Simon Moutter: Kāinga Ora chair on the plan to turn the state housing agency around

Kāinga Ora is focused on bringing down its building costs going forward.

The Government is taking aim at its pricing - saying it is refocusing the state landlord on basics.

A new review judged Kāinga Ora was paid about 12 percent more for building houses, when compared to the market.

Chair Simon Moutter says the costs were partly due to higher design specs than needed.

"Social housing does require some features that normal market housing doesn't - but it doesn't need to cost hundreds of thousands more, it should only cost low tens of thousands more."

The Government's turnaround plan for Kāinga Ora includes cutting a quarter of its staff, removing new-home sustainability requirements and selling off high-worth state homes.

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Episode Transcript

Speaker 1 (00:00):
In the country's biggest landlord has a turnaround plan kind
of order is going to refocus on simply building and
managing social housing. It plans to sell nine hundred homes
a year that are no longer fit for purpose and
renew older homes that it needs to. Overall, the numbers
won't reduce the payoff. Well, debt will be down one
point eight billion dollars in twenty twenty seven twenty eight

(00:22):
compared to the twenty twenty three forecast. Bord chair Simon
Murder is with me this evening, Simon, good evening. Yeah, ah, yeah, right,
building and managing social housing. Was that not an obvious
focus for this outfit?

Speaker 2 (00:36):
Well, I think so, and just it's you know, an
organization is always going to function better when it's got
a very clear and reasonably narrow purpose in mandate and
things that you know, we ended up over the last
few years having a wide range of mandates and that
that can distract you know, your top team, your attention,

(00:58):
your resources. And so I'm confident that as we narrow
the mandate back down and we focus on the core functions,
will do a much better job.

Speaker 1 (01:07):
The number of social houses won't fall, but will it
go up, you know, will it meet the demand of
the wait list?

Speaker 2 (01:14):
Between now and June twenty twenty six, will continue to
grow the total number of social housing and we'll reach
a level of around seventy eight thousand social houses by
June twenty twenty six, and from that point on, unless
the Government instructs us to add further to the total

(01:37):
housing stock, will run the business with one in and
one out approach and that will result in around in
nineteen hundred to two thousand construction events, some of which
are replacing, you know, knocking down old houses and replacing
them with new and others being fully refurbished, so relifing

(01:57):
a home. But that would be the the process from there,
and the government has signaled that it wants to explore
the possibility of future growth in social housing coming from
the community housing provider sector, who are very good at
what they do and provide some very good care services,
and we're very supportive of that.

Speaker 1 (02:18):
Logic it means you'll be building houses. Have you got
to the bottom of why Coming of Order was paying
on average twelve percent more for new builds than the
private market.

Speaker 2 (02:29):
A number of reasons, actually not the least of which
was a very aggressive increase in the requirement to build houses.
And you know, last in twenty twenty four financial year
we built we built nearly six thousand, So it's those

(02:51):
are enormous numbers, and so when you work at that pace,
it does push a lot of inefficiency into the business.
You have to make choices that you otherwise wouldn't to
deliver that sort of a number and shouldn't give you
economies a lot, shouldn't give your economies scale and things cheaper. No,
it's just delivered at such speed and you're pulling on

(03:16):
so many resources. As the opposite occurs, you've become inefficient
with they had to make more sites, election choices and things.
So partly inefficiency, and then a little bit to do
with the design standards and the specks which had got
probably further than they needed to be in terms of
specificity beyond what would be seen as a normal market
build for an affordable home. And so we're already resetting

(03:38):
some of those specifications just to bring them a bit
closer to a regular build. Social housing does require some
features that that normal market housing doesn't, but it doesn't
need to cost hundreds of thousands more. It should only cost,
you know, teaching the low tens of thousands more in
a unit.

Speaker 1 (03:55):
Simon, thank you very much for your time, Simon Mousa.
They're kind of order board share. For more from Hither
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