National faces pressure to build more social houses

Tuesday, 21 May 2024

The eight-member Kāinga Ora board will be refreshed after an independent review found the social housing agency was lacking in transparency and had poor understanding of its effect on tenants.

An independent review into Kāinga Ora, led by Sir Bill English, found the agency was not financially viable.
As a result, the government has decided to “refresh” its board and trim down its focus.
But housing advocates and the political left fear the changes are the first moves towards privatising public housing.

Housing Minister Chris Bishop is facing political pressure to prove his plans to boost housing growth will create more social housing, and aren’t the first steps towards selling state houses.

New Zealand has a chronic housing shortage, and very high construction costs. More than 100,000 people are severely housing deprived, living on the streets, in cars, marae, motels, hostels or other forms of transitional housing, according to government data.

Bishop ruled out a “mass sale of state houses” on Monday as he revealed recommendations and findings from an independent Kāinga Ora review, led by former prime minister Sir Bill English, which said the agency was not “financially viable”, forecast operating losses, growing debt levels, poor asset management, lack of transparency and accountability.

Chris Bishop campaigned on radical reform of Kāinga Ora. (File photo)

'Kāinga Ora is not the solution to the country's housing crisis'

He said senior ministers had not yet considered the ratio of houses built by the state, to ones built by the private sector. He said he wants to grow the number of social houses in New Zealand, not the ones owned by Kāinga Ora, the government's social housing landlord.

Bishop also promised to “refresh” the eight-member board of Kāinga Ora, who will then decide whether it has confidence in the agency’s chief executive, Andrew McKenzie.

The new board would be appointed in the next few weeks, and would be given a new letter of expectations. The board also had to present a turnaround plan to return to financial stability by the end of the year, he said.

The report suggested the creation of new community housing associations, which could be set up before the end of the year.

Bishop also asserted Kāinga Ora was not the answer to the decades-long housing crisis, which the former Labour government promised to fix.

Uncertainty

But Labour’s Kieran McAnulty said he was “sceptical” of a review led by English, because his government left office with 1500 fewer state homes in 2016.

He also pointed out the National-led coalition government had not promised funding to the income-related rent subsidy scheme beyond 2025. The scheme encourages social housing providers to build public housing and rent it at a reduced rate, while the government tops it up to market-level.

This was causing uncertainty and meant some social housing providers had pulled back on their developments, he said.

“The National Party promised to build more houses than we did, and so far we've had no solution to the issues that we're facing, [just] a lot of excuses and a lot of distractions.”

Tamatha Paul, from the Green Party, said the government was trying to create the social licence to sell public housing stock.

Public Housing Futures and Child Poverty Action Group said the recommendations to create community housing associations could be a way for the state withdraw from building public homes.

“The real risk is that the Government will usher in privatisation by stealth by reducing their role in building public housing, and opening up low-income housing to private providers and investors. This will be to the detriment of stable and affordable homes for everyone,' Vanessa Cole from Public Housing Futures said.

Cole was part of a group which reviewed the agency’s finances, alongside the Child Poverty Action Group (CPAG). It found Kāinga Ora was forced to borrow and sell off land in state housing neighbourhoods in order to pay for years of neglect.

Alan Johnson, CPAG’s housing spokesperson, said Bishop’s focus on debt was a political decision.

“This debt is Government-backed so its current level is unlikely to concern financial markets, and its so-called sustainability depends entirely on a political choice by the Government to support Kāinga Ora and its operations'.