Report shows insurance cash considered to help cover surprise dividend demand
Housing New Zealand considered using an insurance payout for Christchurch earthquake damage to meet an unexpected demand to pay higher dividends to the Government in 2011, official letters disclose.
The heavily edited letters, provided to Labour housing spokesman Phil Twyford under the Official Information Act, show that the corporation alsoslowed down its repairs and maintenance to fund an unexpected $45 million jump in the dividend required that year - from $63 million agreed in the agency's statement of intent to $108 million.
The documents also reveal that Housing NZ plans to raise $383 million in the three years to June 2016 by selling or leasing state houses to community and iwi groups and "the possible introduction of third party equity via possible overseas providers".
This is the first time anyone has mentioned foreign companies being involved in planned state house sales, and Mr Twyford said it might point to possible public/private partnerships to redevelop state housing.
He said ministers had forced Housing NZ to pay $216 million more in dividends than they gave it in capital contributions in the four years to last June, and Housing NZ's statement of intent showed that the agency planned to pay a further net $252 million to ministers in the three years to June 2016. "If that's not asset-stripping, I don't know what is."
"They have reduced the net number of state houses by 700 in the last 12 months. They are using it as a cash cow in the middle of a housing shortage." However a spokeswoman for Housing Minister Nick Smith said Housing NZ had always had to pay a dividend and its highest dividend in recent years was $176 million in 2002, under a Labour Government.
"Saying the dividend will come from the insurance payout is not true," she said. "Housing NZ's most recent statement of intent shows very clearly that the insurance payment is for capital expenditure and that its surplus [dividend] is funded out of normal operating revenue."
A letter from then Housing Minister Phil Heatley in May 2010 set targets for the agency's return on equity of 1.1 per cent in 2010-11, 1.2 per cent in 2011-12 and 1.3 per cent in 2012-13. Those targets were reiterated in February 2011. Then suddenly, in an undated letter evidently written in May 2011 after the February 2011 earthquake, the required returns were raised to 1.6 per cent in 2011-12 and 1.7 per cent the next year.
Corporation chairman Alan Jackson wrote back the next month stating that the board would pay the extra $45 million required that year "from a combination of operational savings, changes to capital structure that may include increasing debt, and changes to capital programmes which may include use of insurance proceeds from the Canterbury earthquakes".
There is no evidence in the documents that the insurance money was used to pay the dividend. Other figures show that Housing NZ plans to spend a net $542 million on repairs and new building in Christchurch in the three years to June 2016, much more than the $320 million it received in insurance claims.
However the "operational savings" included decisions announced in August 2011 to end the agency's social services and focus on its role as a landlord, and to close its offices from April 2012 except for appointments made through a call centre.
