Shock housing shortfall 'a disaster'

"This is a social and economic disaster for the country," Phil Twyford said. Photo: NZ Herald
"This is a social and economic disaster for the country," Phil Twyford said. Photo: NZ Herald
Hundreds of documents briefing new Government ministers on key policies have been released. New Zealand Herald journalists have been analysing the Briefings to Incoming Ministers (Bims). Here we look at Housing and Infrastructure.

The Government says it has "inherited a mess" after newly released figures on the country's housing crisis put the national shortfall at more than 70,000 homes.

"This is a social and economic disaster for the country," Housing Minister Phil Twyford said today.

"It's quite complex… and it's going to require bold reform on a number of fronts sustained over a number of years."

He was commenting on new details about the scale of the nation's housing crisis set out in a briefing to the incoming minister of housing.

The Government had "inherited a mess", Twyford told reporters.

"I was shocked to see a shortfall of housing of 71,000 for the country. That's information I'm sure the past government had and chose not to release. But let's be frank about this. The former government was in full scale denial about the sale of the housing crisis.

"What the government officials told us [in the briefing] is there's a housing crisis and it's having huge social and economic effects, locking people out of home ownership, [and creating] record levels of homelessness."

The scale of the crisis was evidenced by the fact the government was spending $100,000 per day on motels as emergency housing for people who could not find affordable rental accommodation, he said.

The briefing had set out a range of tools the government was already embracing to tackle the crisis, including reforms to the way the government dealt with homelessness, and a "massive change when it comes to getting government back in the business of building affordable houses for young Kiwi families".

Auckland has reached capacity

Auckland has reached maximum capacity, as is evidenced by increased traffic congestion and lack of housing, say treasury officials.

The latest briefing for the Minister of Infrastructure released by the department today said the Super City's ability to absorb growth has been reached.

"Auckland is not performing as well as expected for its size and in comparison to other primary cities around the world," the report read. "There are opportunities to increase this productivity, but only if supply constraints, especially transport and housing are resolved."

Spending on the "ageing" infrastructure, that keeps the country's schools, hospitals, prisons worker and water, energy and communications flowing, is expected to soar in the years ahead.

It showed that the expected spend on local government infrastructure was growing and would exceed $9b in 2019.

"This partly reflects that much of our infrastructure is ageing and will need renewing around the same time."

It said both central and local government would be facing numerous challenges over the next 30 years.

The BIM said the greatest win would be to unlock the housing supply and infrastructure pressure points in certain regions, such as Auckland, Hamilton, Tauranga, Wellington, Christchurch and Queenstown.

It cited the slow pace of expansion of the water networks as contributing to the lack of housing supply.

Building sector not keeping up

State officials say productivity in the building sector is slow and the regulatory body was "underperforming" which has led to slower, costly builds and limited innovation.

These statements were made part of the briefing paper for the incoming minister for building and construction, which highlighted a number of inefficiencies in the sector.

The report from the Ministry of Business Innovation & Employment dated October 26 said the building regulatory system was "underperforming" and sector productivity was slow.

"The building regulatory should enable innovation and support improvements to industry capacity and capability. There are challenges that have meant such a system has not always been delivered."

It also said the volatile nature of the sector that saw workers come and go limited productivity and the many small business and individual contractors limited opportunities for innovation and efficiency through large-scale projects.

It said there were a number of opportunities for the industry to improve which could add millions to the GDP.

Every 1 per cent increase in labour productivity for construction would see an increase in GDP of around $139m. A 10 per cent increase in productivity would see a 1 per cent increase in GDP.

MBIE officials in the briefing called for the government to strengthen its role as a central regulator, to shift from a reactive role to one that ensures the system is working as it should.

It called for there to be a better system to ensure risks in existing building stock were understood and managed, greater innovation in building, a strategic approach to construction, and greater stability and longevity in the sector.

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