A New Zealand Herald staffer uses a Bloomberg terminal. Photo / Alex Robertson
A New Zealand Herald staffer uses a Bloomberg terminal. Photo / Alex Robertson
The Government’s housing agency Kāinga Ora is under fire for spending $312,025 a year on seven expensive Bloomberg computers.
Kāinga Ora had been issuing its own debt. This meant the agency could borrow to fund its housing build programme on its own, without going through Treasury, like most other government departments. It issued about $2.5b a year and currently has has $12.1b in debt in its portfolio.
Managing that debt has required seven costly Bloomberg terminals, Kāinga Ora claims.
A Bloomberg terminal is a computer used by people in the financial services sector to help monitor market information and make trades.
Those terminals collectively cost $312,000 a year, or about $44,570 per terminal, according to an Official Information Act request released to the Herald.
Kāinga Ora’s contract for the terminals runs to March 2024, and the agency said it will look to reduce the number of terminals when its contract expires, if its activities remain similar to what they are now. A recent change has meant that Treasury’s New Zealand Debt Management will look after Kāinga Ora’s financing, rather allowing Kāinga Ora to continue issuing its own debt.
The change is a result of tension between Kāinga Ora and Treasury, with Treasury reportedly arguing it should issue the debt as it would be cheaper.
Kāinga Ora’s smaller size and semi-independence from the core Crown balance sheet means its debt comes with a small risk premium over general government debt, a premium that ultimately lands with the taxpayer - and that is before you get to the cost of Kāinga Ora setting up its own debt team with their own Bloomberg terminals.
The Government’s gross debt to May was $133b. Treasury told the Herald it has 13 Bloomberg terminals.
Kainga Ora says the computers were important for financing its building. Photo / Andrew Warner
In a statement, Kāinga Ora’s general manager, strategy finance and policy, Gareth Stiven, told the Herald that “all large issuers of debt use Bloomberg as its market standard platform”.
The terminals “play an important role in the delivery of thousands of newly built public houses which Kāinga Ora supplies each year. We invest around $2.5 billion – $3.5 billion each year on building new homes.
“These terminals are critical IT infrastructure in financing the Kāinga Ora build programme.
“Since they were introduced, nearly 10,000 newly built public homes have been delivered, and funded by our debt programme. Over that time, the value of our housing portfolio has nearly doubled to $50 billion,” he said.
Stiven added the computers also help to “manage cash balances and same-day supplier payments to hundreds of suppliers and build partners”.
National’s housing spokesman Chris Bishop said the spending another example of “bloated bureaucracy”.
“Kāinga Ora’s seven Bloomberg computer terminals are emblematic of the bloated bureaucracy that Kāinga Ora has become. It is the country’s worst landlord and they should focus on being a better landlord not grandiose computers that they have little to no need for,” he said.
Act’s housing spokeswoman Brooke van Velden said the revelation would be “infuriating for Kiwis struggling to make ends meet, but also not surprising when wannabe big time property developers are set free with billions of dollars of taxpayer cash to play with”.
“The saddest thing is that all this extravagant spending by Kāinga Ora has only served to drive inflation in housing and construction, making it an own goal,” she said.
Stiven said Kāinga Ora could not rely on other tools to access the market information provided by the terminals.
“When pricing is closed, all parties independently verify market price. This ensures full visibility. Without terminals, Kāinga Ora would be relying on third parties to relay market movements up to the point of close and would not have independence. Kāinga Ora raised up to $8 billion in capital markets since 2018 using the terminals,” Stiven said.
Defending the number of terminals, Stiven said a debt deal “involves the entire team, requiring a number of terminals, both in the issuance of debt, but also through to the front office in managing liquidity”.
He said Kāinga Ora needed to use the “Bloomberg chat function, which is the market standard platform for communication across parties when opening, running and closing a bond deal”.
Kāinga Ora will continue to use the machines as the role of bond issuance moves to Treasury, but it will use a reduced number.
Stiven said Kāinga Ora would continue to use Bloomberg terminals “for continued interest rate risk management of debt borrowed via the Crown, including the pricing of hedge instruments (related to a debt portfolio size of +$12 billion), ongoing liquidity management requiring communication function for pricing of investments”.
He said this was “comparable in approach” with Treasury’s NZ Debt Management “and other large entities”.
Thomas Coughlan is Deputy Political Editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the press gallery since 2018.
