The Government is moving ahead with a package of reforms designed to improve how infrastructure is funded and financed to support housing and urban growth across New Zealand.
Housing Minister Chris Bishop, Local Government Minister Simon Watts and Commerce and Consumer Affairs Minister Scott Simpson said the changes form a key part of the Government’s Going for Housing Growth programme, which aims to address constraints in land supply, infrastructure delivery and incentives for development.
Bishop said the new approach is intended to create a more flexible funding system aligned with the Government’s planning reforms.
Going for Housing Growth is built around three pillars: freeing up land and removing planning barriers, improving infrastructure funding and financing, and providing incentives for communities and councils to enable housing.
“The Government’s changes will create a flexible funding and financing system to match a new, flexible, planning system,” he said. “Our Going for Housing Growth programme focuses on fixing the fundamentals of our housing crisis: land supply, infrastructure, and incentives for growth.”
As part of Pillar 2, the Government has introduced the Infrastructure Funding and Financing (IFF) Amendment Bill to Parliament, opened public consultation on an exposure draft of the Local Government (Infrastructure Funding) Amendment Bill, and agreed in principle that the Commerce Commission should become the regulator for development levies.
Bishop said the reforms are aimed at enabling more housing to be built, faster. “We know that freeing up land for development is only part of the solution – we also need better tools to fund the infrastructure that makes new housing possible.”
The IFF Amendment Bill is intended to remove barriers that have limited uptake of the IFF Act. Bishop said the amendments will simplify the levy approval process and expand the scope of eligible infrastructure to include transport projects delivered by the New Zealand Transport Agency or KiwiRail, and water services delivered by new water organisations.
Only two levies have been established under the current Act, both initiated by councils rather than developers.
Public consultation has also opened on the exposure draft of the Local Government (Infrastructure Funding) Amendment Bill, which proposes replacing development contributions with a new development levies system.
Watts said the new approach will give councils greater flexibility to recover infrastructure costs and ensure more consistency nationwide.
Key features include separate levies ring-fenced for specific infrastructure services, levy areas expected to be larger than existing catchments, and the ability for councils to charge additional levies in high-cost locations.
The draft bill also proposes a prescribed methodology for councils and infrastructure providers to calculate growth costs and standardised growth units, as well as consideration of different models of infrastructure delivery, including support for first-mover developers.
Watts said the reform represents a “generational shift” in how infrastructure is funded and urged councils, developers, iwi and the public to provide feedback. Consultation runs until February 2026, with further legislation expected in mid-2026.
Cabinet has also agreed in principle that the Commerce Commission should regulate development levies, subject to further work.
Simpson said the Commission is well placed for the role given its existing economic regulation responsibilities, including for water services.
Watts said appointing an independent regulator would promote transparency and fairness in how levies are applied.
Bishop said the reforms are designed to give councils and developers a more flexible toolkit to respond to growth pressures and deliver infrastructure for new housing.
“As a package, these changes will provide councils and developers with a flexible funding and financing toolkit to respond to growth pressures and deliver infrastructure to land zoned for housing development,” he said.