Media release: Housing growth fund a welcome first step
Wellington (Thursday, 28 May 2026) – The New Zealand Initiative welcomes the Going for Housing Growth Incentive Fund announced in Budget 2026. The Initiative has argued for more than a decade that councils need a direct financial stake in enabling new housing. The fund puts that principle into practice.
“Councils have spent years treating growth as a problem to manage. The Incentive Fund changes the calculus. When more consents mean more revenue, councils will find ways to issue them,” said New Zealand Initiative Executive Director, Dr Oliver Hartwich.
“The design is sensible. Payments rise as councils consent a higher share of their existing dwelling stock, so the marginal reward grows with effort. The fund also pays a flat amount per dwelling rather than a share of construction value, which prevents money flowing disproportionately to high-value markets like Queenstown at the expense of areas building plenty of more modest homes.”
The fund commits $400 million over four years, around $100 million a year, or roughly 0.6 percent of total council revenue. The Initiative’s preferred mechanism, a 50 percent share of estimated GST collected on residential building consents, would have delivered more than $1 billion a year, or around 6 percent of council revenue.
“The government’s incentive fund will help, but it will not transform council behaviour the way our GST share would have. Fiscal conditions limit what is possible now. As surpluses rebuild, the payments should grow.”
There will be devil in the detail. Work is likely to be needed to develop an authoritative baseline for the existing dwelling stock, while reporting requirements on how the money is spent will add compliance costs on councils, which could be disproportionate for those that do not get large payments.
“The case for sharing growth-related revenue with councils has been before successive governments for more than a decade. Budget 2026 acts on it. The amount is modest, but the principle is now built into how central government funds local government. That is what we wanted to see.”
ENDS
Dr Oliver Hartwich is available for comment. To schedule an interview, please contact:
Jamuel Enriquez, Marketing and Communications Manager
E: jamuel.enriquez@nzinitiative.org.nz
P: 021 022 34451
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About The New Zealand Initiative
The New Zealand Initiative is an evidence-based think tank and research institute contributing to public policy discussion.
Supported by the nation’s leading visionaries, business leaders and political thinkers, we are committed to making New Zealand a better country for all its citizens with a world-class education system, affordable housing, a healthy environment, sound public finances and a stable currency.
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