Kāinga Ora faces financial crisis – review

Minister outlines response and changes

Kāinga Ora faces financial crisis – review

New Zealand’s social housing system is neither financially sustainable nor delivering the homes people need, according to an independent review by former prime minister Bill English (pictured above left).

Commissioned last year to examine Kāinga Ora's financial situation, procurement, and asset management, the report found the agency wasn’t financially viable, showed limited attention to value for money, and lacked transparency around internal costs and revenue.

Key findings of the Bill English review

The report made seven recommendations, with the coalition government moving to implement four immediately.

These include aligning contractual arrangements across Kāinga Ora and Community Housing Providers, refreshing the Kāinga Ora Board, issuing simplified directions, and setting expectations for the new board to develop a robust plan to improve financial performance, RNZ reported.

“The review makes it clear that Kāinga Ora’s financial situation is very worrying,” said Housing Minister Chris Bishop (pictured above right).

“The operating deficit at the time the review was undertaken was forecast to grow from $520 million in 2022/23 to over $700m in 2026/27, driven by interest on the debt-financed capital investment programme.

“Debt is forecast to increase to $23bn. Kāinga Ora’s forecast cash requirement from the Crown is $21.4bn over the next four years. This is equivalent to every New Zealander paying about $4,000 for this activity.”

Leadership changes at Kāinga Ora

Simon Moutter, former CEO of Powerco, Auckland International Airport, and Spark NZ, will begin as the new chair of Kāinga Ora from June 4.

“We have today appointed Simon Moutter as the new chair of Kāinga Ora. Mr. Moutter has extensive change leadership experience,” Bishop told RNZ.

The government has also agreed to refresh the Kāinga Ora board by July and issue a new letter of expectations highlighting fiscal sustainability and value for money.

“The first task of the refreshed board will be to present a Kāinga Ora turnaround plan to ministers by the end of the year, which focuses on returning Kāinga Ora to financial sustainability and eliminating losses,” Bishop said.

Future considerations and broader implications

Other changes proposed in English’s review will be considered in the coming months. These include moving to a model where the government becomes an active purchaser with a social investment approach to cost-effectively improving housing outcomes.

Bishop stressed that these recommendations align with the coalition’s broader social policy objectives.

“We must never forget that Kāinga Ora’s performance also has a huge impact on the people it is there to serve,” he said.

“Over the past six years, even while billions of dollars were poured into it by the previous government, Kāinga Ora left thousands of social houses sitting vacant, tenants were left to rack up enormous rent arrears, and threatening, abusive tenants were permitted to continue living in Kāinga Ora homes despite the terror they inflicted on their neighbours.

“This is about making social housing better.”

Read the RNZ report here. For the government media release showing Chris Bishop’s response to Bill English’s Kāinga Ora report, click here.

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