The government is emphasising its building programme as emergency housing grants total over $1b in five years but construction costs are rising at the fastest pace on record, writes Anna Rawhiti-Connell in The Bulletin.
$15.8m paid to one motel via emergency housing grants
Three weeks ago, it was revealed that the government has spent $1.2b on emergency housing grants in the last five years. New figures from Stuff’s Andrea Vance show the Ministry for Social Development (MSD) paid out a total of $788m to house 37,887 people between March 2020 and July 2022. When the $1.2b figure was reported, it was noted that a large proportion of that had been paid out to motels. The Herald’s Isaac Davison (paywalled) had a breakdown of that in June. Yesterday, Vance reported on one motel in Manukau that has been paid $15.8m to shelter 621 people, all clients of MSD.
“Get rich scheme for motel owners”
National’s spokesperson for housing, Chris Bishop, has previously called the expenditure “a get-rich-quick scheme for motel owners”, saying the government “has washed their hands of the problem of people on the state house waiting list”. At the end of May, there were 27,000 people on the waiting list. A cut to funding last year that allowed social housing providers to lease existing private sector properties has left providers like the Monte Cecilia Housing Trust in Auckland struggling to provide homes for families who need transitional housing.
Project underway to cut build times
Minister for housing Megan Woods has responded to the figures and criticism of the funding cut to social housing providers by pointing to an emphasis on building new homes rather than always buying or leasing accommodation. As Stuff’s Dileepa Fonseka reports, Kāinga Ora is currently embarking on work to speed up the process of building new homes. Project Velocity, as it’s called, has so far cut the time it takes to actually get shovels into the ground down from 18 months on one project to two months. The need for speed is obvious, with cities like Rotorua anticipating the area will still require emergency housing for at least another five years.
Kāinga Ora’s debt predicted to be $3.7b more than forecast
Like anyone trying to build anything at the moment, Kāinga Ora is not immune to rising construction costs, a tight labour market and supply chain issues. Stuff’s Miriam Bell reports this morning that construction costs are rising at the fastest pace on record. BusinessDesk’s Greg Hurrell reported last week that Woods had received a briefing from the Ministry of Housing and Urban Development to reject new funding requests from Kāinga Ora as the agency faces an unmanageable debt blowout. Kāinga Ora’s debt was predicted to reach $20.1b by 2026, $3.7b more than earlier forecast. The briefing said costs had increased at a greater rate than revenues received. Hurrell reported in late June on a hiring freeze at Kāinga Ora (paywalled) due to soaring building costs and supply chain delays.