Prime Minister Jacinda Ardern visits a Kāinga Ora state housing development in August 2020. Photo / Greg Bowker
Management positions at government housing agency Kāinga Ora have ballooned by more than 86 per cent in two years, and the annual cost of base salaries for managers now tops $100 million.
The Crown agency employed 319 managers in June 2020 at an annualised cost of $58m.
In June 2022 the agency employed 594 managers, at an annualised cost of $103m.
The Kāinga Ora managers’ annual pay, as of June of this year, averaged $173,400, nearly twice the average annual salary ($90,800) across the Public Service.
The Kāinga Ora figures represent only base pay; it excludes benefits like superannuation. The agency said only chief executive Andrew McKenzie receives performance pay.
The agency has a sprawling remit that includes maintaining and developing public housing as well as acting as landlord to some 186,000 tenants and their families. Ministry of Housing and Urban Development (HUD) data shows Kāinga Ora, and the community housing providers it works with, added a net 6772 public homes since the entity was formed in October 2019 (the data was current to September 2022). However, the agency recently missed a target for new builds.
The number of jobs added by Kāinga Ora at the upper end of the public service pay scale appears to be at cross-purposes with the Government’s Covid-era pay-freeze for public servants earning $100,000 a year (this 2020 government guidance extends to mid-2024).
Last year, Finance Minister Grant Robertson and Minister for the Public Service Chris Hipkins extended pay-freeze guidance and noted that the purpose was to “prioritise spending” in light of the large increase in government debt related to the Covid-19 response and recovery.
“We want to see those on lower wages be the focus of any increases in pay … the policy will also help protect jobs by taking financial pressure off the public wage bill,” the ministers said.
While Kāinga Ora’s annual reports show the agency has expanded its total staff considerably in the two-year period, the figures show that management grew disproportionately faster than other staff.
Other staff totalled 1656 in June 2020, and that headcount had risen to 2578 by the end of June 2022. A rate of increase of 55 per cent.
Housing Minister Megan Woods said the rapid expansion of the management layer at Kāinga Ora is justified by its large public housing build projects.
Woods noted that the agency is working with builder partners in the private sector and that “any infrastructure delivery agency will be loaded with those kinds of [management] positions because they’re the positions you need when you are working as a delivery agency”.
Kāinga Ora has been expanding its capacity to build houses, a competency that was rundown in predecessor agencies under the National-Act Government prior to 2017, Woods said.
Kāinga Ora was created in 2019 through a merger of Housing New Zealand, its development subsidiary, HLC, and the Labour-NZ First-Green Government’s beleaguered KiwiBuild unit.
The Kāinga Ora figures were released by Minister Woods in response to written parliamentary questions put by the Act Party. Management positions were defined as roles which have staff members reporting to them.
Chief executive Andrew McKenzie said the agency has “invested in more resources, systems, programmes and people to help meet the Government’s housing priorities … its wider mandate and additional roles.”
The majority of staff increases have been in three regional teams supporting construction, urban development and planning, McKenzie said: “These are the teams which are helping drive the increase in housing supply and the large-scale urban regeneration of several large projects which will deliver up to 40,000 homes over the next 15-20 years.”
He said comparisons with Kāinga Ora’s predecessor entities would be misleading because none were involved in “anywhere near the breadth and depth of this agency’s scope”.
Act deputy leader Brooke van Velden said the cost to taxpayers for “all these extra managers is eye-watering”, particularly when Kāinga Ora is “competing in the market against private developers and first-home buyers, bidding up the price of land and homes while selling off its own”.
Van Velden accused the Government of “failing to fix the housing crisis” even as it “[spent] up a frenzy in the process”.
The rapid rise in the number of managers coincides with criticism that the large agency is contravening the Commerce Act by prioritising its own projects for favourable regulatory treatment over those of other developers.
Last month private sector land developer Winton filed a lawsuit in the High Court alleging the agency was using its powers unfairly to assess and award “specified development project” designation (SDP), which many see as a fast-track consenting process.
Kāinga Ora’s many hats mean that it is both the arbiter of which projects are recommended for SDP designation and a landowner (or pursuing land purchase) in the only two projects approved for consideration to date.
In addition, Kāinga Ora outbid Winton and other developers last year to buy a $70.4m tract of raw land known as Ferncliffe Farms.
The deal was contentious because Kāinga Ora made a huge upfront payment which, unlike some competitors, did not spread payment over a period of years to take account of the risk of delay or difficulty in rezoning. In addition, Kāinga Ora’s bid was supported by two land valuations that, respectively, overstated the likely amount of developable land and assumed that the rural parcel of land was already zoned for urban development.
In recent months Kāinga Ora has missed a key build target contained in its Statement of Intent 2019-2023.
While it aimed to build 4480 public and supported houses by June 30, 2022. The agency, in fact, built only 3,982 such houses, just 88 per cent of its target.
Minister Woods said the target was originally set in light of an earlier Public Housing Plan which has been superseded by an update in 2021, and that she was comfortable that Kāinga Ora’s capability and home building was tracking well.
She also noted that Covid-19 had hampered the agency’s delivery schedule.
The Government’s current housing plan, released in 2021, promises 18,000 new public and transitional housing places by June 30, 2024 (from the time Labour came to power).
HUD’s figures show that count sits at 10,600 for the period October 2017 to September 2022 for public houses. New builds total 8745.
More contentiously, the total also includes 600 leases of privately-owned homes and a further 1464 private market “buy-ins”. Homes are leased or purchased from the private market to add to public housing stock. Sometimes the purchases are used to build larger land parcels for redevelopment.
Van Velden said the practice does little to augment New Zealand’s overall housing supply, and only shuffles homes out of the broader market and shunts their occupants onto the bloated public housing waitlist, which is now a record length.
The count for transitional housing added in the period totals 4020. The figure includes new-builds as well as homes purchased and leased from the private market; a complete breakdown is not supplied on HUD’s dashboard.
McKenzie did not confirm whether the agency expects to meet next year’s July 1 deadline to meet legislated healthy homes standards for rental properties (providing a minimum grade for the likes of heating, insulation and moisture).
As of July 1, 2022, just 52 per cent of Kāinga Ora’s public housing met the standard which came into effect for private landlords last year. McKenzie said 68 per cent of “tenanted Kāinga Ora homes” now meet the benchmark.
Correction: HUD’s figures show a total of around 14,000 public and transitional houses built for the period October 2017 to September 2022. The original report did not include transitional houses.
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