The Government has tapped former Prime Minister Bill English to lead a review of Kāinga Ora’s financial situation.
New Housing Minister Chris Bishop has been a longstanding critic of Kāinga Ora’s financial management and had promised to review the performance of the agency within 100 days of the new Government taking office.
Bishop said that since coming into office, he had received “worrying advice about the financial situation of Kāinga Ora”.
He said the Government would not be releasing that information as it was “commercially sensitive”, however he said it confirmed “an independent review is the right course of action at this time”.
Bishop pointed to another recent report by Treasury and the Ministry for Housing and Urban Development that found Kāinga Ora’s level of debt had grown from $2.7 billion in 2018 to $12.3 billion in June of this year.
“Advice released last year suggests that if Kāinga Ora continues on its current trajectory, their debt would reach $28.9 billion by 2033.”
Bishop said Kāinga Ora was the country’s biggest landlord and that “its operations have a significant impact on the Crown’s books.
“The Crown entity has total assets of $45b and annual expenditure of $2.5b,” Bishop said.
English would be joined by Simon Allen, who helped with the ultrafast broadband rollout, and Ceinwen McNeil, who has experience in the construction and urban development sectors.
“The Kāinga Ora board is currently being consulted on the terms of reference, which will be released later this week once this consultation is complete,” Bishop said.
“It is critical that Kāinga Ora is focused on efficiently building social houses for people in need while also delivering value for taxpayers’ money, and this review will be able to provide recommendations to ensure that these objectives are being met,” he said.
The announcements comes as Prime Minister Christopher Luxon fronts media at his post-Cabinet press conference.
He told media one area where people needed support currently was in housing, citing the high level of rents.
The Government was concerned about the management of its public housing assets, Luxon said. He also said the debt trajectory was quite concerning.
He noted the staff growth within Kāinga Ora, saying it was similar to other agencies under Labour. Luxon said Kāinga Ora was performing “well short of expectations”.
Luxon said if it was deemed necessary to have a review of other state-owned enterprises, they would be open to that. However, he clarified he did not intend to create a number of working groups, something he has criticised the previous Labour government for.
“You’ll have to wait and see,” he said when asked if the Government would announce light rail’s axing before Christmas.
Bishop told media it was essential the Government had a high level of confidence in Kāinga Ora’s actions.
Bishop expected to finalise the terms of reference of the review by the end of the week.
The worrying advice had come from Treasury and it would be released “in due course”, Bishop said. He wasn’t releasing it now as it was commercially sensitive.
Asked if Kāinga Ora was solvent, Bishop said he was advised it was.
Bishop said English was chosen to lead the review because he had extensive experience in turning around struggling finances at a government level, alongside his history of holding the finance ministerial portfolio.
Luxon is also facing questions over his publicly-funded te reo lessons.
Earlier today, Labour leader Chris Hipkins earlier said it is “absolute hypocrisy” for Luxon to let taxpayers fund the lessons while cutting bonuses for some public servants who learn the language.
Luxon is also attracting criticism from the typically National-aligned Taxpayers’ Union, which says there is no justification for Luxon to draw on taxpayer funding for lessons and he should pay it back.
However, Luxon told media it would make him a better PM and he thought it was a good use of that investment.
Luxon believed it was different for public servants whose jobs didn’t require learning te reo.
He wanted to support people learning the language.
Asked if the public had received value for money, Luxon said it hadn’t been easy and it was important for him to keep working at it.
“Yeah, I think they have.”
Luxon accepted he had “struggled” with learning te reo.
He wouldn’t go into who was teaching him the language.
Luxon wasn’t aware how much his te reo lessons had cost. He said he hadn’t set himself any KPIs with respect to using te reo Māori when he appears at Rātana and Waitangi next year.
A report by the Australian Associated Press (AAP) this morning said Luxon used public funds to pay for his private te reo lessons through a budget offered to the Leader of the Opposition, the role he held prior to October’s election.
A statement to AAP from a spokesman for Luxon argued developing better skills in te reo was “highly relevant” to his role as Opposition leader and potential PM.
It followed Luxon railing against financial bonuses being given to public servants learning te reo when it wasn’t relevant to their job. Finance Minister Nicola Willis had confirmed she was seeking advice on how to stop the bonuses being negotiated in the future.
“People are completely free to learn for themselves,” Luxon said earlier this month.
“That’s what happens out there in the real world, in corporate life, or any other community life across New Zealand.
“In the real world outside of Wellington and outside the bubble of MPs, people who want to learn te reo or want to learn any other education actually pay for it themselves.”
When asked, Luxon had regularly stated his support for more people learning te reo and how he was on his own journey with the language.
Hipkins, who had made similar statements regarding his own te reo education, said he supported Luxon learning but believed it was inappropriate to use public funding, given his recent comments.
“Christopher Luxon should be commended for learning Māori, but it’s absolute hypocrisy for his Government to then set about cancelling the taxpayer subsidies he used to do so, thus denying others that same opportunity,” Hipkins said in a statement.
Hipkins claimed Luxon had a history of hypocrisy, citing National scrapping the Clean Car Discount, despite benefiting from that discount when his family purchased a Tesla.
Luxon has long argued the Tesla belonged to his wife, Amanda.
Taxpayers’ Union campaigns manager Connor Molloy said it was clear Luxon had been “caught out saying one thing but doing the other.
“He should do the right thing and pay the money back,” Molloy said.
“Taking taxpayer money for te reo lessons while criticising public servants for doing the same undermines the credibility of the Government, who proclaims to be focused on reducing wasteful spending.”
Molloy, in a statement, supported taxpayer-funded reo tuition if using the language was necessary to a person’s job. However, he didn’t think that applied to the role of Prime Minister.
“If Mr Luxon wants to learn te reo, he should do so from his own pocket.”
Luxon has today announced his first trip as Prime Minister, which will be to Australia to meet with PM Anthony Albanese on Wednesday in Sydney.
“Prime Minister Albanese was one of the first international leaders I spoke with after the election, and I’m looking forward to ongoing discussions throughout my term as Prime Minister,” he said.
“The coalition Government will be engaging internationally with new urgency and intensity, to invest in relationships, increase prosperity and enhance our security.”
He added his support for a “greater focus on improving the business environment” between New Zealand and Australia.
Alongside Albanese, Luxon would be meeting with investors in New Zealand to “hear how we can help them thrive”.
Australia was also the first visit for Chris Hipkins when he became Prime Minister in January.
In April during a visit ahead of Anzac Day, Hipkins and Albanese announced a new direct pathway to citizenship for eligible New Zealand citizens who have lived across the Tasman for at least four years.
Almost 2000 Kiwis had applied when the pathway opened in July.
Also in July, the pair agreed to form a joint Australia-New Zealand expert group to look into ways to make trans-Tasman travel more “seamless”. The group had a 12-month deadline.
Albanese then said New Zealand and Australia could make better use of “SmartGate” technology already in use on both sides of the Tasman, which would mean that “before you get on a plane in either country, it’s already recognised that you are ‘okay’ to come in”.
This week’s meeting between Luxon and Albanese would likely include a discussion about whether New Zealand joined the Aukus security pact, agreed by Australia, the United Kingdom and the United States.
While New Zealand was unlikely to be a full-fledged member of the pact given the country’s opposition to nuclear power, it was possible to agree to Pillar 2 of the pact which largely concerned the sharing of technology.
Luxon and the National Party had signalled stronger interest in investigating joining Aukus Pillar 2. New Defence Minister Judith Collins said the previous Labour Government missed the opportunity as it had been “anti-American”.
On his visit to Australia, Luxon said he had known Albanese through his former role as Air New Zealand chief executive and was hoping to speak about how the two countries could boost their business.
Kiwi assistance is also on standby following flooding in Queensland, he said. No formal request for help had been received he said.
On his relationship with Albanese, Luxon said they used to catch up for lunch when he was in Australia when Albanese was in the transport portfolio.
“It’ll be good if we can get there,” Luxon joked following news the NZ Defence Force plane he intended to use to fly over there was unlikely to be fixed in time.
He said it was “incredibly frustrating” the 757 was experiencing problems. Asked about his previous comments saying he was against using the 757s, Luxon said using the plane allowed media to come along which was important.
“We’re not sending people to the moon, we’re just trying to get to Australia,” Luxon said while accepting it was “incredibly embarrassing” to New Zealand that the 757s kept breaking down.
One of the NZDF’s 757s was in “long-term maintenance”, Luxon said. He was relying on taking the second to Australia but that had experienced problems.
Luxon wouldn’t be drawn on what he was thinking with respect to potentially replacing the Boeing 757s.
Adam Pearse is a political reporter in the NZ Herald Press Gallery team, based at Parliament. He has worked for NZME since 2018, covering sport and health for the Northern Advocate in Whangārei before moving to the Herald in Auckland, covering Covid-19 and crime.
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