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Major Overhaul for Kāinga Ora: Government Reveals Ambitious Turnaround Plan
The New Zealand Government has unveiled its comprehensive “turnaround plan” for Kāinga Ora, following a 2024 review that found the Crown entity was “underperforming” and struggling financially.
The review, commissioned by the Government and led by former Prime Minister Bill English, was released in May last year. It highlighted several critical issues within the nation’s largest landlord, including operational deficits projected to balloon from $520 million in 2022/23 to over $700 million by 2026/27. Additionally, the review pointed out that the broader social housing system was underdelivering, lacked transparency and accountability, and had a “poor understanding” of tenant outcomes.
Over 300 social housing projects were stalled as Kāinga Ora assessed their economic viability.
Government’s Turnaround Plan
Today, Housing Minister Chris Bishop outlined the Government’s strategy to revitalize Kāinga Ora. The plan consists of five major components:
- Refocusing Kāinga Ora’s Core Mission: Building, maintaining, and managing quality social housing while being a supportive yet firm landlord.
- Improved Tenant and Community Management: Enhancing relationships with tenants and communities.
- Enhanced Housing Portfolio and Build Management: Better management of existing assets and efficient construction or renewal of homes, including simplified building specifications and diverse delivery channels.
- Boosted Organisational Performance: Focus on cost-effectiveness by reducing high overheads and leveraging buying power more effectively.
- Persistent and Sustainable Funding Approach: Establishing consistent and enduring financial strategies.
Renewing Kāinga Ora’s Stock
Bishop announced plans to renew Kāinga Ora stock, with the organization funded to deliver approximately 2,650 houses nationwide through 2026. An additional 1,500 social houses will be delivered by Community Housing Providers starting June 2025.
Under the new plan, Kāinga Ora will engage in around 1,900 to 2,000 “construction events” annually, including 1,500 newly built homes and 400 retrofits of existing homes. This will be balanced by demolitions related to redevelopment activities and the sale of around 900 homes per year. This approach ensures that the number of Kāinga Ora social houses will not diminish over time, while refreshing older or unsuitable housing stock.
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Focus on Older Properties and Construction Costs
Kāinga Ora’s sales will target older properties in high-value areas, with proceeds allocated to providing other units in different regions. These sales will also focus on houses that are “not fit for purpose” or uneconomical to maintain or redevelop.
Bishop emphasized the Government’s commitment to reducing construction costs, which have 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,” he stated.
Streamlined Operations and Legislative Changes
Kāinga Ora’s focus will be narrowed, with a “back-to-basics” approach. Residual KiwiBuild underwrite activity will transfer to the Ministry of Housing and Urban Development, administration of the Infrastructure Acceleration Fund will move to the new National Infrastructure Funding and Financing Agency, and the Kāinga Ora Land Programme will be wound down.
Bishop aims to progress legislation to amend the Kainga Ora Homes and Communities Act, with an expected reduction in deficits by approximately $190 million this financial year and $354 million by 2027/28. Debt is forecast to be $1.8 billion lower in 2027/28 compared to the 2023 Pre-Election Update.
Political Reactions
Labour’s housing spokesperson Kieran McAnulty criticized the announcement, accusing National of failing to commit to building new public houses despite the pressing need for emergency housing. “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,” McAnulty argued.
Green Party housing spokesperson Tamatha Paul accused the Government of using the Kāinga Ora review to push a “privatisation agenda.” She emphasized that public housing is as essential as public healthcare and education and criticized the Government for stripping Kāinga Ora to the bare bones.
Conclusion
The Government’s ambitious plan for Kāinga Ora aims to address financial challenges, improve housing quality, and enhance transparency and accountability. As the plan unfolds, its impact on New Zealand’s housing landscape will be closely watched.
SOURCE: 1NEWS