Housing developments north of Auckland could soon be charged higher targeted rates to help fund infrastructure.

The government is working with the Auckland Council to see if such targeting of rates can be done under current law.

Finance Minister Steven Joyce said the council had said it could not afford the trunk infrastructure, such as main pipes and roads, to connect a large area of land that had been earmarked for housing growth during the next 20 years.

"It's out the back of Orewa and those sorts of places," Joyce told Radio New Zealand. "The idea would be you would get a targeted rate across that land up there and that would be an income stream that would pay the cost of some of that infrastructure."


Asked if a law change would be needed, Joyce said that was being worked through.

"It is actually quite a tricky area of current law but we are trying to find a way of doing it because it is something the Auckland Council is very interested in."

Joyce made his comments after the Productivity Commission this morning released its report on how to improve urban planning.

The Government-commissioned report made 64 recommendations, including making greater use of targeted rates and other ways to fund infrastructure.

The council's debt to revenue is about 256 per cent, near the debt ceiling of 265 per cent.

Auckland Mayor Phil Goff has warned that a credit downgrade would reduce investor confidence in the council, drive up the cost of borrowing and reduce the council's ability to secure longer duration debt.

The Government has not been supportive of other targeted measures to help fund Auckland's growth, including Goff's proposed "pillow tax" on hotels and other accommodation providers, and a regional fuel tax.

Goff wants to raise $27.8 million to fund tourism and events promotion, but it is doubtful he has the numbers to pass the rate, which is vehemently opposed by the hotel and hospitality industries.


Meanwhile, bids for a slice of the Government's $1 billion housing infrastructure fund close this week.

The fund, set up last July, offered five councils low-interest debt to fund such things as water and roading for new housing.

The eligible recipients are Auckland, Hamilton, Tauranga, Christchurch and Queenstown Lakes councils. Hamilton has applied for $240m of the $1b fund to fast-track infrastructure for 2350 to 3100 homes in Peacocke and Rotokauri.