Photo: RNZ / Nate McKinnon
A former Kāinga Ora board member says the government's shake-up at the state housing provider is "sheer folly, wanton folly" that will slow efforts to provide housing for low-income families.
The new board was announced earlier this week, following a scathing report from former prime minister Sir Bill English, which said Kāinga Ora was underperforming and not financially viable in its present state, independently borrowing large amounts of money at higher interest rates than would have been charged if borrowing went through Treasury.
Sir Bill also said the board had become too involved in its operation in his review, which the board criticised as inaccurate and based on "relatively limited engagement" with the organisation.
Housing Minister Chris Bishop this week said the new board "collectively has the experience to drive change in Kāinga Ora and ensure the organisation stays focused on delivering its core functions well, ensures value for money in its spending, and is fiscally sustainable".
Outgoing board member Philippa Howden-Chapman said on Friday she was asked if she would "be happy to implement the government's policy" before she had even seen it.
"When I saw there was no response to a very detailed critique of the review, I decided I wasn't prepared to work in the board," she told Morning Report.
"And as it happens the board has completely changed, and I think that's a really a real shame… I think Kāinga Ora is a remarkable success story which I was involved with for six years.
"Ignoring its achievements, which the government has done, is a major policy mistake. And not continuing any funding from 2025 - capital - and saying that can no longer build homes and apartments, but should be just be a landlord, is to just abandon one of the largest organisations in New Zealand that works to improve construction."
The recent Budget directed new capital towards community housing providers, rather than Kāinga Ora. Bishop, in his reaction to Sir Bill's review, said Kāinga Ora had "easy access to debt but insufficient focus on fiscal discipline"
Chris Bishop. Photo: RNZ / Nick Monro
Howden-Chapman said the review "missed the critical point" that Kāinga Ora's borrowing was what allowed it to ramp up construction of new homes.
"We work with private construction companies, engineers… architects and so forth, and to abandon that is sheer folly - wanton folly, in my opinion…
"Has anyone ever bought a house or built a house without doing any borrowing? The money doesn't come off trees. In fact, Kāinga Ora owns - well, the state owns - 72,000 houses and they are worth close to $40 billion… We have one of the lowest debt rates against asset capital - much lower than, in fact, that the Reserve Bank recommends."
She said the final report was "no different" to the draft, suggesting those involved in writing it had already made their minds up, and ignored any rebuttals.
"We were given a brief to try and improve housing for Māori and Pasifika and people on low incomes, and they've developed a housing development system which cuts the timing to design and build houses… close to 40 percent. I mean, that is extraordinary.
"People have been coming from Australia and the States to look at how we've managed to get those efficiencies…. They are working with private developers. They work very closely with the community housing sector…
"But the community housing sectors, as they have said themselves, don't have the capital. It needs state capital if we're to catch up with the shortage of affordable housing in New Zealand which is not provided by the private sector, because naturally they want to go where there is a good profit."
Bishop this week also announced plans to loosen development rules to encourage the private sector to develop smaller, more affordable housing to help bring prices down.
