The axing of thousands of planned new homes and staff cuts at Kāinga Ora signal a turning point in the state’s role as key provider of social housing, writes Peter Bale.
‘It was like Elon Musk came in with his chainsaw,” says a Kāinga Ora staffer of the state housing agency’s restructuring. The decapitation of the ambitious project to dramatically expand social housing and build model communities calls into question the fate of almost a century of government policy and the very idea of state housing as we’ve come to know it.
Housing Minister Chris Bishop’s “turnaround plan” is far more than the traditional cycle of National and Labour governments cutting or expanding investment in social housing, say both proponents and critics of the previous Labour administration’s attempt to create a world-class central agency to build thousands of homes and sophisticated, integrated communities. This time, it may be terminal in terms of a state agency planning communities and building social housing en masse. The government wants a big shift in responsibility to community housing groups at this point ill-equipped for the scale of the job.
It is arguably a turning point in the myth of an egalitarian New Zealand where we accept the state having a key role in social housing provision. Few believe a future government could recreate the huge investment of money and people Labour committed to Kāinga Ora (critics say without regard to cost or strategy).
More than 600 staff – about 17% – are going in the current cuts, which come on top of losses of a similar magnitude since December 2023 in design and construction expertise.
It’s the end of a huge investment in new homes and methods of building homes and communities pushed by Labour and led by a passionate former Fletcher Building executive, Andrew McKenzie. In what it first called a “reset”, the coalition has refocused the state rental housing agency on its existing housing stock and tenants, and abandoned building at scale to try to solve a 25,000-strong state house waiting list.
The government, backed by a theoretically independent review, says Kāinga Ora was profligate and unsustainable. Its debt rose from from $12.3 billion to $16.5b in the last financial year and was forecast to rise to $23b by 2028. It had a $568 million operating deficit last year. Former board members say it was always run on a debt-funded model with a AAA rating to build assets that accrued to the national balance sheet.
Kāinga Ora had failings, but under Labour it built at a rate not seen for decades. From 2017 to 2023, it added 12,000 public homes. The following financial year, 2023-24, saw 4864 new builds completed – the biggest delivery of new homes in decades.
But in June this year, Bishop called a halt to 212 of 460 projects either under way or in the pipeline that would have delivered 3500 more homes. This followed February’s announcement of plans to cut the agency’s debt by $1.8b.
The new Kāinga Ora will focus on its duties as a landlord – tenancy and housing management – rather than aiming to be a world-class developer of entire communities. The agency says it still expects to have a slightly expanded estate of about 78,000 homes by mid-2026, but its capacity to deliver new homes at scale has been cut as homelessness continues to spike.
The impact of the revamp has also hit the private sector, with hundreds of tradespeople losing their largest client. Kāinga Ora plans to sell about 900 properties, saying the money will be reinvested in properties elsewhere. Both new developments and vacant lots where older homes have been demolished lie empty, to be sold or developed in yet-to-be-determined partnerships with private developers.
This is far more than the “reset” signalled when Kāinga Ora’s board was sacked and replaced in July last year. The coalition’s aim to shift responsibility for delivering social housing to community and local groups may be the right way to go, but the question is whether the money, skills and capacity will follow. It represents a historic shift in ideology and policy.
Housing for the people
Our emblematic state houses grew out of the idea workers deserved decent homes. The architecture and planning built on the English idea of model suburbs: communities integrated across classes with tidy streets and green spaces instead of slums and ghettos.
“It was housing for working-class men and their families,” says Bill McKay, a senior lecturer in architecture and planning at the University of Auckland and co-author of Beyond the State: New Zealand state houses from modest to modern. “It was housing for the people … It wasn’t until the 1960s and 70s that we started to get into welfare houses.”
Where Labour believed only the state could operate on a big enough scale to solve homelessness, the coalition wants private and community groups to provide social and affordable homes. McKay calls this a “tragedy”.
Bill English, the former National prime minister who wrote the template to restructure Kāinga Ora, says the idea of a centralised state-run housing agency is outdated and unsustainable and has failed to serve tenants or taxpayers. No one, not even Labour, he reckons, would want a return to the old Kāinga Ora as a state planner and builder.
“We’ve been one of the last places on Earth to have a government monopoly on social housing,” says English. (The state provides 84% of social housing; community groups the rest.) He argues, as does the government, that local and iwi groups are more effective at providing social housing. The coalition last year launched a specialist agency with $140m to lend to community housing providers, giving them access to cheaper borrowing to build 1500 homes.
Slum landlord
Debate about Kāinga Ora and its tenants – two-thirds of whom are Māori or Pasifika, many on low incomes, vulnerable or having “complex needs” – exposes unpleasant truths about our attitude to the poor or less fortunate and to racial disparities.
English, a former minister of housing who once described the government as the country’s “biggest slum landlord”, questions how much we are committed to equality. “I think most of us, of course, would like an egalitarian community. We say we would [but] it’s not how we behave.”
Phil Twyford, the first housing minister in the Labour government that created Kāinga Ora, believes the state has a central role to play in providing housing to the less well-off and creating a floor in the housing market at a price point the private sector cannot meet.
“It’s really important that there is a strong public housing sector,” he says. “The conception of state housing has changed since the 1930s. It’s become … part of the welfare system for people who would otherwise struggle on the private rental market.”
He says he is gutted by the coalition’s changes. “The government has basically said, ‘Stop. Do not increase the stock of public housing from this year.’ They are basically dismantling Kāinga Ora’s capability to build, [which was] built up over six years.”
McKay has greater faith than English in New Zealanders’ commitment to equal opportunities. “I think there’s still a very strong egalitarian instinct … among most New Zealanders. So I think most would agree that it should be the state’s job to provide housing.”
That’s not reflected in the coalition’s decision to sell hundreds of properties in well-heeled Auckland suburbs – more than 200 are valued at over $2 million each – and instead build homes where less well-off people live already, such as South Auckland or Porirua (a practice seen before, in National’s 1990s sell-off of more than 11,000 state houses). Surely this smacks of nimbyism and risks creating ghettos?
The government and English reckon the answer is a greater role for community housing providers and iwi, with an efficient, less ambitious Kāinga Ora repairing and replacing its assets but not growing the stock explosively.
Bad press
In parts of the media, state housing tenants are portrayed as “troublesome” or “nightmare neighbours”. No doubt, some are, but Kāinga Ora houses 185,000 people. Then there are stories of “container homes” or “battery hen” developments alongside complaints of excessively costly developments in prime suburbs. Kāinga Ora couldn’t win.
English says his concern is tenants: how to truly address their needs. He argues local services are far more likely to do that than an unwieldy state apparatus.
“[Kāinga Ora] does a poor job, and that’s obvious. It’s obvious that the stock is not well-maintained. It’s obvious that a lot of tenants don’t get either the support they need or the pathway to independence that they could achieve.”
His report – which emerged remarkably in line with Chris Bishop’s view that Kāinga Ora was “underperforming and not financially viable” – described a bloated organisation running its own agenda driven by over-ambitious government targets, a management not under the control of its board, and generating huge debts.
Others argue that although Kāinga Ora invested heavily and dramatically ramped up housing delivery, it was doing so at scale and adding to the national balance sheet in a sustainable way.
But the message from the English report stuck. Kāinga Ora is a shadow of what it was. Former chief executive McKenzie quit in July 2024 with a payout (and presumably a non-disclosure agreement – he did not respond to requests for comment). Some Kāinga Ora insiders blame him for its failings and say he pursued a personal agenda to change home-building with little regard to cost. Others see him as a visionary.
The former Kāinga Ora board responded to the English report, arguing its conclusions were both wrong and predetermined, and would trigger a new wave of homelessness.
Former board member Philippa Howden-Chapman, a public health and housing expert, sees a destructive cycle of National and Labour governments taking diametrically opposing approaches to public housing each time they govern. “This is such a terrible pattern for such a small country.” Kāinga Ora, she says, was “the last resort for housing people in decent homes in strong communities, supporting and sustaining tenancies.”
Pioneering state
New Zealanders are nostalgic about state houses. Well-built ex-state homes, with their native timber construction and adaptable and boxy architecture, are sought-after.
The photograph of Labour prime minister Michael Joseph Savage carrying furniture into the first state house in Miramar, Wellington, in 1937 is an iconic image. (Jacinda Ardern had a model of a state house in her Beehive office beneath a photograph of Savage.) New Zealand was a leader in social housing – certainly as provided by the state rather than local councils or by philanthropists, as was the case in the UK and most other countries.
It took three decades after prime minister Richard Seddon proposed state “workers’ dwellings” in 1905 for the first official state home (dwellings in Petone were a forerunner) to be built and occupied – by a bus conductor and his wife. The solid, tile-roofed homes were built to last – decent homes for decent people. By the late 1980s, more than 91,000 had been built in wholly state suburbs or in established neighbourhoods. Successive governments embraced the principle.
State houses also came to be associated with Māori, especially during the rural-to-urban shift of the 1950s. It led to state house suburbs as well as the idea of “pepper potting” – scattering Māori across suburbs to promote assimilation.
The 1990s brought a turning point. The National government introduced full-market rents, with an accommodation supplement that was insufficient compensation for many. Then it embarked on a sell-off of state homes, shrinking public housing from 70,000 to 59,000 units. The sales were concentrated in suburbs with higher land values.
Now, the coalition is mirroring that process. Selling prime properties in areas like Pt Chevalier, Ponsonby, Remuera and Mt Eden to private developers is perhaps the most naked example of how far the concept of mixed suburbs has been abandoned. There is an underlying assumption about who lives where. As The New Zealand Herald headlined, “Kāinga Ora is selling up in Auckland’s most expensive suburbs”.
Some of Kāinga Ora’s most controversial projects have been in areas such as Auckland’s Meadowbank, where residents opposing social houses either thwarted projects or forced costly redesigns to reduce the number of units, making them more expensive.
In Orākei, once a pioneering state housing area as well as the scene of the 1977 protests over plans for luxury private homes on Bastion Pt, Ngāti Whatua Orākei endured dispossession from colonial times until the 1950s. Even now, it has had to buy state homes from the government as part of its plans to provide secure rental and rent-to-buy homes for its people.
“Our history with the state in regard to housing has been extremely fraught and challenging, one full of mostly sadness and trauma, to be frank,” says Ngarimu Blair, director of Ngāti Whatua’s development agency. He’s also a former Kāinga Ora director. He had hoped it would build houses for Māori but it never did. In fact, the iwi paid $16.5m to Housing New Zealand in 2017 for land on which to build future homes for Māori.
“Since 1992, we have been focused more on home ownership opportunities for our people,” says Blair. “We’ve created over 100 home ownership opportunities now on tribal land. So the land is still held communally and we give a licence to occupy for 150 years to our tribal members, against which we support them to get a mortgage.”
Passing the buck
At one time, state services like the Post Office or Railways provided homes to staff in suburbs such as Herne Bay or towns like Taihape. The idea that essential workers – police, nurses, teachers – might have subsidised housing to allow them to live closer to work is long gone.
In London, with its mix of estates developed by philanthropists and council-owned social housing (much of it now privatised), the police and some hospitals still have subsidised accommodation. New York has rent-controlled apartments and social housing projects.
Here, the coalition wants community groups like the Salvation Army to pick up some of the burden. Paul Gilberd, chief executive of Community Housing Aotearoa, which has 92 members, says Kāinga Ora plays an essential role in putting a floor under housing that private companies and his association’s members cannot match. He believes the agency will never recover its former capacity. “It’s being fundamentally undermined and disassembled.”
Gilberd says the solution to housing crises is a mix of tenancy and housing types, from social housing with secure rental tenancy to those with some form of ownership with paths provided by the state and the private sector.
“I think there’s a place in every community for affordable and social housing, and particularly in New Zealand, where your postcode to this day remains a far greater determinant of your life chances.”
Instead, “we’ve had wild fluctuations in policy settings throughout the last 30 or 40 years, as we’ve had changes of government. If you ask me, ‘Is the answer to deal only with the community housing sector?’ I’m going to say ‘no’, but nor is it the answer to deal exclusively with Kāinga Ora.”
Shane Brealey, a veteran builder of affordable housing, now runs Simplicity Living, which funds its build-to-rent homes from Simplicity KiwiSaver. He believes the state should be able to use its scale and borrowing power to deliver quality, cost-effectve housing.
But he says “profligacy” at Kāinga Ora meant many of its schemes cost far more per square metre or per dwelling than private developments, making them uneconomic. Despite the huge sums of money thrown at the housing crisis, Kainga Ora failed to deliver.
“Perhaps the issue is that when you have to be competitive and you have to be financially viable, the cunning and the savvy of the private sector rises to the occasion and meets the challenge,” says Brealey.
Kāinga Ora insiders say the cost differences reflected factors like demolishing old state-housing stock, and difficult or steep sites avoided by the private sector, which often prefers more uniform construction methods and designs. The agency’s McKenzie-era housing development system – intended to accelerate and streamline planning, design and construction – never quite lived up to its promise, nor did experimental ideas like modular homes built in factories. Kāinga Ora says it is still using the system.
There are some success stories in the mix. Gilberd talks about the Ngāti Hine Health Trust in Kaikohe; English says Hastings District Council has done good work; Brealey points to a Simplicity-led development in Northcote, Auckland; some Kāinga Ora developments have won praise and awards for design and integration into communities.
It is possible the government is right and that there is at least merit in what it’s doing. Its turnaround plan may smell of ruthless cost-cutting and libertarian thinking but perhaps the old state-driven model of a benevolent, centralised bureaucracy providing homes to the needy was outdated. It is hard to argue against the idea that local agencies may be able to deliver better housing options for local people rather than a one-size-fits-all model. It’s also true that Kāinga Ora was trying to deliver localised options and to address local needs.
English says “universalist” ideas of central government no longer work. “They are much larger, more managerial, self-interested institutions now than in the 1930s. It’s much smarter to distribute the provision of services in a way that’s much more customer focused … The fundamental relationship is between government and the tenant, not government and the house. This is one of the ideological divides.”
Housing first
The concept of “housing first” underlies modern thinking about social housing. It puts housing – a secure, safe place to live – at the centre of dealing with problems like addiction. It is the prerequisite to getting better, not the prize if you manage to sort yourself out.
“When people are in stable housing, whether it’s community housing or Kāinga Ora, their lives improve, the children do really well,” says Howden-Chapman. “There’s much less hospitalisation, there’s much less police contact.” However, “we definitely have a very strong shadow coming from the Victorian idea of the deserving poor”.
Economic commentator Bernard Hickey calls the New Zealand economy “a housing market with bits attached” that distorts everything and makes progress nearly impossible.
Twyford agrees. “My little thumbnail theory of how we got into such a fucked-up mess is that a raft of tax breaks for landlords over the past 40 years entrenched the idea of untaxed capital gains from housing. So it made housing an investment asset, a highly speculative investment asset, and that has made the cycles more volatile and the peaks even higher … and driven up prices. Those things have compounded to get us into this mess.”
Kāinga Ora clearly made mistakes. It could be an ungainly bureaucracy – aggravated by overlaps with the Ministry of Housing and Urban Development and other government agencies. It had conflicting objectives, the task of renewing old housing stock and difficult tenants. McKenzie’s housing development system set out to revolutionise the speed and efficiency of building at scale but never quite delivered.
One project in particular set the scene for what Kāinga Ora later tried to become in its conversion from Housing NZ into a top-quality housing provider working with the private sector to create integrated developments. Hobsonville Point, in West Auckland on the site of a former air force base, is successful in its own way. It has won prizes for architecture. Its houses and apartments are sought-after and it is now a destination for visitors as well as a stylish suburb.
The catch is that despite being a joint venture between Housing NZ and private developers, it is today far removed from the original model-suburb vision of a mixed community where 20% of the 3000 homes would be allocated to low-to-moderate income earners.
In 2006, then-local MP John Key called the plan to house social tenants at Hobsonville Pt “economic vandalism”.
“You’ve got a capacity to build some fantastic housing there,” he said. “The people of West Harbour, who are most affected by this, have invested millions and millions of dollars in their property. It’s a very upmarket area, West Harbour.” After he became prime minister, his government axed a scheme allocating a portion of the houses to low-income buyers. Sound familiar?
A lost model suburb for a model society
In the bayside Auckland suburb of Ōrakei, Paritai Drive, with its mansions and commanding views of the Waitematā Harbour, is an architectural and societal relic of an egalitarian vision – the Ōrākei Garden Suburb.
“The broad slopes of Orakei [sic] make an ideal site for a garden suburb … The opportunity for creating a model suburb is unique and now is the time for action,” The New Zealand Herald wrote in 1924.
Well-kept homes on tree-lined streets ending in grassed circuses are a lasting reminder of the attempt to create a New Zealand version of the English “model” or garden suburb.
No one today calls it Ōrākei Garden Suburb. The name fell out of use soon after it opened, in 1936, as developers and governments watered down the vision. But you can still see director of town planning Reginald Hammond’s 1925 design competition-winning plan reflected in streets that follow rather than fight topography, the green spaces and the mix of state and private dwellings.
It is a slice of New Zealand history with all that implies – Māori land “sold”, stolen or gifted to Pākehā, and the vision of an egalitarian society and homes for all. Mini versions of garden suburbs were created throughout the country: in Palmerston North (Savage Crescent), Christchurch (Peverel Street), Wellington (Miramar), and Hamilton (Hayes Paddock).
In 1937, the Auckland Star wrote, “Today, the high land above Paratai [sic, now Paritai] Drive…is graced by some of the most beautiful homes in Auckland.”
Yet, they stood apart. In a 2007 thesis on the model suburb experiment, architect and academic Tony van Raat wrote: “It appears as if the occupants of houses along Paratai Drive simply turned their backs on the state tenants behind them and prepared to ignore them.”
Ōrākei Garden Suburb is almost an archaeological site: many of the state houses have been changed out of recognition or demolished for flashier homes. In the 1990s, the National government embarked on a huge state housing sell-off and Ōrākei’s state housing stock diminished considerably.
Green spaces are still there, creating open sight lines to the harbour and places to play or walk along calm streets.
Original plans show wide streets, roundabouts and sections for family homes including state housing, middle-class homes, modernist apartments and land for a university and schools.
Some elements survive: Pāora Flats, named for Ngāti Whatua rangatira Pāora Tūhaere, who sold land in the area for £50 and about £200 in goods in 1850, are a classic of mid-century design by architect Ken Albert. Coloured glass panels create a chequerboard with white glass and large windows making the most of natural light and the views over the Waitematā. Pāora Flats could be in Europe.
The model suburb could have been much bigger. The 1925 plan extended into Bastion Pt (Takaparawhau). But the 1970s Muldoon government proposed high-income housing, triggering the 506-day Māori occupation broken by police and the army in 1977-78. The area now has a marae and a park but not a garden suburb.
Ōrākei Garden Suburb, as it was envisaged and as it is now, embodies the ambition of egalitarianism, the hopes of urban planning and the persistence of our attitudes to homes, neighbourhoods, and our neighbours.
Van Raat concludes: “Ōrākei is still a good place to live, and this fact justified the work of all those who believed in it as an ideal site for a suburb – a good environment for a good life.”