Social housing reform is at the top of the Government's infrastructure list, writes Fran O'Sullivan.

Finance Minister Bill English is putting social housing at the top of his infrastructure priorities for a third term in Government.

English -- who has Cabinet responsibility for infrastructure -- says the Government is setting up an independent transactions unit within Treasury to push ahead with reforms involving Housing NZ's social housing portfolio.

"Housing NZ is not set up for it," he says. "It's not in their DNA."

He highlights the Tamaki Project where the Government wants to realise the development potential of the housing stock, and praises Housing NZ's work with the Hobsonville Land Company.


"But we need a lot of smaller opportunities like that to meet our social housing needs more efficiently, but also to realise the development potential of a lot of the land in our metro markets, where land is the scarce resource."

There's a more fundamental economic driver behind English's thinking. He notes housing is the "biggest single asset class in New Zealand", with about $600 billion of houses on the national balance sheet (the single biggest item on it).

"The things that drive its value matter a lot to the economy.

"As house prices rise we come under a lot more pressure to subsidise housing. We're not driving this, -- it is the planning decisions and we've got to bore in on those."

Expect a strong Governmental focus on decision-making by councils that affects the supply and cost of housing. Highlighting Auckland Council, English says minimum sizes for apartment buildings and forcing builders to add balconies can push building costs up a further $100,000 and have economic ramifications.

"It will pick up speed because we need to alter the planning process somehow so it takes account of the fact that those decisions have an impact on our interest rates and exchange rates for the whole country and on the Government's books."

Another third term priority is to take forward the recommendations of the Data Futures Forum.

"We'll be setting out to execute some fairly significant change to improve services and productivity," says English. "For instance, IRD, ACC and the Ministry of Social Development who have 4 million customers are all going to go through significant operational and service changes driven in part by the IT changes."


Other infrastructure priorities include:

• Making progress on issues the Productivity Commission has highlighted in its work on regulatory reform.

• Resource Management Act reforms which still languish in Parliament.

• Managing the State's commercial assets better. The electricity companies are now under share market scrutiny, but Treasury's new commercial advisory board is focused on Solid Energy, KiwiRail and NZ Post. "There is a clear pecking order - and they are all under pressure for different reasons."

• Working with the Christchurch City Council on its proposal to release capital from commercial assets to reinvest in the city's rebuild and forming a company to manage its social housing portfolio.