Westpac sees housing solution in PPPs

David McLean. Photo / Greg Bowker

One of New Zealand's biggest banks wants to fund large-scale housing projects and its chief says public-private partnerships could help to solve Christchurch's woes and the leaky home disaster and house Auckland's rapidly expanding population.

David McLean, Auckland-based head of Westpac Institutional Bank, is today raising the issue of PPPs to create affordable housing in his address to the Community Housing Aotearoa conference in Auckland.

McLean wants to spark a public discussion on the issue, citing the scale of damage to Christchurch housing, the leaky homes issue and Auckland's ongoing population expansion.

"Westpac would like to participate in providing well-planned large-scale housing initiatives. We would like to get to know the not-for-profit housing providers here today," he said.

The bank already has experience in affordable housing PPPs through funding the Bonnyrigg project, not far from Parramatta in New South Wales, he says, where the first stages of a vast urban renewal of state housing are under way.

Westpac NZ took politicians from both sides of the House to see this $1 billion urban renewal project, he said.

Public or state housing there was extremely rundown and McLean showed photographs of dilapidated houses with windows barred. But its PPP redevelopment would eventually see 800 houses replaced, 2500 new houses built and a new structure established for ongoing management of 833 houses, McLean said.

"Bonnyrigg was the first social housing PPP in Australia."

The urban renewal project is being run by the NSW Department of Housing and Westpac is acting as a senior debt financier and an equity investor. Of 18 stages in the process, stages one and two are completed and 220 houses are occupied. Stage three was now under way, he said.

The bank recognises the social issues present in community-based housing, he says. It also understands the social role it can play in supporting solutions and balancing commercial and social objectives.

"New Zealand has a once-in-a-generation opportunity now to make a difference in many New Zealanders' lives. The nature and scale of the problem obliges us to look for new solutions. I firmly believe that PPPs complement other affordable housing initiatives, including the not-for-profit sector's," McLean said.

Although a project like Bonnyrigg in Australia might not be suitable for New Zealand, McLean said Westpac wanted to create some successful New Zealand examples of housing built by a partnership of all sectors working together.

Mark Binns, head of infrastructure at Fletcher Building, has expressed scepticism about PPPs, which he says have been discussed for many years in New Zealand but amounted to little. Many projects are too small to make the method work and he questioned the costs involved.

Andrew King, vice-president of the NZ Property Investors' Federation, was sceptical about McLean's suggestions and the NSW project.

"There's nothing wrong with the PPP model although I think you have to watch the numbers - if there's too many people involved, all clipping the ticket, that can increase the costs," he said. He criticised moves to transfer housing to not-for-profit organisations, saying the private sector could manage housing better.