Minister of Housing Phil Twyford says MBIE correctly diagnosed the weakness in the Treasury’s KiwiBuild forecast & they're the ones implementing the policy

Housing Minister Phil Twyford “accepts” the Prime Minister’s advice he went too far in criticising Treasury officials, but has stopped short of an apology.

In Question Time on Tuesday, Twyford said he called officials “kids… disconnected from reality” because he was “frustrated” by their “blatantly wrong” KiwiBuild forecasts.

He prefers the Ministry of Business, Innovation and Employment (MBIE) advice, which shows much more money would be spent on residential property than Treasury’s forecasts.

On Monday, Prime Minister Jacinda Ardern said he had gone too far with his comments.

National’s Housing Spokeswoman Judith Collins jumped at the opportunity to grill Twyford over his remarks, asking if he stood by all his comments regarding the Budget.

Twyford, who obviously knew where Collins was going with her line of questioning, said he did.

“Except my description of Treasury officials, I accept the Prime Minister's advice that this went a little bit too far,” he said.

Collins then asked why he made the comments in the first place, given he now believes he should not have made them.

“Because I was frustrated at the forecasts that have been made by Treasury that were blatantly wrong,” Twyford said.

But he doubled down on his opinion that MBIE’s advice was correct, as its officials are the ones implementing the policy.

“When Government officials give advice it's just that – advice,” he said.

“The analysis from MBIE correctly diagnosed the weakness in the Treasury’s forecast [and] that they failed to take into account the fact that the KiwiBuild capital fund is recycled consistently over and over,” he told media before going into the House.

He said it shouldn't surprise anybody that with a policy as “big and complex as KiwiBuild” different government agencies end up with different views.

Twyford stopped short of saying sorry when asked by media if he would apologise to Treasury officials.

“I have reflected on the Prime Ministers advice and I'm not intending to make any further comments on that light.”

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54 Comments

He's got a point. Treasury have come up with an assumption without knowing the fundamentals involved

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You mean they were realistic instead of overly optimistic when they came up with their assumptions. Time will tell.

Did you listen to the video? Thought you would be able to decipher better, unless you worked for the treasury

Actually Grendal is right here. He may not be the most pleasant commenter here but even PT stated that it is understandable for different opinions due to the large number of unknowns.

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Exactly, two government agency's using different assumptions. Also I have to say that in Treasuries defence how are they to assess something that seems to change every week.

Seriously why are they buying houses from the existing this year instead of building the houses I voted for!

I'm not deny that fact, but grendals response was not balanced.

I do suspect unbalanced is probably correct, maybe not the way you were referring though.

If you read my initial comment, I was not biased about the treasury, I did state that they did not know the fundamentals involved

So houses overpriced ......... what are these fundamentals that the treasury ( who is going to have to stump up with the money ) , has "ignored "

I have worked with Treasury departments previously in my life and for the most part they are cautiuos and conservative .

I suspect that MBIE a re not really geared up to ascertain actual costs .

And give the scale and scope of Kiwibuild , we are in for some shocking costs in things like complex and long RMA applications and the holding costs that go with huge delays .

We should also not lose sight of the fact that Government Departments have no sense of commercial urgency whatsoever , and costs habitually spiral out of control in these types of projects ( Kiwibuild )

Just a simple fact that the plan is now to buy of the plan.. makes a huge difference to their modelling

I completely agree with your last paragraph

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What part of no Kiiwibuild houses have been built yet Mr Twyford?

You are grossly out of your depth in parliament and it continues to show!

You should step down from the housing portfolio and hand it to ?????
That’s right there is no one else in your coalition that has any experience!!!!

Be a man and suggest a name from any party that in your imaginary mind will do a good job

So are you the same Retired Poppy or an imitation?

Why can't you accept other views and have a sensible arguments ?

You just keep negating and blindly jumping to the defence of PT or anyone from this CoLs ( who seem to be able to do no wrong in your view).

And, get into the habit of respecting yourself here so you may earn some respect ! .. Insulting people reflects only on yourself.

Take it easy, this useless Gov will be gone in 2 years and some will end up with eggs on their face.... They are digging their grave efficiently so your die-hard defensive comments will not save them.

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Eco Birdy, sensible people reject warped views. If you start talking some sense you'll get noticed for all the right reasons.

How can I debate with fools like you who claim this government issueless and that they will be in power for only the next two years.

You arrogant thugs were so confident that your incompetent government would be back in power. Now they are completely decimated..

Hi Eco Bird - To me RP and HO come across as angry and resentful people with huge chips on their shoulders and appear to want the economy to collapse ( particularly housing ) to prove they are right ! I guess this site is black and white ie Socialists or Capitalist, Capitalists are optimistic Socialists are negative

Shoreman, shows your level of comprehension, have I ever stated the economy has to collapse?

The problem is you guys are so stuck in a world of fantasy, that if anyone is a realist, is trampled on

You are quite a sad bunch in society

https://www.google.com/amp/s/www.cnbc.com/amp/2017/07/26/the-market-risk...

Ouch ! Actually I am a true realist, I see true reality with the opportunities it offers and act on it hence my wealth. Too many people on here just have wish lists that doom will fall on us and Asset prices will tumble. There is no certainty in anything but that should not prevent us from making informed decisions about our future. We can never rely on any of our Governments to fix our lives. Oh and I am part of that bunch who create employment and contribute to the growth in our economy have a happy day !

Everyone can generate wealth, it's about being wise about it.

Might as well change your name to " Show off "

Rather childish wouldn't you say HO ? No not everyone can generate wealth thats why we have tax scales and a welfare system to support our society, some of us pay alot of tax thats the system. I would say you have to be very wise to generate wealth, if we all had that ability there wouldn't be the issues we have now. If you see me as a show off then so be it but that can only be driven by your own failures. I am dissapointed with how KB looks to be going and highlights the real difficults of being in Government and delivering policy. KB always looked like a dream during the election for me the COL is a step backwards for NZ and thats my personal view - Have a Happy Day

I understand you don't like the COL cause they prevent you running like a headless chicken putting all your so called wealth in one basket

I see true reality with the opportunities it offers and act on it hence my wealth. Too many people on here just have wish lists that doom will fall on us and Asset prices will tumble.

Massive contradiction. Falling asset prices and market failure are "opportunities to generate wealth", just not for the masses, who are more likely to make decisions based on their gut feelings, fears, and hopes.

Personally I would rather generate wealth rather than gain wealth by taking advantage of people in a - Falling asset prices and market failure - situation

... the difficult part begins when the asset balloon implodes ... 'cos investors get to watch their equity fall faster than a lead zeppelin ... but the debt remains the same ...

Personally I would rather generate wealth rather than gain wealth by taking advantage of people in a - Falling asset prices and market failure - situation

OK. if the FIRE sector and the govt blow asset bubbles, that's essentially "taking advantage of people."

Is this reverse psychology or sarcasm (or both?)

HO.To pick you up on that albeit a slightly different tack. How’s this for a question. Of MP’s of any party, of say this century, who would you employ, like to be employed by or employed with. Personally can only nominate one candidate who I consider of really capable calibre, and that was Simon Power during his brief tenure as Justice Minister. There may be others Katherine Rich perhaps, but they don’t seem to stay long. Of Labour from personal experience Ruth Dyson is an exemplary local MP. But quite honestly when you ask your question about exactly who for what, I think across the board they are a pretty rum lot indeed at present.

JA, just because of the way she conducted herself during the election campaign, and being a PM.

She seems to stand by her word and have pulled her mp's when gone astray

Well you are like me. Between us we can only come up with two over nigh on 20 years. Doesn’t inspire much confidence does it!

I used to admire BE, until he contested this election, lost all respect when he started misstating facts

Yes go along with that and there is no doubt that he and his predecessor Michael Cullen were capable enough finance ministers. But the way I have started to feel about our brand of law makers, in line with my above three questions, the relationship of our MP’s with the public of NZ, and I admit this is a generalisation, leaves a lot to be desired.

I think it’s a National Party thing.

Admire maybe not, but I thought BE was a genuine kind of guy. Until he started calling young NZers druggies and said we need to import cheap labour.

This was pure laziness and will full lying. To be honest it gutted me and along with immigration, homelessness, and unaffordable housing this was the last straw. I respected Bill but he lost all my respect.

Young NZers are part of NZ, they need as much help as everyone else, they are NZs future, it seems as if National doesn't want NZ to be here for young NZers, they just want short term gain and who cares about the future.

I voted National, but the way National abused the country for short term gain, it leaves a queasiness in my stomach.

If Labour doesn't come to the party on immigration and unaffordable housing then there is room for a third party in my view, tackling just these two issues as their main policies.

I just cant stomach voting National again, if labour doesn't come to the party on immigration and housing.

Phil's a bit confused isn't he.
Someone told me today that they reckon his announcement of 4000 homes at unitec was an error. That in fact it's about 1800 homes, accommodating 4000 people. Let's see where that one ends up

To be fair though, Mr Twatford’s middle name is “Stoner” so that would probably give him an excuse for being so confused wouldn’t it!

You are literally brain damaged.

Who smuggled the computer into Hillmorton Hospital and why has nothing been done about it yet?

They don't need to build 4000 houses. A source from Housing NZ told me that many developers want Housing NZ to buy their apartments because they aren't able to sell, AND, Housing NZ is seriously considering buying these apartments. As bright line has been moved to 5 years and negative gearing is ending in a year, this will change the housing investment landscape. House prices wouldn't crash but they aren't going up for many years. Therefore, I know a few investors are selling and getting ready to buy again in a few years.

FamilyGuy I actually think this is what the government/Kiwibuild should have planned from the start... high density, central, apartment accommodation. This 1/4 acre nonsense needs to die a death, it's simply not realistic or practical for the future based on population and demographic projections. Kiwi's are urbanising, same as every other Western culture.

At least some of the sprawling, ugly, boring mass of poorly built suburban houses in NZ cities (particularly Auckland) need to make way for some sensible densification. It will make for a more dynamic city.

I am deeply concerned for the future of NZ in terms of the housing crisis, but at least some of it is simply idiotic town/city planning. In most western, developed nations FHB's do not expect to buy a house in a major city. You buy an apartment, or if you're flash, maybe a town house. What rarely gets discussed in the housing crisis debate is cost per sqm and associated land use compared to other countries in the OECD. NZ-ers expect a helluva lot more house and land for their buck than other OECD comparisons (barring Oz).

If land is better utilised, housing will become much more affordable. So what would young Kiwi's rather have...a decade of their lives saving up for a deposit, a life time of debt, hours and hours of their life spent in traffic or just embrace apartment living? The government can strong arm NIMBY's and Auckland planning issues to get some progressive urban planning on the go if they can grow a pair.

Apartments get you paying off a mortgage rather than paying rent, and get you on the property ladder.

I'm all for the Coalition's ambitions (especially as the previous government had none) but they need to stop prating about and actually action something practical. Supporting struggling apartment projects would be a good start.

I think Kiwi build and Housing NZ should be leading the way in densification. It's perfectly possible to have a lovely quality of life in a well built, well sound insulated flat. And if you're a young, hard working city professional, you probably can't be arsed with garden maintenance anyway.

And now commentators are saying his regional fuel tax is doomed. https://www.stuff.co.nz/business/104114068/the-auckland-fuel-tax-always-...

Lets just recognize that Kiwibuild is fast becoming a fiasco , its all over the place with no direction whatsoever .

There is no plan , just rhetoric and grandiose ideas to give everyone a house on a quarter acre section to either buy or if you cant affrd one , Housing New Zealand will give you one , the whole thing has never been properly articulated
There is no tangible document that sets out the mechanics of how it is going to work, let alone where these houses are even going to be built
The prices of the "affordable " houses keeps changing.
Not a single consent application has been filed by the new administration
The hare-brained scheme to put 9,000 units on the Unitech is fraught with problems , which will take a decade to sort out .

Those of us who saw through this ruse prior to the election can only say ...... : see I told you !"

I have to (reluctantly) agree with Boatman.. (ignoring all the hyperbole)

The Labour govt hasn't got its ducks in a row.. it has squirrels, and they're at a rave...

@Pragmatist , we seldom agree on anything , but I actually wish they could do this and get the whole thing to be a success .

My adult children need to get into owning their own homes, so I have a vested interest in its success

I am afraid that in my experience with Government projects of this scale and scope , is that something called Commercial Urgency ( or lack of it ) is a major problem .

Costs spiral out of control ( especially holding costs ) , everyone tries to get in on the action to make a fast buck , and the whole thing either fails , the taxpayer pays for the mess , or it collapses spectacularly , or a combination of the three outcomes .

The Government HAS NOT ARTICULATED how its going to work , who carries the RISK and such matters of concern .

I wish we could see a clear roadmap of this Kiwibuild project

Yawn, had enough of the right-whinger standard trope of Govts can't do anything right, they are inefficient and lazy. Its been old for ages, and it ain't getting any fresher.

Agree its a trope, shame that in this case its correct. And the your response should be outrage that this trope rings so true not boredom from seeing this ineffective lot replace the last ineffective lot.

We vote for change. Where is it?!

I disagree, there are some thing that simply cannot be done without govt scale organisation and funding. US space program being one shining example.. and dont trot out SpaceX, they wouldn't have got off the ground in the 1960s, and are building on decades of the US space program R & D work which has been released to the public.

I've seen enough of private enterprise making complete screw ups of projects I've been involved in to know they are no better. Latest one i've been involved with was a ~$6m part of a larger project that we built, installed, commissioned and then ripped out before it ever went into production, and are now quoting on reconfiguring and reinstalling at a another location. It must have cost the company at least 3x what its worth by now with all the pissing about and business interruption.

This rather strange article appears to confirm that your question is valid https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=120...

The reason I think it's strange is that implies that those who oppose the Government are in some way holding them back.

The issue with Gubmint large-scale anything which has to be built physically (as opposed to redistributed with a hefty ticket-clip) is that the entire public service has not Clue One about the Time Value of Munny.

Propose a project for $100m in Year 1, with an initial cost outlay (say, for Land) of $30m, Years 2-4 at $20m each nominal, and Year 5 at $10m, a WACC of 6%, a construction cost inflation rate of 9%, and a five-year schedule. The Guibmint wallahs then gape in wonderment as the thing (without contract variations) ends up costing $143.7m. Cumulative interest carry is $20.4m, construction inflated by CCI (which to be kind is limited to years 2-5 only) is $23.3m. So 100+ 20.4 + 23.3 = 143.7. The time value of munny....

This sort of non-thinking is absolutely rife through all levels of government. They never have to sell enough on Friday to make payroll on Wednesday following, never have to chase debts, never have to juggle cash flows to make the 20th of the month payments to creditors. Their world is literally cossetted: salaries arrive with the regularity of a sunrise, revenue falls into their ledgers like Sky Food off the edge of the bench for a dog, cash-flow is non-existent, and the only exception to this happy existence is IRD, who certainly know the Time Value on unpaid taxes....

Imagine, (strike up the John Lennon chorus about now) that Local Gubmint had to pay consent applicants the IRD UOMI rate on project value for every day they dragged the chain on the consent. Imagine... but enough already. T'will nevah happen.

This sort of non-thinking is absolutely rife through all levels of government. They never have to sell enough on Friday to make payroll on Wednesday following, never have to chase debts, never have to juggle cash flows to make the 20th of the month payments to creditors. Their world is literally cossetted: salaries arrive with the regularity of a sunrise, revenue falls into their ledgers like Sky Food off the edge of the bench for a dog, cash-flow is non-existent, and the only exception to this happy existence is IRD, who certainly know the Time Value on unpaid taxes

Wonderfully expressed

History would indicate that you're wrong and your perspective to be blinkered. Here's another way of looking at it c/- Mariana Mazzucato's 'The Value Of Everything'

https://www.youtube.com/watch?time_continue=4&v=YYy4IgezHvM

Boatman, it was 4000 units on the Unitec, I thought, but it won’t happen anyway!

Any chance we could change the record.. This one is scratched and repeating itself.

Dup

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