John Key flags China options for Auckland's development

Key said Auckland Council's ability to fund infrastructure was constrained by its balance sheet. Photo / Dean Purcell

The Prime Minister has raised the prospect of Chinese companies funding and building infrastructure in a bid to speed Auckland development.

He says an urban development authority is an option as is allowing companies - including from China - to directly fund and build some of the city's infrastructure.

"If Auckland is going to grow at a consistently faster rate than it historically has, it needs to build the infrastructure to match that more ambitious growth rate," Key said at a lunch hosted by the Chinese Chamber of Commerce.

"It can't have the lead times that it's historically had. If you look around the world, urban development authorities have been used quite successfully in Australia and [elsewhere] to support faster infrastructure in a more contained way. We've got to do a bit more creative thinking".

Key said Auckland Council's ability to fund infrastructure - including the City Rail Link which he predicts will "almost certainly cost more than they thought" - was constrained by its balance sheet.

Asked if Chinese construction firms could build "horizontal infrastructure" - largely roads, rail and pipelines - he asked local bodies had turned down that option in the past.

The potential for Chinese companies to be involved in building horizontal infrastructure was raised by China Construction NZ managing director Timothy Yang.

Yang said he emigrated to New Zealand in 2001 and, after a period working in China, had returned to Auckland to find slow progress compared with Pudong, which in just 20 years had transformed from paddocks to a commercial area linked by five bridges and 11 tunnels to old Shanghai.

Hear Prime Minister John Key speak to NewsTalk ZB's Mike Hosking on the issue here:

"Is there any need for Chinese construction companies to help New Zealand with building infrastructure and developments?" he asked.

China Construction NZ is owned by a subsidiary of the world's third-largest construction company, China State Construction Engineering Corporation, ranked at 299 in the Financial Times Global 500.

Yang emphasised the Chinese Government had encouraged the firm to export its experiences, technology, resources and financial capability to the world.

China Construction had worked with Shanghai Pengxin to fund and build the $387.8m four-lane Penlink highway to Gulf Harbour.

But he said after two years working with local government it had "not got anywhere". Key said he had been approached by several developers who said they would build the horizontal infrastructure for developments with no request for funds from the council because they're "happy to finance upfront the horizontal infrastructure and happy to get it back through the development contributions essentially from the buyers".

"We are turning our mind to those issues. It might require some sort of changes," he said.

"But built to the right standards with the right conditions I can't see why that wouldn't be possible.

"As you pointed out, you are building huge constructions around the world, there's no reason why you can't build that here."

Key later told the Herald that Auckland Council's ability to fund necessary infrastructure was also constrained by its refusal to sell assets.

"There's a lot of thinking happening in Government, about how we can ensure urban development and that infrastructure is built more rapidly."

Key said the Government was considering how to streamline the process.

"There's been a number of changes from the national policy statement to the special housing areas, so the current proposed reforms are the RMA, so we're really trying to tie all of those together and consider what the next steps might be."