18 May 2018

Minister rejects Treasury forecast on Kiwibuild impact

1:51 pm on 18 May 2018

Treasury is wrong in halving its forecast of the early impact of the Kiwibuild programme, Housing Minister Phil Twyford says.

Construction starts on the Kiwibuild project

Construction starts on the Kiwibuild project Photo: RNZ/ Sophia Duckor-Jones

Treasury expects the government's building programme to add $2.5 billion to the economy over five years, with its real contribution coming later than previously forecast.

Mr Twyford said a higher forecast from the Ministry of Building, Innovation and Employment was much more in tune with the construction industry.

"Treasury have made a number of highly questionable assumptions,

"It's almost a hypothetical or academic exercise trying to model the effect on overall residential investment. I think they're simply wrong and it's unfortunate."

National housing spokesperson Judith Collins said Treasury's forecast meant KiwiBuild would contribute "half as much to the building of new houses as Mr Twyford has spent years claiming".

"He's arrogantly said all those experts are wrong and he's right.

"In the last few weeks alone Mr Twyford has been forced to admit he won't build the number of houses he promised, he won't build them for the total cost he claimed and he won't be able to sell them for the price he promised.

"To make matters worse, confidence in the residential construction sector is waning because the government is making it harder to find skilled tradespeople to build the houses as well as to get the credit to pay for the houses."

Treasury also forecast Budget surpluses to rise gradually, from an improved $3.7 billion in the year ended 30 June, 2018, to $7.3bn in 2022.

It has forecast net debt to fall to 19.1 percent of gross domestic product (GDP) by 2022.

It expected growth would rise from 2.8 percent in the June 2018 year to peak at 3.6 percent in late 2019 before easing back to 2.5 percent by 2022 due to rising interest rates and slowing jobs growth.

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