Housing Minister Chris Bishop: What's the real meaning of "Kāinga Ora's core role is as a landlord"? Photo / Mark Mitchell
THREE KEY FACTS
Sir Bill English said it bluntly: the Government shouldn’t build social housing.
The National Party’s muse and former Prime Minister was speaking at a Property Council conference earlier this year.
There’s a better approach, he said, and you can see it in the retirement sector. The Government pays a residential care subsidy directly to providers, but “it hasn’t invested in capital stock (buildings) for 30 years”. And yet, he suggested, “the outcomes are better than with social housing”.
I’ve been to seven housing conferences in the last few months, and many more housing-related events. I’ve sat through days of speeches and panel discussions. Government ministers have set out their plans.
I’ve heard frontline stories and analysis from community housing providers, social workers and others. There’s been analysis from banks and other finance specialists, builders, public servants, planners and economists.
All of them have debated the complex, interrelated questions of how to address homelessness, create a more rational housing market, make construction cheaper and easier and build stronger communities in our towns and cities.
But it was English who pointed to the biggest goal. And it doesn’t mean merely pulling out of construction.
In my view, when you put together the different components of Government policy, something else becomes plain. There is a desire to discredit and destroy the construction arm of the state-housing agency, Kāinga Ora (KO). To do it so comprehensively that no future government will be able to put it back together and get on with the job.
That’s the context in which English’s investigation in 2024 reported that KO was billions of dollars in debt, had a board that didn’t know what it was doing and was run by profligate senior management. The narrative was almost entirely swallowed by many commentators.
But KO’s debt is negligible in real-world terms. It’s tied up in 70,000 state houses, where the income and expenses are known, managed and proportionate.
Outgoing board members like Professor Philippa Howden-Chapman tried to explain this and were ignored. As Vanessa Cole of the advocacy group Public Housing Futures puts it, “The Government has manufactured a debt crisis, in order to justify a sell-off of state housing and privatisation of the sector.”
I think that’s right.
Perhaps you’re thinking, hang on. Hasn’t the Government repeatedly committed to building more state houses?
Yes it has. I was at the meeting in Māngere in 2022 when Nicola Willis, now the Minister of Finance, signed a pledge in front of hundreds of people to build at least 1000 social houses in Auckland every year.
I’ve heard Housing Minister Chris Bishop say they will “build enough state and social houses so that there is no social housing waitlist”. I’ve heard Associate Housing Minister Tama Potaka promise to “build more social houses than the Labour Government”.
But it turns out they don’t mean Kāinga Ora will build them, or commission them to be built, or buy them once they’re built.
In fact, the Government has announced it has no plans to build more state houses after 2026.
Instead, the Government will facilitate others to build, own and operate social housing. KO itself will focus on what Bishop calls its “core role”: being a landlord.
It’s worth remembering that the agency, as chief executive Matt Crockett likes to say, doesn’t own any hammers itself. State housing has always been built for the Crown by the private sector: Michael Joseph Savage’s pioneering programme in 1935 contracted James Fletcher to plan and then do the work. But the state owned the houses.
The new approach is both good and bad. The good part is that it means long-overdue beefed-up support for community housing providers (known as CHPs). There are dozens of CHPs, including the Salvation Army, Habitat for Humanity and local community housing trusts all around the country.
This is not the private sector in the usual sense. CHPs are not-for-profit and many are church-related. Iwi are technically not CHPs but their funding and operations are similar.
The value of CHPs in the housing sector is that they often have deep roots in local communities and are already experienced providers of social services. A CHPs housing project can offer tenants proven support.
Despite this, CHPs have been hard done-by over the years. Labour, to their shame, never believed they could have a big role building homes, despite their repeated pleading for more support.
This was ideological: Megan Woods, Labour’s Housing Minister, once told me: “It’s our job to build social housing.”
National has now flipped the script, with Bishop announcing Government support for the Community Housing Funding Agency (CHFA). This agency was established last November by the CHPs group Community Finance, to aggregate the financial clout of the sector and thus grow funding support for CHPs projects.
The Government will enable the agency to borrow at the same competitive rates as Kāinga Ora, by helping it to secure a competitive credit rating and providing a long-term loan facility. James Palmer, chief executive of Community Finance, calls it “a watershed moment for community housing in New Zealand”.
In contrast to Woods’ “it’s our job” declaration, Bishop says he wants “a level playing field between CHPs and Kāinga Ora”. He calls it “competitive neutrality”.
In my view, what he really wants is to take KO off that “level playing field” altogether.
There are so many problems with this. The first is that CHPs can’t do it all.
They already provide 16% of social housing and they want to grow. But they have never said they should take over from Kāinga Ora. They don’t have the scale and, as not-for-profits, it’s dangerous for most of them to get too big. They see their role as complementary and have repeatedly made this clear to the Government.
The state has been building homes, on and off, since Richard Seddon introduced the Workers Dwellings Act in 1905. Under Savage, 5000 were built in the four years before World War II, and then 10,000 a year were built after the war. It wasn’t until the 1990s that the National Government reversed the policy, stopped building and began a widespread selloff.
The 2017 Labour-led Government restored the building programme and got construction back to 1970s levels. Now, it’s being abandoned again.
Even the “core” landlord role is being undermined: Kāinga Ora is losing 673 roles by the end of June, which is nearly a quarter of its workforce. Crockett says this won’t affect support services for tenants, but he has also confirmed there will be fewer staff in “customer-facing roles, including housing placement and call centre teams”.
Pulling KO out of construction has other consequences. One of the reasons its build programme was called expensive is that a lot of it was in areas with poor infrastructure.
When Māngere was established in the 1950s, for example, the homes were built on top of a very poor sewerage system. Recent KO projects have been fixing the pipes.
There’s a social good in this that won’t readily be picked up by anyone else.
Another factor in the cost of KO homes was that they have been built to reasonable standards. Bishop says he was puzzled to learn that KO apartments should have “Juliet balconies”.
“I didn’t even know what a Juliet balcony was,” he tells audiences.
He may not have been in a small apartment, either. Anyone who has could tell him that having a balcony makes all the difference to their quality of life. He should think of it not as an unnecessary expense, but as a cheap way to compensate for a small floorplan.
And in 2020, KO did another great thing: it committed to using the Homestar 6 standard for all new builds. That is, to build warmer, healthier and more energy-efficient homes than were required by the Building Code. The wider industry has tended to follow suit.
Crockett says they “haven’t ditched” Homestar 6. But he prefers to say they are “refining it and making sure we have the right balance”.
We have a crisis of homelessness in this country that the city missions in both Auckland and Wellington have called “the worst we’ve seen”. Census data released last year revealed 112,496 people were “severely housing deprived”: sleeping on couches, in their cars and on the streets.
It’s great the CHPs are getting more support. But as Community Housing Aotearoa chief executive Paul Gilberd says, “Everybody, including Kāinga Ora ... needs to do everything it can to increase the amount of housing stock in New Zealand. We simply don’t have enough of it.”
The Government cannot turn its back.
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