Kiwibuild will remain an electoral albatross
their bills paid. Without certainty, they inevitably focus on more profitable, less risky projects. High net worth clients with no sales chain present smaller risk than a marginal (Kiwibuild) client. The margin in the ‘‘affordable’’ homes is not there – without governmental intervention.
Secondly, changing the game requires delivering housing ahead of the market without profit considerations. That is what social housing is, but Kiwibuild is not. Anyone capable of affording a $650,000 Kiwibuild home can afford open market rates. Shared-equity schemes run by the Housing Foundation and Habitat for Humanity create quality affordable housing in mixed communities. Affordable homes are subsidised by selling higher-value, larger homes on the open market at commercial rates.
Why not have government directly support such providers? Better yet, provide subsidised land to facilitate their work? Currently the land they obtain is subject to commercial competition, constraining their ability to address demand.
Thirdly, the building industry delivers market outcomes in spite of government policy, not because of it. Government policy has ignored industry capacity.
Priority was given to forming the Ministry of Housing and Urban Development, then ‘‘refreshing’’ the Building Act and RMA.
By contrast, skills, training and investment languish. While the Government pushed forward the ‘‘fees free’’ for the first year at university, apprenticeship schemes were ignored. A golden opportunity for capacity growth squandered.
Without definitive financial intervention and large contracts, no capacity development will happen. Both this and previous governments promote growth by providing ‘‘opportunities’’ for development and land. In a free market, unless ‘‘opportunities’’ are profitable, industry reserves the right to decline to engage. It is not mandatory for industry to provide societal outcomes that conform to government policy objectives.
Kiwibuild’s failures aren’t unique. Fifty per cent of National’s special housing areas failed. Large profitable sections were built out first; sections for affordable housing languished.
After 10 years of sustained growth, we hit 8000+ homes last year. Kiwibuild’s ambitious goals of 17,000 homes a year in Auckland were unrealistic.
But the devil’s in the detail. General Montgomery said: ‘‘Amateurs talk strategy. Professionals talk logistics.’’ The logistics of Kiwibuild were overlooked from the start. Now there are no easy options. Ideology and hubris have tarnished decision-making on both sides of the aisle. In spite of the hope of ‘‘resetting’’ the narrative away from unobtainable Kiwibuild targets, they will inevitably feature in next year’s election.
Kiwibuild has every possibility of becoming an albatross around the neck of the Government.