Chris Bishop releases Kāinga Ora ‘turnaround plan’
Tuesday, 4 February 2025
Kāinga Ora has assets of $47 billion and over $2.5 billion of expenditure each year.
The plan includes selling 800 older homes each year, demolishing 700, retrofitting 400 and 1500 new builds.
Housing Minister Chris Bishop has already overhauled the agency’s board and appointed Simon Moutter as chairperson.
Housing Minister Chris Bishop has promised there won’t be a “firesale” of social housing as Kāinga Ora looks to sell high-value properties in order to fund smaller social homes, and “reduce construction volumes” in order to be more financially sustainable.
Bishop released Kāinga Ora’s “turnaround plan” on Tuesday, which he says will refocus the housing agency on its core purpose of being a “good social landlord” and help it build new homes at market rate or cheaper.
It is his latest move to reform the agency, which formally began when Bishop commissioned an review into the agency, led by former prime minister Sir Bill English, which found it had easy access to debt but an insufficient focus on fiscal discipline.
Bishop said the housing agency has been building houses for about 12% more than market comparisons, and that the plan commits Kāinga Ora to delivering new builds at costs that are in line with, or better than, market rates.
Social housing sales
Bishop has also outlined the agency’s intention to sell older properties in high value areas, in order to fund more units in elsewhere, as well as houses which are not fit for purpose, and where the typology is ill-suited to the particular area, or which are uneconomic to maintain or redevelop.
He said the agency owns 200 homes which are worth more than $2 million each, most of which werein Auckland, and that as many as 50% of people on the social housing wait list were also wanting a one-bed apartment or home. This equalled about 10,000 people. However one-beds on accounted for about 10% of the social housing stock.
But Green Party housing spokesperson Tamatha Paul accused the government of usings its review into the agency to “push their privatisation agenda”.
“The housing crisis in Aotearoa is getting worse and worse. Instead of making excuses to allow poverty and homelessness to skyrocket, the Government needs to back Kāinga Ora to build at scale and at pace,” she said in a statement.
“The last Government sold just 276 state houses over six years, but increased public housing supply by over 7,000 homes. With this new direction, Bishop will sell 900 per year. That’s not just opening the door to privatisation, it’s welcoming it in with open arms.”
Turnaround plan
Bishop said the plan had five components:
Kāinga Ora to be refocused on its core mission: building, maintaining and managing quality social housing, and being a supportive, but firm landlord.
Improved tenant and community management.
Improved housing portfolio and build management – better managing the existing Kāinga Ora assets and building or renewing homes as efficiently as the market, including simplifying social housing building specifications and using all available building delivery channels.
Improved organisational performance: a focus on cost effectiveness – reducing high overheads and leveraging buying power more effectively.
A more persistent and sustainable approach to funding and associated settings.
As a result of the plan, Bishop said the agency will be involved in around 1900-2000 construction events per year, made up of approximately 1500 new build homes and 400 retrofits of existing homes, from mid next year.
“This will be offset by demolitions associated with redevelopment activities, and sales of around 900 homes per year. This means the number of Kāinga Ora social houses will not reduce over time, and existing older or unsuitable housing stock is refreshed.”
Bishop also pointed out operating deficits had increased at the agency, growing from a surplus of $76 million in 2017/18 to a deficit of $568m in 2023/24.
He said Kāinga Ora’s 2023 Board-approved budget showed debt forecast to grow to $24.8 billion by 2026/27, outside of the previous government’s debt limit for the organisation.
“Staff numbers grew from around 2000 in 2020 to around 3477 by the end of 2023 – all this at a time when the social housing waitlist grew to over 20,000 applicants.”