Could KiwiBuild be on the way out? (Image: Getty Images, design: Tina Tiller)

PoliticsApril 24, 2024

Is KiwiBuild finally on its last legs?

Stewart Sowman-Lund

The Bulletin editor

Could KiwiBuild be on the way out? (Image: Getty Images, design: Tina Tiller)

A look at the state of the previous government’s affordable housing scheme, and what could come next.

Remind me: What’s KiwiBuild again?

First announced in 2012, KiwiBuild was a flagship policy of the Labour Party heading into both its 2014 and 2017 election campaigns. With Jacinda Ardern as prime minister, the scheme, which pledged to build 100,000 affordable homes within a decade, formally launched in 2018.

100,000?!

Yes.

But did it reach this target?

Nope. By 2019, the government admitted that just 300 homes would be built by the middle of that year, 700 fewer than had been promised the year before (by September, the number was actually just 258). The target of 100,000 homes was ditched soon after and a “reset” was announced, which included a progressive home ownership scheme.

By May 2022, around 1,300 KiwiBuild homes had been built. After the budget was released and a Spinoff contributor suggested the programme was being quietly laid to rest, then housing minister Megan Woods argued that KiwiBuild was alive and well, even if it had slowed. “We’re making good progress, but the problems caused by decades of under-investment in housing infrastructure, National’s gutting of public housing and failure to build more, and no action on growing affordable housing, was never going to be fixed in a few years. The reality is it’s going to take more time,” she wrote.

Former minister Megan Woods, photographed in her Beehive office by Michelle Langstone

All right, so it’s still going even now?

Yup! I just bought a KiwiBuild home, so yes, it’s still operating despite its shaky track record. If you meet the eligibility criteria, which includes income requirements and that you are a first home buyer, you can access KiwiBuild properties. All the eligibility details can be found here.

The KiwiBuild website lists 22 developments with homes currently for sale (most are in Auckland, but there are properties in other regions like Rotorua).

How does it work again?

The Crown underwrites homes in new residential developments either on private land or Kāinga Ora land, meaning it either buys the homes from the developer off the plans at a discounted price and on-sells to home buyers, or it promises to buy any that don’t end up selling once they’re completed. According to the KiwiBuild website, “the underwrite gives developers the backing and certainty required to deliver developments that may otherwise have not proceeded or at a greater pace than originally planned”.

Where are we now?

Latest figures released to The Spinoff under the Official Information Act show the KiwiBuild scheme has resulted in 2,335 new homes being built since it launched in 2018. Most – more than 2,000 – have been in Auckland. In the Greater Wellington area, there have been 106 KiwiBuild homes constructed in the past six years, with 68 in Taranaki and 11 in Canterbury.

A housing development (Photo: Justin Latif)

Part of KiwiBuild’s initial appeal was the lower price point for a brand new home. For example, the average sale price of a KiwiBuild home in Auckland over the past six years has been $613,437, compared to a national average of $800,000 or Auckland average of over $1 million.

And going forward?

In addition to the completed homes available to buy, according to the data provided to The Spinoff, there are 1,238 new KiwiBuild homes still contracted to be built. Again, most of these – close to 1,000 – are in Auckland. In Wellington, there are 80 contracted to be built. Several main centres, notably Canterbury, have no new KiwiBuild properties in development. Neither does Northland, Hawke’s Bay, Taranaki or Manawatū.

“Private developers independently submit underwrite proposals to deliver KiwiBuild homes as part of their planned development,” a spokesperson for Kāinga Ora, the agency that runs KiwiBuild, told The Spinoff. “This means at any one point in time there may not be active KiwiBuild projects in all locations. It is also important to consider the wider market context and volume of new residential development in Auckland.”

So is KiwiBuild is on the way out?

The coalition government has pledged to kill the scheme entirely, but there isn’t currently a timeframe for this to happen. While in opposition, the National Party launched its own affordable housing proposal dubbed Going for Housing Growth that included an end to KiwiBuild. It advertised a $1 billion fund for “Build-for-Growth incentive payments” for councils that deliver more new housing, which would be “funded by stopping existing programmes like KiwiBuild”.

Asked for comment, housing minister Chris Bishop told The Spinoff that KiwiBuild was a “disaster” and said the government was keeping an eye on it and other housing schemes (which may include other support for first home buyers, like the First Home Grant). “The government is taking a close look at all housing funds in the context of the constrained fiscal environment and our own priorities around Going for Housing Growth,” he said.

Housing minister Chris Bishop and PM Christopher Luxon at parliament (Photo: Hagen Hopkins/Getty Images)

Is Kāinga Ora preparing for the death of KiwiBuild?

A spokesperson for the housing agency said that decision lay with the minister. “As a Crown entity, Kāinga Ora responds to and delivers on the government’s housing priorities and expectations set by our responsible minister,” the spokesperson said.

However, as Thomas Coughlan recently wrote for the Herald, the former government had already pivoted away from KiwiBuild to focus on making it easier for new homes to be built by adjusting planning rules. “After it [Labour government] did away with KiwiBuild, it shifted to a housing strategy based on liberalising planning rules and forcing councils to zone for more housing, first through the NPS-UD, a set of permissive planning rules from 2020, and then through the MDRS, a set of even more permissive planning rules ushered through thanks to a bipartisan deal between the Labour government and the National opposition,” Coughlan said.

Under the National and Act coalition agreement, the Going for Housing Growth policy was adopted along with Act’s promise to make the medium-density residential standards (MDRS) optional for councils.

Meanwhile, a review of Kāinga Ora led by former PM Bill English is expected to be made public in the coming weeks. It was reported last week that some building projects, including KiwiBuild, had been delayed until the review’s findings were known.

If not KiwiBuild, then what else?

Along with making it easier to build new properties through planning rules, the government recently announced proposed changes to the Building Act that PM Christopher Luxon said would help cut red tape. “We have a major challenge. Our building costs have gone up 41% in just the last five years across New Zealand. To build a house here in New Zealand is now 50% more expensive than it is in Australia,” Luxon said. “We want to make it easier and cheaper to build.”

Part of that, Luxon said, was to amend the Building Act so that product standards from other countries could be recognised.

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— Editor

Keep going!

Let’s see who this really is

OPINIONPoliticsApril 24, 2024

Labour has forgotten it was in government

Hayden Donnell

Contributing writer

Let’s see who this really is

Labour in opposition will be shocked to learn which party had six years in power but squandered any chance to make real change.

Grant Robertson’s valedictory speech was a predictably entertaining trip down memory lane. The acid-tongued incoming Otago University chancellor administered a sick burn to the coalition government. He talked about the time Lockwood Smith called Carmel Sepuloni Sepul Carmeloni. But in the middle there was a familiar lament: New Zealand’s tax system, he said, is “unfair and unbalanced”. “We are almost alone in the OECD in terms of not properly taxing assets and wealth in some form. Our current system entrenches inequality. It’s not my place any longer to say specifically what the answer is here, but I do know that the answers are out there.”

It’s hard to argue with him. Our efforts to tax capital are so lax that the IMF, which isn’t widely known as a leftist organisation, has taken to calling us out for overburdening workers and giving the rich a free pass. Recent IRD research found the wealthiest New Zealand families pay a median effective tax rate of around 9.4% – just over half that of someone on minimum wage.

Given that, Robertson will be vexed to hear that a recent left-leaning government did little to change those tax settings, even after it won a historic and likely irreproducible MMP majority.

He’ll be frustrated that the finance minister from that administration repeatedly shot down calls to enact a broad-base capital gains tax, telling Alice Snedden on Bad News it would mean they “burn very brightly as a government for three years and then disappear into the wilderness”, apparently fearing that making radical changes could sink the party’s vote as low as 26.91%.

He will be absolutely apoplectic at the news that the finance minister in question was in fact him.

Robertson isn’t the only Labour figure who seems to have forgotten Labour was, until quite recently, in power. His party’s leader Chris Hipkins has also come to the conclusion our tax system is “inequitable”, “unsustainable” and “broken”, telling party faithful that “people with multiple investment properties are getting huge tax breaks while those on salary and wages pay tax on every dollar they earn”. Hipkins will be horrified to learn of the actions of one former prime minister, who vowed no government he led would ever introduce a wealth or capital gains tax.

It’s not just tax though. The aforementioned Sepuloni blasted the coalition government’s move to crank up the number of sanctions handed out to beneficiaries, telling reporters that “people deserve to be supported into meaningful, long-term employment, and sanctions will not do this.”

She will be pained at the news a recent government had the opportunity to end benefit sanctions and declined to do so. Not only that, it commissioned a report on how to make the welfare system more fair and effective, then failed to fully enact any of its 42 recommendations. Sepuloni will be most gutted of all to hear she was that government’s deputy prime minister.

Another high-profile member of that government, Phil Twyford, has come out swinging against immigration settings binding migrant workers to employers, observing they’ve created an environment that’s ripe for exploitation. He also took aim at the accredited employer work visa system, which he said “clearly needs change”. Twyford will be angry at the author of that system, the sixth Labour government, for failing to overhaul immigration when it had a majority.

In these politicians’ defence, these policy areas – while impactful – haven’t always been the subject of extensive media coverage. They might not have known what Labour was up to.

The same can’t be said about light rail. Everyone knows Labour came to power in 2017 promising rail to the airport, and left power in 2023 without laying a single metre of track.

Everyone, that is, except the official Labour Twitter account. It jabbed prime minister Chris Luxon for saying we should be like Estonia, pointing out its capital Tallinn has a light rail system.

Of course, so too would Auckland if a certain former government had simply approved the one AT had ready to go ahead in 2017 instead of seeing six seductive PowerPoint slides and immediately deciding to spend five years crafting $228 million worth of business cases instead.

Talk to some Labour members, and they’ll agree there’s a gulf between their party today and their party a year ago. They’ll point out it’s likely to pass resolutions on things like tax and housing at this year’s conference which it wouldn’t have dreamed of legislating when it was in power. It can feel like there are two Labours — Labour in government and Labour in opposition.

Those two parties don’t always seem to have that much in common. Labour in government fears backlash from landlords and special interest groups for the wealthy. Labour in opposition talks about how capitalism has been a blatant failure for the poor. Labour in government triangulates its policies to offend the fewest possible people and ends up pleasing no one. Labour in opposition spends less time wringing its hands over electoral prognostications and more asking what will be effective. Labour in government is cautious to the point of paralysis. Labour in opposition is more willing to try winning an argument and slightly less afraid of losing one. It knows structural problems need structural solutions. It wants to take decisive action. It can even be a bit bold. Perhaps Labour in government, if it ever returns, could follow its lead.

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