Keith Melville

A truly wonderful vision for more state houses, and the social benefits arising from such an expansion, was presented by Phoebe Carr of WHARE (Whakatāne Housing Action Reform Enthusiast) in her Beacon opinion last Wednesday.

Phoebe’s dream of a housing utopia is free, but totally unrealistic. She should have read the 2024 review of the state housing agency’s disastrous performance in the previous seven years, and what that agency is doing now to address the issues raised, before criticising the Government for pressing the reset button.

Just to recap, Kainga Ora was a debt-ridden bloated mess when the coalition Government was elected in November 2023. The agency was facing a $700 million annual deficit; it had bought up big for redevelopment, often in the wrong places; and development costs far exceeded the private sector. On top of that, inflation, interest rates, and building costs were soaring.

A local builder tells me building costs have increased 41 percent since 2021. That shows the type of cost pressure Kainga Ora was exposed to.

Former Prime Minister Sir Bill English, who carried out the Kainga Ora review in 2024, found the agency financially unsustainable. Its debt was $2 billion in 2017 and was projected to rise to more than $24 billion by this year or next. Kainga Ora needed a $21 billion cash injection (I don’t know how much it received) just to stay afloat. In other words, Kainga Ora was bleeding taxpayers dry.

A key reason for the spending pause was the finding that the agency had moved away from its core purpose of being a good social landlord to become a large-scale developer.

The review found that of 460 projects Kainga Ora had on its books, 212 did not make commercial sense, many because they were not in areas of housing demand. Despite the reset Kainga Ora will continue to own 78,000 housing units although its staff level has been cut by about 670 jobs

Kainga Ora’s mismanagement at the financial level was mirrored by mismanagement at the social level.

I wonder if Ms Carr and others recall Kainga Ora’s failure to deal with bad tenants when disruptive behaviour was often tolerated under a hands-off policy called Sustaining Tenancies, a name probably dreamed up by a woke bureaucrat. More realistically, the policy should have been called unsustainable neighbourhoods.

Vandalism, violence, drug-dealing and harassment of neighbours were common in state and social housing neighbourhoods until there was a policy change in 2024 and a greater focus on tenant responsibility.

That change of focus following the review led to tenant debt falling from $19.4 million in January 2024 to $5.5 million in September the same year although a good portion of that decrease was due to debt forgiveness of those who were making an effort to pay off their overdue rent.

Just imagine the mess the agency would be in now if it had been allowed to carry on regardless without the reset.