June 17, 2024 • 16 mins
It’s been five years since social housing in New Zealand was put under the banner of Kāinga Ora.
Over that time, questions have been asked about the financial stability of the organisation, and the loaded remit Kainga Ora has to also lead and develop urban renewal projects.
The Government made it a priority to investigate the state of the agency, ordering a review led by former PM, Sir Bill English, that painted a stark image of its fiscal situation.
With Housing Minister Chris Bishop processing the recommendations from the report, some are wondering what the future holds for the agency responsible for over 70,000 public homes.
Today on The Front Page, NZ Herald deputy political editor Thomas Coughlan joins us to discuss his recent reporting into the future of Kainga Ora and social housing in New Zealand.
Read more on the future of social housing here:
- https://www.nzherald.co.nz/nz/politics/inside-kainga-ora-what-the-government-wants-to-fix-and-why-its-solution-could-make-things-worse/36IR67UFUBCFRJMTAMXAF5BGP4/
- https://www.nzherald.co.nz/nz/politics/the-43b-social-housing-cliff-no-one-is-talking-about/G3YL4MS3IBBMZH2SODH6EU4YLA/
Follow The Front Page on iHeartRadio, Apple Podcasts, Spotify or wherever you get your podcasts.
You can read more about this and other stories in the New Zealand Herald, online at nzherald.co.nz, or tune in to news bulletins across the NZME network.
Host: Chelsea Daniels
Sound Engineer: Paddy Fox
Producer: Ethan Sills
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:06):
I'm Chelsea Daniels and this is the Front Page, a
daily podcast presented by the New Zealand Herald. It's been
five years since Social Housing in New Zealand was put
under the banner of King Order. Over that time, questions
have been asked about the financial stability of the organization
(00:28):
and the loaded remit Kaying Order has to also lead
and develop urban renewal projects. The government made it a
priority to investigate the state of the agency, ordering a
review led by the former Prime Minister Sir Bill English
that painted a stunk image of its fiscal situation. With
Housing Minister Chris Bishop processing the recommendations from the report,
(00:52):
some are wondering what the future holds for the agency
responsible for over seventy thousand public homes.
Speaker 2 (00:59):
Today.
Speaker 1 (00:59):
On the Front Page ends at Herald, Deputy Political Editor
Thomas Coglan joins us to discuss his recent reporting into
the future of Coing or Order and Social Housing in
New Zealand. Thomas, if we start a little broadly for
those I'm sure exactly what coing or Order is. What
does the organization cover because it's not really just a
(01:23):
social housing provider, is it.
Speaker 2 (01:25):
No, it does many things, so The main job, as
you say, is as a landlord. Basically has the majority
of the eighty thousand public houses in New Zealand which
house people who need governments boat housing. Well, it owns
the majority of them and it rents them out. But
however it also does a lot of other stuff, and
this is quite controversial because it got a lot of
(01:47):
these jobs fairly recently. So it runs a shared equity scheme,
so it actually owns I think slightly over one hundred
million dollars worth of other people's houses. So it's a
shared owner of private homes with First home buyers, runs
a lot of other schemes which are aimed at getting
people into their first homes. The First home Buyers grant
recently scrapped. It administered that. And then it's also an
(02:09):
urban developer, so some of these large urban developments that
you see in Auckland, and in particular Auckland, they are
kind of led by klient Aura in that respect is
something quite different to what Housing New Zealand or other
historic government social housing providers have done. They have built
a lot of houses obviously, but none of them have
(02:31):
quite had the scale I guess of development ambition that
client AURA has at the moment.
Speaker 1 (02:36):
So how does this tie into the income related Rental
support housing or the IRRs for short.
Speaker 2 (02:43):
The way that client aur makes its money, it has
to make its money by renting our houses now, because
it's tenants are people who can't afford housing on the
private market. The rules for social housing are that you
cannot pay more than twenty five percent of your income
and rent the cat and then the government tops up
the remainder with the income related rent subsidy. The only
(03:06):
difference between paying it or and other commercial landlords is
that client Ura can only pass on a certain amount
the costs of the extual tenant and then it sends
the bill for the rest of it to the government.
And so when you look at clime aura's accounts, there
are two big revenue streams coming in. One of them
is from tenants and the other is from the Ministry
Housing and Urban Development, which tops up to their rent.
(03:27):
Where things get challenging is that when it comes to
stuff like this urban development ambition that the government are
the last government labor had for it, it doesn't really
get enough funding to do that, and so many of
these other jobs that klim Aura does have to be
cross subsidized through its main job, which is as a landlord.
And KLi and Aura has for some time been asking
(03:48):
ministers to say, well, look, if you want us to
do these other things, so that are other jobs, then
you kind of need to pay us to do them.
And that's kin where some of these problems are actually
the way that the rent market in general, not just
the government side of it, but for all landlords. Often
there isn't actually a lot of money to be made
in renting out the house and the cash flow. You
(04:09):
don't actually make the money from renting the house so
much where the real money is often made in the
rental market in New Zealand, that is selling the housing
through capital gains, which are famously mainly untaxed in New Zealand.
And that's something that's also difficult for cime Aora because
you know, to make its figures stack up, it can't
just flog off a lot of housing and add that
(04:29):
money to its bottom line. It needs to continue to
own the housing because its job is to own that
housing and rent it out to social housing tendents. So
you've got all those difficult treads going on inside these
accounts and that's contributed to the financial pickle that climb
Order has found itself.
Speaker 3 (04:45):
In a review into the state housing provider is Damning,
it found the agency's debt ballooned or fold over the
past six years to twelve billion dollars and business is
usual without savings or significant investment mean Kying or a
needed twenty one billion dollars of government money over the
next four years.
Speaker 1 (05:06):
This is equivalent to we're any Zealander paying about four
thousand dollars each to keep kying or going Thomas, can
you walk us through the kinds of housing support people get?
Speaker 2 (05:18):
There are two kinds of basic almost benefits that the
government provides. One of them is public housing, funded by
the income related rent subsidy. So if you're really in
quite die need of a house and you really really
can't afford it, you might be evicted, you might be
unable to get any housing on a private market, you'll
(05:38):
go on the social housing waitlist and then hopefully eventually
you'll be allocated at public house. So most of these
owned by Kying or a run by clying, or sometimes
they run by Community Housing Providers or chips CHP CHIP.
But for all intents and purposes as a tenant. You
might not know the difference. A community housing place is
(06:00):
still subsidized by this income related rent subsidy. The only
difference is that the government sends the money to the
CHIP rather than sending the money to caying AURA. So
if you're in really bad need the then eventually, hopefully
you'll get one of these places. You've obviously got emergency housing,
which has been in the news recently, motels and stuff,
and that is for people quite a new acute need
(06:22):
who are unable to get a permanent place just yet.
Because obviously there is that weight list and people in
those houses get an average of eighteen thousand dollars a
year in government support for their housing. So that's how
much that income related rent subsidy is generally on average worth.
In the past, we've talked about state housing for example.
This is the modern version of what that looks like,
(06:44):
and we've got roughly eighty thousand households that are in
that boat at the moment, and there's about twenty five
thousand households that are on the weightlist for a place.
There's another form of support. It's been around in some forms.
It's the seventies really accelerated in the nineties and that's
called the Accommodation Supplement. There are more than three hundred
(07:05):
thousand people who receive this, and this is a payment
that goes to people who are in the private rental
market but need some help paying the rent. It varies
depending on where one is. Obviously, rents very throughout the country,
and this is substantially less generous. It's worth about five
thousand dollars a year per persons to the people who
get it. It gets paid out like a benefit does,
(07:25):
and it's meant to help people whose incomes are not
high enough to pay the rent. It's quite controversial because
really this money goes from the government's checkbook into the
hands of private landlords. It props up high rents in
the country because the more government support you give to
the rental market, the more landlords will logically take. We
(07:47):
know e kind of research done by the Ministry Housing
and Treasury and the Reserve Bank are recently showed that
rent prices typically mirror people's incomes, so benefit like the Accommodations,
which boosts people's incomes, will allow landlords to boost their
rents as well. So it's quite it's quite controversial, and
it creates almost two different classes of housing support for
(08:09):
people because one group gets very generous or I mean,
you don't want to say too generous, because obviously it's
not quite the life of luxurally living in a social house,
but relatively speaking, it's quite a lot of support. And
if you're in a publicly funded public housing place, and
then you've got another group of people which gets substantially
less support and is left to fend for themselves in
(08:32):
the private rental market, that creates a massive problem because
it incentivizes people to get into a public house and
stay in that public housing system and not come out
of it and try their luck on the private rental market. Again,
it basically means that there is a one way direction
of travel towards public housing, which is putting immense pressure
on it when it's such a scis resource. You know, again,
(08:53):
there are about eighty thousand places and twenty five thousand
people on the weightlist. There's a massive weightlist considering this
the overall size of the of the portfolio.
Speaker 1 (09:13):
If it is such a good deal, Thomas, how does
the government urge people on so those twenty five thousand
do get a chance to move in.
Speaker 2 (09:21):
Well, the last government built a lot of houses, and
that's probably the bigest thing to do, is just build
a lot of houses with Historically, I mean, you can
pull any number of statistics out there. You need to
build more public houses. You also need to build more
private houses, because the reason people need social housing is
(09:41):
that they can't afford private housing. And the reason why
they can't affoid private housing is that the private mental
market's absolutely cooked. Unfortunately, the incentives that are absolutely cooked.
At the moment, we've got construction costs are actually plateauing
a wee bit at the moment, they might even be
coming down, but for a long time, construction costs we're
going sky high. We've got high interest rates, which means
that you know, if you want to build some houses
(10:03):
to rent, you've got to borrow money, which costs a
pretty penny at the moment, and then you've got to
pay people to build it. And at the moment it's
very expensive to pay people to do that, so it's
really it's really not a good time. But the sort
of secret to fixing this is to actually ensure that
private housing is affordable and public housing is accessible, and
right now, both of those things aren't happening. You know
(10:24):
that you can't get into a public housing place. The
weightlist is very long, and the weight list is long
partly because the private rental market is so expensive and
people can't afford it.
Speaker 1 (10:34):
The new government commission to report into kyung Or Order
and was chaired by former Prime Minister Sir Bill English.
What did that report look into and what are the
headline findings from it?
Speaker 2 (10:45):
So it locked into the financial state of client order.
So the Labor government was aware that Climate Order financially
was in a bit of a state Client Order basically
got caught out. It arguably hired excessively. It was it
grew would be a very big organization. It did that
urban development stuff that we were talking about earlier. It
(11:06):
wasn't adequately remunerated for that urban development stuff. So it
asked for money to be able to do that. Said, look,
if you want us to be a massive urban developer,
you're going to need to pay us for it. We
can't subsidize it through selling assets and then are other
sort of rental work. So we knew that there was
a problem there. So Billing this was commissioned to look
into it. He saw that Clian Aura had forecast large
(11:29):
deficits going to the future. It had a very large debt.
There were a number of reasons for this. The staffing
obviously was an issue. He thought that they that Client
Order sort of did gold plated builds. I guess he
would argue sorry that it built, that it was someless,
slightly distracted by things like modular construction and new green
(11:49):
energy standards. Wouldn't really it probably should have been what
should have been focused on building as many houses as
possible for the largest sort of cost. There were other
issues about the number of works progress that it had
on and the amount of money it cost to have
such high borrowings before you actually could bring the houses
that you had borrowed money to build to the market. Obviously,
(12:10):
if you're going to build three thousand houses, you've borrowed
the money to build those three thousand houses, well, it
starts to cost you the day you borrow that money.
You're paying interest on it, But you don't actually make
money for those three thousand houses until those houses have
really to lived in. So Client Order had massive borrowings
but didn't necessarily have the rental income to sustain those
(12:31):
massive borrowings Client Order just like anyone who's dabbled in
the housing market recently has borrowed a lot of money
and is being caught out by punishingly high interest rates.
And that's really a story that has taking place across
the New Zealand housing market, across the housing markets of
the developed world, there are a lot of people who
are up to their eyeballs and dead and paying very
(12:54):
high interest rates to service it. And for Client Order,
that's a really big problem.
Speaker 1 (13:00):
I can rule out a mass sell off of state houses.
Speaker 2 (13:03):
We're not there with a mass plan to sell off
state houses. What we are there to do is actually
increase the stock of social housing.
Speaker 1 (13:10):
It's like they've only just realized it costs money to
build houses. They talked about the increase in debt, they
didn't once talk about the increase in assets. How did
the government respond to this report?
Speaker 2 (13:24):
So the government, I mean, one of the findings we
didn't mention was that is that Buildings was very critical
of the organization's governance and argued that it hadn't really
had enough of a focus on the financial implications of
what it was doing. The government responded by really accepting
that recommendation and as pivoting towards using more community housing
providers a set of client in order to provide public
(13:46):
housing places in future. So the government is committed to
the ongoing provision of public housing and it has committing
to growing the number of places that people who need
housing support can get. However, it is looking to do
that through a different method, which is community housing providers. Now,
there's a private, well not for profit organizations that are
(14:09):
basically the same as Kyle Auora, but they're owned not
by the government, and they also must not charge more
than twenty five percent of someone's income and rent, and
they also receive the income related rent subsidy from the
government to provide that. Basically, the sort of short answer
is the government really isn't that impressed with kin or
As governance and has therefore decided to shift the emphasis
of new places new housing places to these community housing
(14:33):
providers for now.
Speaker 1 (14:35):
And Thomas, from the people that you've spoken to, does
it seem like caying an order can be fixed or
are the issues just too far gone?
Speaker 2 (14:42):
There are some acceptance of the fact that the financial
position is worrying. There is still a lot of dispute
over who's fault it is whether it's been asked to
do so, much like this urban development thing. There's also
a question as to whether it's caring or as fault,
or whether the whole model is broken. You know, pi
Aura is run like a really big landlord. The models
(15:05):
of being a landlord is broken. You know. The only
way to make money from being a landlord is to
sustain your debt payments through rent and then make your
money when you sell the properties, make your money through
capital gains. So there's a question as to whether the
model that CI or or any public housing provider operates on.
There's a question as to whether that is sustainable for anyone,
(15:29):
let alone a government entity. The question of whether it
can be fixed is actually it's one that's almost the
secondary question. The question which we still don't get to
the bottom of us is not whether it's broken. People
except that it's broken, but the question of why it's
broken is the one that people are still litigating.
Speaker 1 (15:44):
Thanks for joining us, Thomas. That's it for this episode
of the Front Page. You can read more about today's
stories and extensive news coverage at zat Herald dot co
dot MZ. The Front Page is produced by Ethan Siles
with sound engineer Patty Fox. I'm Chelsea Daniels. Subscribe to
(16:08):
the front page on iHeartRadio or wherever you get your podcasts,
and tune in tomorrow for another look behind the headlines.
I'm Chelsea Daniels and this is the Front Page, a
daily podcast presented by the New Zealand Herald. It's been
five years since Social Housing in New Zealand was put
under the banner of King Order. Over that time, questions
have been asked about the financial stability of the organization
(00:28):
and the loaded remit Kaying Order has to also lead
and develop urban renewal projects. The government made it a
priority to investigate the state of the agency, ordering a
review led by the former Prime Minister Sir Bill English
that painted a stunk image of its fiscal situation. With
Housing Minister Chris Bishop processing the recommendations from the report,
(00:52):
some are wondering what the future holds for the agency
responsible for over seventy thousand public homes.
Speaker 2 (00:59):
Today.
Speaker 1 (00:59):
On the Front Page ends at Herald, Deputy Political Editor
Thomas Coglan joins us to discuss his recent reporting into
the future of Coing or Order and Social Housing in
New Zealand. Thomas, if we start a little broadly for
those I'm sure exactly what coing or Order is. What
does the organization cover because it's not really just a
(01:23):
social housing provider, is it.
Speaker 2 (01:25):
No, it does many things, so The main job, as
you say, is as a landlord. Basically has the majority
of the eighty thousand public houses in New Zealand which
house people who need governments boat housing. Well, it owns
the majority of them and it rents them out. But
however it also does a lot of other stuff, and
this is quite controversial because it got a lot of
(01:47):
these jobs fairly recently. So it runs a shared equity scheme,
so it actually owns I think slightly over one hundred
million dollars worth of other people's houses. So it's a
shared owner of private homes with First home buyers, runs
a lot of other schemes which are aimed at getting
people into their first homes. The First home Buyers grant
recently scrapped. It administered that. And then it's also an
(02:09):
urban developer, so some of these large urban developments that
you see in Auckland, and in particular Auckland, they are
kind of led by klient Aura in that respect is
something quite different to what Housing New Zealand or other
historic government social housing providers have done. They have built
a lot of houses obviously, but none of them have
(02:31):
quite had the scale I guess of development ambition that
client AURA has at the moment.
Speaker 1 (02:36):
So how does this tie into the income related Rental
support housing or the IRRs for short.
Speaker 2 (02:43):
The way that client aur makes its money, it has
to make its money by renting our houses now, because
it's tenants are people who can't afford housing on the
private market. The rules for social housing are that you
cannot pay more than twenty five percent of your income
and rent the cat and then the government tops up
the remainder with the income related rent subsidy. The only
(03:06):
difference between paying it or and other commercial landlords is
that client Ura can only pass on a certain amount
the costs of the extual tenant and then it sends
the bill for the rest of it to the government.
And so when you look at clime aura's accounts, there
are two big revenue streams coming in. One of them
is from tenants and the other is from the Ministry
Housing and Urban Development, which tops up to their rent.
(03:27):
Where things get challenging is that when it comes to
stuff like this urban development ambition that the government are
the last government labor had for it, it doesn't really
get enough funding to do that, and so many of
these other jobs that klim Aura does have to be
cross subsidized through its main job, which is as a landlord.
And KLi and Aura has for some time been asking
(03:48):
ministers to say, well, look, if you want us to
do these other things, so that are other jobs, then
you kind of need to pay us to do them.
And that's kin where some of these problems are actually
the way that the rent market in general, not just
the government side of it, but for all landlords. Often
there isn't actually a lot of money to be made
in renting out the house and the cash flow. You
(04:09):
don't actually make the money from renting the house so
much where the real money is often made in the
rental market in New Zealand, that is selling the housing
through capital gains, which are famously mainly untaxed in New Zealand.
And that's something that's also difficult for cime Aora because
you know, to make its figures stack up, it can't
just flog off a lot of housing and add that
(04:29):
money to its bottom line. It needs to continue to
own the housing because its job is to own that
housing and rent it out to social housing tendents. So
you've got all those difficult treads going on inside these
accounts and that's contributed to the financial pickle that climb
Order has found itself.
Speaker 3 (04:45):
In a review into the state housing provider is Damning,
it found the agency's debt ballooned or fold over the
past six years to twelve billion dollars and business is
usual without savings or significant investment mean Kying or a
needed twenty one billion dollars of government money over the
next four years.
Speaker 1 (05:06):
This is equivalent to we're any Zealander paying about four
thousand dollars each to keep kying or going Thomas, can
you walk us through the kinds of housing support people get?
Speaker 2 (05:18):
There are two kinds of basic almost benefits that the
government provides. One of them is public housing, funded by
the income related rent subsidy. So if you're really in
quite die need of a house and you really really
can't afford it, you might be evicted, you might be
unable to get any housing on a private market, you'll
(05:38):
go on the social housing waitlist and then hopefully eventually
you'll be allocated at public house. So most of these
owned by Kying or a run by clying, or sometimes
they run by Community Housing Providers or chips CHP CHIP.
But for all intents and purposes as a tenant. You
might not know the difference. A community housing place is
(06:00):
still subsidized by this income related rent subsidy. The only
difference is that the government sends the money to the
CHIP rather than sending the money to caying AURA. So
if you're in really bad need the then eventually, hopefully
you'll get one of these places. You've obviously got emergency housing,
which has been in the news recently, motels and stuff,
and that is for people quite a new acute need
(06:22):
who are unable to get a permanent place just yet.
Because obviously there is that weight list and people in
those houses get an average of eighteen thousand dollars a
year in government support for their housing. So that's how
much that income related rent subsidy is generally on average worth.
In the past, we've talked about state housing for example.
This is the modern version of what that looks like,
(06:44):
and we've got roughly eighty thousand households that are in
that boat at the moment, and there's about twenty five
thousand households that are on the weightlist for a place.
There's another form of support. It's been around in some forms.
It's the seventies really accelerated in the nineties and that's
called the Accommodation Supplement. There are more than three hundred
(07:05):
thousand people who receive this, and this is a payment
that goes to people who are in the private rental
market but need some help paying the rent. It varies
depending on where one is. Obviously, rents very throughout the country,
and this is substantially less generous. It's worth about five
thousand dollars a year per persons to the people who
get it. It gets paid out like a benefit does,
(07:25):
and it's meant to help people whose incomes are not
high enough to pay the rent. It's quite controversial because
really this money goes from the government's checkbook into the
hands of private landlords. It props up high rents in
the country because the more government support you give to
the rental market, the more landlords will logically take. We
(07:47):
know e kind of research done by the Ministry Housing
and Treasury and the Reserve Bank are recently showed that
rent prices typically mirror people's incomes, so benefit like the Accommodations,
which boosts people's incomes, will allow landlords to boost their
rents as well. So it's quite it's quite controversial, and
it creates almost two different classes of housing support for
(08:09):
people because one group gets very generous or I mean,
you don't want to say too generous, because obviously it's
not quite the life of luxurally living in a social house,
but relatively speaking, it's quite a lot of support. And
if you're in a publicly funded public housing place, and
then you've got another group of people which gets substantially
less support and is left to fend for themselves in
(08:32):
the private rental market, that creates a massive problem because
it incentivizes people to get into a public house and
stay in that public housing system and not come out
of it and try their luck on the private rental market. Again,
it basically means that there is a one way direction
of travel towards public housing, which is putting immense pressure
on it when it's such a scis resource. You know, again,
(08:53):
there are about eighty thousand places and twenty five thousand
people on the weightlist. There's a massive weightlist considering this
the overall size of the of the portfolio.
Speaker 1 (09:13):
If it is such a good deal, Thomas, how does
the government urge people on so those twenty five thousand
do get a chance to move in.
Speaker 2 (09:21):
Well, the last government built a lot of houses, and
that's probably the bigest thing to do, is just build
a lot of houses with Historically, I mean, you can
pull any number of statistics out there. You need to
build more public houses. You also need to build more
private houses, because the reason people need social housing is
(09:41):
that they can't afford private housing. And the reason why
they can't affoid private housing is that the private mental
market's absolutely cooked. Unfortunately, the incentives that are absolutely cooked.
At the moment, we've got construction costs are actually plateauing
a wee bit at the moment, they might even be
coming down, but for a long time, construction costs we're
going sky high. We've got high interest rates, which means
that you know, if you want to build some houses
(10:03):
to rent, you've got to borrow money, which costs a
pretty penny at the moment, and then you've got to
pay people to build it. And at the moment it's
very expensive to pay people to do that, so it's
really it's really not a good time. But the sort
of secret to fixing this is to actually ensure that
private housing is affordable and public housing is accessible, and
right now, both of those things aren't happening. You know
(10:24):
that you can't get into a public housing place. The
weightlist is very long, and the weight list is long
partly because the private rental market is so expensive and
people can't afford it.
Speaker 1 (10:34):
The new government commission to report into kyung Or Order
and was chaired by former Prime Minister Sir Bill English.
What did that report look into and what are the
headline findings from it?
Speaker 2 (10:45):
So it locked into the financial state of client order.
So the Labor government was aware that Climate Order financially
was in a bit of a state Client Order basically
got caught out. It arguably hired excessively. It was it
grew would be a very big organization. It did that
urban development stuff that we were talking about earlier. It
(11:06):
wasn't adequately remunerated for that urban development stuff. So it
asked for money to be able to do that. Said, look,
if you want us to be a massive urban developer,
you're going to need to pay us for it. We
can't subsidize it through selling assets and then are other
sort of rental work. So we knew that there was
a problem there. So Billing this was commissioned to look
into it. He saw that Clian Aura had forecast large
(11:29):
deficits going to the future. It had a very large debt.
There were a number of reasons for this. The staffing
obviously was an issue. He thought that they that Client
Order sort of did gold plated builds. I guess he
would argue sorry that it built, that it was someless,
slightly distracted by things like modular construction and new green
(11:49):
energy standards. Wouldn't really it probably should have been what
should have been focused on building as many houses as
possible for the largest sort of cost. There were other
issues about the number of works progress that it had
on and the amount of money it cost to have
such high borrowings before you actually could bring the houses
that you had borrowed money to build to the market. Obviously,
(12:10):
if you're going to build three thousand houses, you've borrowed
the money to build those three thousand houses, well, it
starts to cost you the day you borrow that money.
You're paying interest on it, But you don't actually make
money for those three thousand houses until those houses have
really to lived in. So Client Order had massive borrowings
but didn't necessarily have the rental income to sustain those
(12:31):
massive borrowings Client Order just like anyone who's dabbled in
the housing market recently has borrowed a lot of money
and is being caught out by punishingly high interest rates.
And that's really a story that has taking place across
the New Zealand housing market, across the housing markets of
the developed world, there are a lot of people who
are up to their eyeballs and dead and paying very
(12:54):
high interest rates to service it. And for Client Order,
that's a really big problem.
Speaker 1 (13:00):
I can rule out a mass sell off of state houses.
Speaker 2 (13:03):
We're not there with a mass plan to sell off
state houses. What we are there to do is actually
increase the stock of social housing.
Speaker 1 (13:10):
It's like they've only just realized it costs money to
build houses. They talked about the increase in debt, they
didn't once talk about the increase in assets. How did
the government respond to this report?
Speaker 2 (13:24):
So the government, I mean, one of the findings we
didn't mention was that is that Buildings was very critical
of the organization's governance and argued that it hadn't really
had enough of a focus on the financial implications of
what it was doing. The government responded by really accepting
that recommendation and as pivoting towards using more community housing
providers a set of client in order to provide public
(13:46):
housing places in future. So the government is committed to
the ongoing provision of public housing and it has committing
to growing the number of places that people who need
housing support can get. However, it is looking to do
that through a different method, which is community housing providers. Now,
there's a private, well not for profit organizations that are
(14:09):
basically the same as Kyle Auora, but they're owned not
by the government, and they also must not charge more
than twenty five percent of someone's income and rent, and
they also receive the income related rent subsidy from the
government to provide that. Basically, the sort of short answer
is the government really isn't that impressed with kin or
As governance and has therefore decided to shift the emphasis
of new places new housing places to these community housing
(14:33):
providers for now.
Speaker 1 (14:35):
And Thomas, from the people that you've spoken to, does
it seem like caying an order can be fixed or
are the issues just too far gone?
Speaker 2 (14:42):
There are some acceptance of the fact that the financial
position is worrying. There is still a lot of dispute
over who's fault it is whether it's been asked to
do so, much like this urban development thing. There's also
a question as to whether it's caring or as fault,
or whether the whole model is broken. You know, pi
Aura is run like a really big landlord. The models
(15:05):
of being a landlord is broken. You know. The only
way to make money from being a landlord is to
sustain your debt payments through rent and then make your
money when you sell the properties, make your money through
capital gains. So there's a question as to whether the
model that CI or or any public housing provider operates on.
There's a question as to whether that is sustainable for anyone,
(15:29):
let alone a government entity. The question of whether it
can be fixed is actually it's one that's almost the
secondary question. The question which we still don't get to
the bottom of us is not whether it's broken. People
except that it's broken, but the question of why it's
broken is the one that people are still litigating.
Speaker 1 (15:44):
Thanks for joining us, Thomas. That's it for this episode
of the Front Page. You can read more about today's
stories and extensive news coverage at zat Herald dot co
dot MZ. The Front Page is produced by Ethan Siles
with sound engineer Patty Fox. I'm Chelsea Daniels. Subscribe to
(16:08):
the front page on iHeartRadio or wherever you get your podcasts,
and tune in tomorrow for another look behind the headlines.
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