$1 Billion Infrastructure Carrot for Developers

The federal government’s $1 billion infrastructure fund, aimed at reducing pressure on housing affordability, officially opened for business this week.

The $1 billion boost, which comes as the high cost of housing in Australia has been at the forefront of a range of recent policy debates, will likely see developers and community housing providers join forces to access the fund which will finance loans and invest in local infrastructure.

Brenden Crotty, director of GPT Group and Brickworks, was appointed chairman of the National Housing Finance and Investment Corporation last month, as legislation to establish the new fund was passed last week with bipartisan support.

The Government is expected to make further NHFIC Board announcements.

Related reading: Incentives for Developers Could Create More Affordable Housing

The NHFIC will operate an affordable housing bond aggregator to provide cheaper and longer-term private and institutional finance for affordable housing providers.

The corporation will also administer the $1 billion National Housing Infrastructure Facility (NHIF) which will invest in critical infrastructure to release new housing supply.

Property Council chief executive Ken Morrison welcomes the fund as an important initiative targeting supply of both sub-market and market-based housing.

“Its primary focus rightly is to finance the more affordable and social housing outcomes - but it is also aimed at unblocking market based housing supply,” Morrison said.

The NHIF will provide $1 billion over five years to support local governments through a range of options to finance critical infrastructure such as transport links, power and water infrastructure, and site remediation works.

The $1 billion NHIF will provide local governments the opportunity to access up to $600 million in concessional loans, $225 million in equity investments and $175 million in grants.

“It’s not uncommon for gaps in local infrastructure and servicing to block the roll-out of an entire housing precinct,” Morrison said.

“This initiative provides an opportunity to uncork those housing supply blockages that are beyond the capability of one proponent to deal with.”

The NHFIC is based on AHURI research into bond aggregator models presented in a report from the Affordable Housing Working Group (AHWG) to federal, state and territory treasurers in late 2016.

It’s expected to take a month before applications for housing to the corporation start to be processed.