Chris Bishop: Housing Minister on the new plan to cut costs in Kainga Ora

The Government's set to sell off high-priced Kainga Ora homes in an effort to bring its books down. 

It's reviewing state housing stock, focusing on expensive areas. 

Its new cost-saving plan includes the sale of around 900 homes a year, with the money to go to more low-cost, denser places with greater demand. 

Housing Minister Chris Bishop told Mike Hosking they want to be more deliberate with their purchasing. 

He says 50% of people on the register just need a one-bedroom unit, so they don't need to be building lots of three bedrooms. 

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Episode Transcript

Speaker 1 (00:00):
The social housing resets on. They're selling the ones worth
a lot in rebuilding new ones for less, so they're
selling nine hundred ish fifteen hundred get built. The Housing Minister,
Christ Bishop is with us. Very good morning to you.

Speaker 2 (00:09):
Good morning.

Speaker 1 (00:10):
The debt issue they carry, how quickly does that get sorted?

Speaker 2 (00:15):
The debt will be about one point eight billion dollars
lower in three to four years time than it is
than it was forecast to be, which is good. They
will still carry debt and you'd expect that because there's
a large entity with a large number of assets. So
that's fine, but of course we have to fund all
of that debt as taxpayers. That comes off our the
Crown's box, the government's box, so it is important that

(00:37):
we get that debt under control. We've got a balanced
plan here where we're continuing to build more houses, but
as you say, sell five value ones, sell ones in
the wrong location, ones where they're just simply uneconomic to upgrade,
it does make sense just to sell the house or
sell the land that the house is on. So it's
a balance plan where we've got a plan to invest

(00:57):
and keep the housing stock the same, but have much
more focus on cost control. So KO was building at
about twelve percent above what the market was building at,
for example, and so that's unsustainable. And I think everyone
listening on many people listening will have stories about KO
coming to town with the big checkbooks from the last government,
plenty of easy money, plenty of cheap debt. KO comes

(01:20):
to town and the price goes up for building materials
and for land, and you know, there's a whole lot
of quite crazy decision frankly, and so we're put it
all under control.

Speaker 1 (01:28):
That mix and match stuff that you're talking about. You know,
there's a big cue of people twenty thousand, most of
them want one beds. Why put a one betty person
in three bedroom and remy, we're are worth two and
a half million dollars. Is that lack of rigor or
is it simply you can't forecast what people are going
to need twenty years down the track.

Speaker 2 (01:46):
It's a lack of rigor, and it's the system not
responding quickly enough or effectively enough. So we're changing the system.
And one of the things we'll be working on really
hard this year is moving to a much more deliberate
purchasing role for the Crown when it comes to what
people need, and we're going to be really looking at
individual customers and individual clients and what they need. So

(02:07):
as you say, fifty percent of people on the register,
they just need a one bedroom unit. They don't need
a three or four bedroom unit. They just need a
one bedroom unit. And actually we can build that really cheaply,
and some of the stuff we're doing on the granny flats,
for example, make it easier to build one and two
bedroom granny flats on properties will make a real difference there.
So they just need a one bedroom unit. But it's
fifty percent of the register, twelve percent of what KO owns.

(02:27):
They've known about that for twenty years, frankly, probably longer,
and it's just successive governments, particularly the last government, have
not been really clear about what they're trying to build. Basically,
the story of the last government was they gave them
billions and billions and billions of dollars of debt and
operating funding and just said, build as many houses as
you can, and we don't really care where they where

(02:48):
you book them, and we don't really care what they cost.
We just want houses. As a result, the organization had
to scale up really quickly. They did build quite a
lot of houses six in the last two three years,
but those houses have come at huge expense of seeing
those one point five million dollar apartments in Auckland, for example,
I mean, Chao should not be building massively expensive ornate
apartments with Juliette balconies and all sorts of bells and

(03:10):
whistles and things like that. Where did weep the board?

Speaker 1 (03:13):
Where were the board that you've got rid of? Will
they quit? Were they under riding instructions or were they incompetent?

Speaker 2 (03:21):
Well, I mean all I can say is we changed
the board and that was one of the first recommendations
for the independent review we did in the first quarter
of last year was to refresh the board. I don't
want to get too much into the details of it,
but I suffice to say we've been We were unhappy
with the organization and opposition. We were unhappy when we
came to government. The review born that out and we've

(03:42):
made the changes.

Speaker 1 (03:43):
Well, good luck with it. Chris Bishop, Housing Minister. I
think he answered it without answering it didn't he for
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