The Government is being accused of making up policy "on the hoof" after it revealed that it would no longer be taking dividends from the state housing corporation.
Finance Minister Bill English confirmed yesterday Housing New Zealand would not pay a dividend over the next two years. That went against Budget forecasts in May, which said HNZ would pay $38 million in 2016 and $54m in 2017.
English said yesterday that those forecasts were based on old estimates, and HNZ had since updated its financial plan to put a greater focus on increasing social housing stock. The corporation forecast a tiny surplus in 2016/17 and had proposed that no dividend be paid.
English said that a dividend was also not expected the following year because HNZ's social housing programme was being ramped up.
It comes after Labour and the Greens urged the Government to scrap the dividend and reinvest the money in state houses.
Labour announced that this would be its formal policy on Saturday, following a similar Green policy announcement in May.
At the time of the Greens' announcement, English said that the dividend was "not the issue" and that previous governments had used it to "place a discipline" on HNZ.
Labour's finance spokesman Grant Robertson accused the Government of "panicked, desperate" policy-making.
" ... we're pleased that something we announced on Saturday has so quickly become Government policy. It seems very odd that it appeared in the Budget a few months ago and now it's not there."
He said the change had left a $100m hole in the Budget.
3 questions for Labour
1 How would you get the land to build 10,000 extra houses a year when it has taken three years and 154 Special Housing Areas under the Auckland Housing Accord to lift housing consents from 5100 a year to 9400 a year?
Phil Twyford (Labour): Labour's Affordable Housing Authority will redevelop Housing NZ land, Government surplus land, buy land as needed, and partner with councils and iwi who may bring land to the project. It will plan large projects in the city around the rail network, and greenfield projects on the fringes like Hobsonville.
Shamubeel Eaqub (economist): Land will be hard. But it can be done. There is enough physical land but it hasn't been built on. So this is something that is holding everyone up. Crown land will be easiest but other land will be difficult if they don't have other mechanisms in place.
2 How would you get the skilled labour required to build the extra houses when builders say they are already constrained by labour shortages?
Twyford: Labour will invest in a massive increase in construction trades training, supported by our three years free post-school education and training policy, and our Dole for Apprenticeships policy. We also expect many from the Canterbury rebuild workforce to transition to Auckland.
Eaqub: As long as it is ramped up gradually and the pipeline guaranteed, the private sector is very capable of doing this. But it will need to ramp up training to make sure we don't rely just on migrant workers.
3 How would you pay for the extra houses given Cabinet minister Steven Joyce's calculation that you would need to design, build and sell 4000 houses every five months to do it with only $2 billion?
Twyford: KiwiBuild has a ramp-up period where we develop the land sites, houses will be completed in a steady stream, and construction work will be paid for as it is delivered. Once under way KiwiBuild will be completing around 2500 homes over each quarter, providing a steady stream of returning funding.
Eaqub: The recycling of capital makes sense. Each lot of houses can be sold to fund the next lot. This is not really a new model and pretty doable.