doesn’t come off their benefit, you need a legislation change. When’s that happening?

It’s not legislation; it’s a regulation change that will go through Cabinet very shortly. It’s a pretty simple administrative thing. Look, this meth fiasco should never have been allowed to happen. It was a massive public policy failure right across government. We’ve cleaned it up. We’ve fronted up and said, ‘Look, Housing New Zealand and the former government got this wrong, and we are putting it right.’

One of the women affected said she’s heard that she’s going to get compensation before Christmas — next week, in fact — she’s still living in her car after being evicted. And Housing New Zealand doesn’t know when she’s going to get a home. Should these people be prioritised on this list?

Well, my understanding is that they have been prioritised. People should not be living in cars. And my advice is that Housing New Zealand is doing everything it can to make sure that people who were affected in that way, that that situation is put right.

Okay, Housing Urban Development Authority Minister, thanks very much for your time.

Thank you.

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