Government refusing to show business case for fast-tracking Hobsonville build but let's hope it's just the start.

Well, knock me down with a feather - Housing Minister Nick Smith and his Cabinet colleagues have finally decided to lead from the front in dealing with Auckland's housing crisis.

They are to fast-track the purchase of 16.5ha at Hobsonville Pt, two years ahead of schedule, so 500 new houses can be built earlier than planned.

The $31 million purchase price will go to the New Zealand Defence Force as landowner and will be recouped, with interest, when the houses go on the open market.

In a statement, Dr Smith says the original plan was that the Hobsonville Land Company, a subsidiary of Housing New Zealand, "would not purchase this area until 2015 and would fund it from house sales proceeds. The company presented a business case, approved by Cabinet, showing it was better for the taxpayer and for housing supply to bring forward this purchase and development."


The minister refuses to reveal the business case that went to the Cabinet, but pushing through 500 houses two years earlier than planned will obviously help to ease - if only a little - Auckland's housing supply crisis.

As for being advantageous for the taxpayer, I guess the quicker the 3000-house Hobsonville project is completed, the sooner the profits can be added up.

And all going well, there will be quite handsome profits.

In the Hobsonville Pt Development project summary just over a year ago, the company's strategic goal was to complete the development by June 30, 2017, within the budget set by shareholders' provided funds of $30.7 million.

In return, there was to be a capital return to the Crown of $184.5 million.

Dr Smith will now front up with a further $31 million, but will get that, plus the earlier projected capital return, back earlier than expected.

A month ago, Rod Chadwick of AVJennings, one of the private house-building partners with the Government in this project, said "the market demand is insatiable at the right point".

It's been something of a saga to reach this point, but after four years, 150 houses are finished and a further 240 will be completed next year.

In the original plans drawn up by the previous Labour Government, state rental properties were to be pepper-potted throughout the development. But local MP John Key campaigned against that in the 2006 general election, saying it was "economic vandalism".

The compromise is that 10 per cent of the houses will sell at or below $400,000, 5 per cent between $400,000 and $450,000 and 5 per cent between $450,000 and $485,000.

With Mayor Len Brown and the minister talking of the need to build 10,000 to 13,000 new houses a year to meet Auckland's burgeoning growth, the quicker houses rise the better. Even if it means Dr Smith having to bend the party line a little.

He tries to have a bob each way. On the one hand he sticks to his old line that "the big gains in housing will come from private housing developments off the back of Government reforms to free up land supply, increase competition in building materials, and constrain council development and compliance costs".

In the same breath, he says the Government's decision to sink more cash into the project "highlights the Government's pragmatic approach ... where it makes sense".

For many observers, the only chance of building anything like the 10,000 new houses a year Auckland is said to need is for the Government to follow the hugely successful Hobsonville template. Take the lead by aggregating land, underwriting the initial development, assembling the alliance of private developers needed to do that job and, as at Hobsonville, working with Auckland Council to smooth the regulatory hurdles.

A year ago, the Productivity Commission failed to come up with any easy solutions to the housing-affordability crisis but it did suggest working as a team might just work. Auckland Council should, it said, "look to collaborative models for the process of identifying, assembling and releasing large tracts of land".

The problem with that recipe is that Auckland Council is neither funded nor programmed to engage in land-banking or large-scale housing development. But the Government is, and Hobsonville Pt proves how successful a publicly led partnership with private builders can be.

Dr Smith sees it as a marriage between pragmatism and dogma. Let's hope he gets a taste for this special blend and takes his pragmatism further afield, and with the help of the Hobsonville team, spearheads similar house-building partnerships all around the isthmus.