The Government has outlined its “turnaround plan” for Kāinga Ora after a 2024 review found the Crown entity was “underperforming” and struggling financially.
The Government-commissioned review of the nation’s biggest landlord, led by former Prime Minister Bill English, was released in May last year and identified several issues with the organisation.
Operational deficits were forecast to balloon from $520 million in 2022/23 to more than $700 million in 2026/27. In addition to the financial issues, the review suggested that the broader social housing system was underdelivering, lacked transparency and accountability, and had a “poor understanding” of tenant outcomes.
More than 300 social housing projects were held up while Kāinga Ora assessed their economic viability.
Today, Housing Minister Chris Bishop outlined the Government’s plan to turn things around at the organisation.
Housing Minister reveals plans for the nation’s biggest landlord after a review last year found it “underperforming” and struggling financially. (Source: 1News)
There were five major components to its plan, including:
- Refocusing Kāinga Ora’s core mission: “Which is 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 management of 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 with a focus on cost-effectiveness by “reducing high overheads and leveraging buying power more effectively”
- A more “persistent and sustainable” approach to funding and associated settings.
Bishop said the Government planned to renew Kāinga Ora stock.
Currently, Kāinga Ora was funded to deliver around 2650 houses across the country through to 2026, with an additional 1500 further social houses to be delivered by Community Housing Providers from June 2025 onwards.
Under the new plan, Kāinga Ora would be involved in around 1900 to 2000 “construction events” per year, comprising approximately 1500 newly built homes and 400 retrofits of existing homes, Bishop said.
“This will be offset by demolitions associated with redevelopment activities, and sales of around 900 homes per year. This means the number of KO social houses will not reduce over time, and existing older or unsuitable housing stock is refreshed.”
Kāinga Ora sales would also focus on “older properties in high-value areas”, with proceeds going toward providing other units in different areas. These sales would also focus on houses that are “not fit for purpose, where the typology is ill-suited to the particular area, or which are simply uneconomic to maintain or redevelop”.
“Despite rhetoric from Labour in the past, divestment of properties in order to manage stock is a routine approach to Kāinga Ora’s operations,” Bishop said.
“In the past five years, they have sold, demolished or ended the lease on more than 5000 properties as part of their normal stock renewal process. The plan allows them to do more of this so the old, unfit housing stock can be renewed more quickly.”
The Government’s plan also aimed to reduce construction costs.
According to Bishop, costs had been more than 12% higher than market comparisons.
“The plan commits Kāinga Ora to delivering new builds at fully allocated costs that are in line with, or better than, market rates.
“Ministers are clear that Kāinga Ora should be building or acquiring simple, functional warm and dry houses as quickly and efficiently as possible.”
Kāinga Ora’s focus would also be “narrowed,” with the Government aiming to take a “back-to-basics” approach.
Under the plan, Bishop said residual KiwiBuild underwrite activity would be transferred to the Ministry of Housing and Urban Development, administration of the Infrastructure Acceleration Fund would transfer to the new National Infrastructure Funding and Financing Agency, and the Kāinga Ora Land Programme would be wound down.
He also aimed to progress legislation to amend the Kainga Ora Homes and Communities Act.
Bishop said he hoped the plan would reduce deficits by around $190 million in this financial year and $354 million in 2027/28 compared to the 2023 Pre-Election Update. He said debt was forecast to be $1.8 billion lower in 2027/8 compared to the forecast included in the 2023 Pre-Election Update.
Bishop ‘full of it’ — Labour
Labour’s housing spokesperson Kieran McAnulty slammed the announcement, saying National wouldn’t commit to building new public houses despite “people in genuine need being stopped from accessing emergency housing”.
He said Bishop was “full of it”.
“It is completely heartless and out of touch of him to be comfortable with people sleeping in cars and tents, while he stands up and boasts about saving money,” McAnulty said.
“It’s simple — build more public houses so that people have somewhere to live. Housing is the bare minimum that a person needs to live, and to help turn their life around.
“Chris Bishop completely missed out the words that matter – a commitment to building more public houses.”
The Green’s housing spokesperson Tamatha Paul, meawhile, accused the Government of using the Kāinga Ora review to “push their privatisation agenda”.
“Public housing is as essential as public healthcare and public education. Housing is a human right that this Government is denying our communities from accessing.
“This Government is deliberately stripping Kāinga Ora to the bare bones, playing straight into the hands of wealthy landlords looking to exploit housing insecurity for private profit. We cannot rely on the private market to solve our problems, we have seen it entrench poverty and homelessness across generations.”
