National leader Simon Bridges says Labour 'woefully underestimated' KiwiBuild in Opposition

National Leader Simon Bridges said as Labour's pre-election policy was for the Crown to build the homes, MBIE's data shows Labour undercosted KiwiBuild by $18 billion. Photo / Mark Mitchell

Prime Minister Jacinda Ardern says a claim by National that Labour undercosted its KiwiBuild policy by $18 billion is incorrect.

"We have always said that the $2 billion that had been set aside is to kick-start the KiwiBuild programme," Arden said yesterday.

She said that money was to enable the Government to "get going on intervening in the housing market, which has clearly failed".

"As we build and sell, funds go back into the KiwiBuild pot – we're also partnering with others in order to develop the programme."

Before the election, Labour promised to deliver 100,000 KiwiBuild homes over 10 years, which would be funded by a $2 billion capital injection. That would then be recycled as the houses were sold and returned to the Crown at the end of the KiwiBuild programme.

National leader Simon Bridges claimed this week Labour undercosted the policy to the tune of $18 billion.

He based that claim on a report in April from Ministry of Business, Innovation and Employment (MBIE) on the KiwiBuild business case.

Information in the report provided by PwC said "$2 billion is insufficient working capital to meet the target of 10,000 homes per annum (on an optimistic average three-year recycling of the capital, only 1000 homes could be built per year)".

The advice, which was hypothetical, assumed the Crown would be building all the KiwiBuild houses itself.

Bridges claimed it would mean a 9000-home shortfall and the estimates to reach 10,000 homes a year were $18 billion off.

"Labour had nine years in Opposition to come up with policies. It's unbelievable that one of its flagship policies that it campaigned on in the election was miscalculated by such a huge amount."

MBIE said today the paragraph was not based on detailed calculations and was intended to be a high-level illustration that fully funding KiwiBuild projects would likely tie up much more of the Crown's working capital than other alternatives.

Earlier this year, the Government amended its KiwiBuild targets to 1000 homes in the 2019 financial year, 5000 in 2020 and 10,000 in 2021.

That figure would climb to 12,000 per year from the 2022 financial year onwards.

In May, the Government unveiled its buying off the plans initiative, where the Government would underwrite developers to build KiwiBuild homes.

Housing Minister Phil Twyford revealed 800 – or 80 per cent – of the KiwiBuild homes in the 2019 financial year would be bought off the plans.

That number jumps to 2500 in 2020 and 4000 in 2021.

The April MBIE document said the Government would need to leverage "other parties' capital in order to achieve its goals".

Ardern said the Government had been open about the fact it would partner with developers and others to deliver the full scale of KiwiBuild.

Although Labour never explicitly referenced its plans for buying-off-the-plans homes in its KiwiBuild policy, Twyford had flagged before the election that was Government's intention.

He yesterday pointed to the party's comprehensive housing policy launched in 2016.
"Labour's Affordable Housing Authority will have two chief functions: acquire land for housing, including Crown land, and partner with the private sector, councils and iwi to create housing developments," the policy said.

Twyford said: "We knew then that we would need to use the best of public and private sector expertise to work with developers to cut through the red tape, with fast-tracked consenting so it can get on with building the houses we need.

•An early version of this article omitted comment from MBIE that the PwC advice was not based on detailed calculations.