KiwiBuild: 'You can’t live in a reset'

9:23 pm on 4 September 2019

Analysis - Megan Woods has come in like a wrecking ball to Labour's KiwiBuild scheme and - to be frank - Phil Twyford's time as Housing Minister.

Construction starts on the Kiwibuild project

Construction on the first KiwiBuild homes in Papakura began in April last year. Photo: RNZ/ Sophia Duckor-Jones

The announcement of the long-awaited 'KiwiBuild reset' sees $400 million worth of new "progressive home ownership products" including rent-to-buy and shared equity options.

The money is intended to help people cobble together enough to get a mortgage so they can pay a mortgage rather than the same amount on rent. Ms Woods reckons, depending on the details, that will help between 2500 and 4000 people into home ownership.

But amidst the announcements came the smell of burning rubber as the government performed some of the biggest political u-turns you've ever seen. Ms Wood's appraisal of KiwiBuild thus far - and implicitly Mr Twyford's handling of the gargantuan policy - was as damning as anything we've heard from National over the years.

If the first rule of real estate is 'location, location, location', Labour lost the map. KiwiBuild was building the wrong houses in the wrong places.

The ambitious - some had always said impossible - target of 100,000 new homes in 10 years was a target driving a policy, Ms Woods confessed. Houses were being approved in the wrong places simply to try to get the numbers up.

Even then, KiwiBuild was not delivering the number of houses at the pace desired, Ms Woods admitted. She might also have added they weren't coming in at the right price, so there weren't enough people who could afford them. Disaster.

Labour is even selling 461 of those 'wrong' houses on the open market, "clearing the decks of what hasn't worked".

Ouch. If you've ever complained that politicians should admit when they've stuffed up and stop treating us like fools, well today you got your wish. Ms Woods' own analysis was that Mr Twyford - and David Shearer and David Cunliffe before him - had failed utterly in making the KiwiBuild dream a reality.

Back in November 2012, Mr Shearer announced the new policy and Labour hitched its hopes to it through various leaders and election cycles. Capital gains taxes, immigration targets and more came and went, but KiwiBuild was the rock on which the party built its hopes for re-election. Until Jacinda Ardern became its star turn in 2017.

Mr Shearer promised a 'self-funding' scheme where the government would contract private building firms to build thousands of homes a year, hitting 100,000 after a decade. Mr Twyford stuck to that promise and more, insisting before the last election that "we have a bold and comprehensive set of measures that we believe will deal with the housing crisis".

Turns out they didn't. Having promised 16,000 new homes in the first three years, Labour has delivered only 258 in the first two.

Fast as we can

Today, Labour officially abandoned its promise of "100,000 affordable starter homes", saying only that they will build "as many as they can, as fast as we can". That PR albatross is gone from round their necks, but so is the public's ability to measure the success of the scheme in any simple way. The new un-goal is one they can't fail to hit.

The problem now though, is that while the Labour-led government has introduced some logical new ways to intervene in the market and grow home-ownership, it has implicitly admitted that KiwiBuild can at best have only a negligible impact on home ownership.

What has become crystal clear in the past few years is that the political will to build houses is not nearly enough. KiwiBuild ran aground on the rocks of land availability, a lack of builders and tradies, a lack of infrastructure around greenfield sites, slow and complex consenting processes, the rules around long-term government contracts, rapidly rising construction costs and a failure to get pre-fab construction up and running.

I remember talking to Mr Twyford in 2015 as he enthused about builders being able to buy doorknobs in bulk, thereby driving down costs. Doorknobs, window frames, tiles and much more. He imagined as recently as last year that more than half of KiwiBuild houses could be built off-site at half the square metre cost of on-site builds. Yet here in the back end of 2019, we're yet to see any of these grand plans turned into reality.

So really, resetting KiwiBuild is the least of the problems besetting this government's housing policy. As welcome as it is for first-home buyers to get help with their deposits, that is just a tiny part of this country's "housing crisis".

Green Party co-leader Marama Davidson today said the reset put home ownership "back within the realm of lower income people". It's hard to see how.

Even within the realms of KiwiBuild, the solutions offered today are all demand-side. The government has done nothing to build more houses. What's more, the cost of the homes is still $650,000 plus, meaning you will need to be an above-average household to be able to afford a mortgage. Lower income? Na-ah.

But the deeper problems lie beyond KiwiBuild, in the rest of the housing portfolio. The government won't be able to solve the crisis unless it can also find solutions to the much more complex issues, such as labour force, infrastructure, consenting and more.

Mr Twyford was famous for mocking previous National minister Nick Smith by saying "you can't live in a consent". Truth is, you can't live in a reset either. Labour's housing policy is still a fixer-upper and the work has only just begun.

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