Kiwibuild reliant on outside cash

Kiwibuild will be heavily reliant on outside capital through its ‘‘buying off the plans’’ initiative, to come in under its $2 billion budget, official advice shows.

National have used this advice to claim the original policy was ‘‘woefully underfunded’’ by $18b, a figure reached by multiplying a hypothetical point in the advice.

Housing Minister Phil Twyford says National are ‘‘wilfully mischaracterising’’ the advice and Kiwibuild is financially on track.

The advice comes as part of a business case prepared by the Ministry of Business Innovation and Employment (MBIE) for the initiative, which sees the Government ‘‘de-risk’’ private developments by underwriting the cost of building affordable homes as part of larger developments, rather than building the affordable homes itself.

It makes clear that this policy, and other streams that introduce outside capital, would be needed to build the thousands of Kiwibuild homes promised without overspending the $2b allocated, as the Government would only be able to afford 1000 houses a year if it built them itself.

‘‘$2 billion is insufficient working capital to meet the target of 10,000 homes per annum (on an optimistic average three-year recycling of the capital, only 1000 homes could be built per year),’’ the document reads.

Kiwibuild is the Government’s promise to build 100,000 affordable starter homes over 10 years, with half being built in Auckland. The ramp-up period involves 1000 homes in the first year, 5000 in the second, and 10,000 in the third, with 12,000 homes every year from then on.

National Party leader Simon Bridges has used the advice, released to his party under the Official Information Act, to claim the ‘‘original model’’ of the housing policy was $18b underfunded at the election.

But this assumes that Labour’s election policy never involved ‘‘buying off the plans’’ and interviews prior to the election suggest Twyford had always seen private sector developments as part of the plan.