PHOTO: Kāinga Ora. FILE
Concerns are mounting in the construction industry that tradespeople may be forced out of business due to the government’s overhaul of Kāinga Ora.
Kāinga Ora, New Zealand’s largest home builder, currently has 5,299 homes under construction. However, Newshub reveals that 3,001 consented homes are now under review as a new board formulates a turnaround plan for the state housing provider, expected in November.
The construction industry is worried that delays will force tradespeople out of work.
“We’re not getting enough clear signals from the Government about when that’s going to change and pick up,” said Tommy Honey of the NZ Construction Industry Council. “We’re going to see a lot more construction companies at risk of going to the wall if they can’t get the work that they’ve been getting over the last few years.”
A review led by Sir Bill English suggested that Kāinga Ora’s board needs refreshing and a turnaround plan. Consequently, Kāinga Ora is reassessing its consented but not yet contracted homes.
Patrick Dougherty, General Manager of Construction and Innovation, stated that as of May 31, 2024, Kāinga Ora had 5,229 new social houses under construction across New Zealand. Additionally, 833 consented homes are planned for delivery by June 30, 2025, with several developments set to proceed after reassessing value for money and alignment with the Ministry of Housing and Urban Development’s (MHUD) priority locations.
Dougherty added, “We have a further 2,168 houses consented but not yet contracted for delivery post-June 2025. These projects are currently paused while we work with MHUD on our asset management strategy, including understanding priorities and financing for our housing renewal programme.”
This situation is a setback for the construction industry, especially when residential building consents in April dropped by 24 percent compared to the previous year.
Honey told Newshub, “In some ways, the indecision or the pause by Kāinga Ora is actually contributing to the recessionary effect on the construction sector.”
Housing Minister Chris Bishop has indicated that private Community Housing Providers could play a larger role, allocating them $140 million in this year’s Budget. Over the last Labour Government’s two terms, Community Housing Providers built more than 2,000 homes.
Paul Gilberd of Community Housing Aotearoa expressed confidence in their ability to deliver the 1,500 homes announced in the Budget, noting that with Kāinga Ora holding an 80 percent share of the social housing market, any building pause is significant.
“For a couple of years now, residential construction consents and activity have been in a steep decline, and we have been arguing with the ministers of housing that there is a role to play because we are really worried about how deep that decline is going to go,” Gilberd said.
Newshub asked Housing Minister Chris Bishop about the industry’s concerns and the fate of the 3,001 consented but not contracted Kāinga Ora homes. Bishop stated, “I’ve made my expectation clear that Kāinga Ora must ensure their focus is on delivering their basic functions as a landlord well, and that their activities represent value for money. Kāinga Ora has certainty of funding right now and a lot of contracted work to deliver their current projects.”
The Ministry of Housing and Urban Development was also questioned about Kāinga Ora’s future construction pipeline. It replied, “Budget 2024 decisions did not provide for growth in the Kāinga Ora portfolio at this time. This does not mean there will not be a build programme for Kāinga Ora, but the focus will be on renewing the ageing stock where the need is greatest.
“Kāinga Ora is due to present to Ministers a proposed approach to priorities and financing of a housing renewal programme over the coming month. The financing of the renewal programme will be within the borrowing appropriation already included in the 2024 Budget.”
As of April this year, 24,466 people were on the Public Housing Register, with each applicant waiting an average of 218 days to be allocated a state home.
SOURCE: NEWSHUB