KiwiBuild under fire

National claims Labour undercosted its flagship KiwiBuild policy to the tune of $18 billion while in Opposition but Housing Minister Phil Twyford denies this is the case.

A Ministry of Business, Innovation and Employment (MBIE) KiwiBuild business case — prepared in April and released under the Official Information Act — showed that Labour’s preelection KiwiBuild funding promise to implement the policy was nowhere near enough to build 10,000 homes a year.

Before the election, Labour promised to deliver 100,000 KiwiBuild homes over 10 years — 10,000 a year. This would be funded by a $2b capital injection, which would be recycled as the houses were sold, then returned to the Crown at the end of the KiwiBuild programme.

Midway through this year, the Government amended those figures to 1000 homes being built in the 2019 financial year, 5000 in 2020 and 10,000 in 2021. That figure would climb to 12,000 per year from the 2022 financial year onwards.

But the MBIE business case study said $2b was simply not enough money to provide 10,000 houses a year. “Two billion dollars 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 said. This advice assumes the Crown would be building all the KiwiBuild houses itself.

The document went on to say the Government would need to leverage “other parties’ capital in order to achieve its goals”.

National leader Simon Bridges said as Labour’s pre-election policy was for the Crown to build the homes, MBIE’s data shows Labour undercosted KiwiBuild by $18b.

He said the $2b Labour had promised for the Crown to build 10,000 houses a year would only be enough to build 1000 homes and therefore the policy had been undercosted. The promised funding, according to MBIE, would mean a 9000 home shortfall and the estimates to reach 10,000 homes a year were $18b off, Bridges claimed. Because of this, he said the Government shifted its focus from building KiwiBuild homes to underwriting private developers to build them. “Labour had nine years in Opposition to come up with policies. It’s unbelievable that one of its flagship policies that it campaigned on in the election was miscalculated by such a huge amount.”

Twyford has denied Labour undercosted the policy before the election. “It has always been Labour’s plan to work with builders and developers, and in turn leverage private investment, to build KiwiBuild homes.”

He pointed to the party’s Comprehensive Housing Policy launched in 2016. “We knew then that we would need to use the best of public and private sector expertise to work with developers to cut through the red tape . . . so it can get on with building the houses we need.”