The future of public housing

The report into Kāinga Ora, released this week, paints a bleak picture of a wasteful organisation that is "not financially viable".

The review, led by former National leader Sir Bill English, outlines many failings and proposes ambitious solutions.

While the Government headlines it as "independent", its membership and its mandate inevitably skew towards National’s general ideology.

Social investment ideas are picked up, and "place-based" provision would be encouraged. Community housing providers could play a larger role in running social housing. Kāinga Ora required more contestability and there was a need for more innovation and different approaches.

If all the report’s seven recommendations are followed — four have been accepted and three are under consideration — change, which would take some time, would be considerable.

The monolith that Kāinga Ora has become would be whittled down, although the report still sees it as having important roles. Housing Minister Chris Bishop has also said there would be no mass sell-offs of state houses.

Later in the year, though, there could be a mix of asset management, renewals, sales, demolitions and new builds.

Kāinga Ora’s broad mandate is already being trimmed as the coalition Government announced on Wednesday the end of first-home grants and the end of the remnants of Kiwibuild. Money saved on the grants is to go to community housing providers to build new homes.

The report gives examples where community and Māori providers have developed different ideas. The report sees it as essential that the playing field be levelled so these providers can do a lot more.

All this would see a shift from the centralised system which it is said is poor financially and poor for tenants.

While it criticises so much of the status quo, the report is hardly "hard right". Many of the suggestions are sensible.

Putting them into practice, of course, will be tough. It is all very well to criticise the status quo because there will always be faults and inefficiencies. It is another task altogether to institute effective and efficient change without being accompanied by another set of serious problems.

A vision of Community Housing Associations doing the work of Kāinga Ora in different parts of the country is utopian and could well never come to pass.

Kāinga Ora’s vast increase in spending and staff numbers has already become "unsustainable".

It is claimed the previous board failed to govern properly and the organisation was able to spend without discipline. The operating deficit of $520 million in 2022-23 was to rise to $700 million by 2028.

Housing minister Chris Bishop said the cash requirements from the Crown (for deficits and capital costs) for the next four years was $21.4 billion, the equivalent of every New Zealander paying $4000 to keep Kāinga Ora going.

There have, indeed, been plenty of stories of Kāinga Ora paying over the top for houses and land and builders charging premium prices for Kāinga Ora work. Redevelopment costs were, the report said, on average $35,000 per home more than developer-led acquisitions, excluding land costs.

The failings are such a shame and an indictment on public enterprise. Where were the economies of scale, the extra bargaining power, the potential expertise?

Was it the easy access to money and poor management and governance that could be rectified? Or is it in the nature of the beast?

A new "refreshed" board will have the chance to prove its worth. Its first task is to turn around the financial performance, producing a credible and detailed plan before the end of the year.

Meanwhile, as Labour has emphasised, no more money will be budgeted to Kāinga Ora for extra social housing places until the turnaround plan is approved. The social housing and construction "momentum" built by Labour was stalling. About 25,500 households are waiting on social housing lists.

Kāinga Ora houses 185,000 people in more than 72,000 homes. Whatever develops, it will have an important role in the future of social housing for at least some years yet.