Both KiwiBuild and the Provincial Growth Fund are struggling to take off, but Phil Twyford is copping more flak than Shane Jones. Jenée Tibshraeny explores why

Both KiwiBuild and the Provincial Growth Fund are struggling to take off, but Phil Twyford is copping more flak than Shane Jones. Jenée Tibshraeny explores why
Phil Twyford on the bank of mum and dad being "as kiwi as pavlova"

At the beginning of the year I wrote a column exploring the extent to which the goals the Government has set itself will define its success.

I compared Housing and Urban Development Minister Phil Twyford’s KiwiBuild to Regional Economic Development Minister Shane Jones’ Provincial Growth Fund (PGF), concluding:

KiwiBuild risks being canned before it has a chance to develop because of the scrutiny Twyford’s transparent goals are opening the scheme up to.

The PGF on the other hand – a scheme that’s costing taxpayers much more – is safe, as is Shane Jones’ “Champion of the Regions” title.  

Why? Other than the fact no one’s going to refuse free money, measuring the scheme’s success is near impossible….

The reality is that Jones is going to cruise through to the next election much more smoothly than Twyford, regardless of the merits of their flagship policies.

The pinch is, the easier it is for a minister like Jones to avoid scrutiny of what they haven’t done, the more difficult it’ll be for them to prove what they have, come election time.

This situation was ever so stark this week.

Disproportionate attacks risk derailing housing policy

The KiwiBuild qualm of the week, raised by Radio New Zealand and hungrily fed off by the Opposition, was that there were supposedly a few asset-rich income-poor people who were deemed eligible for KiwiBuild houses.

This is because the KiwiBuild criteria includes an income cap, not an equity cap.

Sure – it isn’t ideal a scheme designed to increase the supply of affordable housing while helping those into their first homes, could be milked by people who don’t need support.

But the reality is it’s impossible to create a policy that only captures those it’s designed to target. At the margins, “undeserving” people will always benefit, while “deserving” people will miss out.

We all knew from the get-go that KiwiBuild doesn’t target those most in need. Transitional housing does.

Some of us were also wary of the Government not making the criteria to qualify for a KiwiBuild home too tight, as the risk of the houses not selling, prompting the taxpayers to step in and buy them, was very real. We are already seeing this happen.

So, while not a fantastic situation, I didn’t see the need for the media and Opposition to create too much hysteria over the odd “wealthy” person (who clearly isn’t wealthy enough to buy a less modest house) putting their hat in the ring for a KiwiBuild house.

But, it’s easy to knock someone when they’re down, and Twyford’s admission that KiwiBuild needs a “reset” makes him easy fodder for those on the prowl.

Since he started missing his very ambitious KiwiBuild house building goals, things have gone downhill. His admission to interest.co.nz that the policy’s key 100,000-house target might not make it through the housing policy reset increased the speed of this journey.

With a Cabinet reshuffle to be announced in coming weeks, he this week showed visible signs of stress.

Twyford uncharacteristically lost his cool when grilled by media on KiwiBuild's lack of asset testing, strangely repeatedly saying first home buyers turning to the bank of mum and dad was "as kiwi as pavlova".

He made huge promises before the 2017 election, so needs to be held accountable.

His failure to reach the numerical targets he naively set is rightfully giving the media and Opposition ample ammunition to attack him.

The unfortunate thing is that these attacks are becoming disproportionately large and risk derailing his broader work programme on housing.

Jones: ‘I don’t want to hang myself with a figure’

By contrast, Jones – the Minister behind another flagship policy designed to produce results long-term – was nonchalant when he appeared before a select committee this week to discuss Budget funding allocations.

He even wore a “KiwiRail Shane” baseball cap to the committee.

According to the PGF Unit, as of May 31, only $181 million of the $3 billion PGF had been paid. A month earlier, this figure sat at under $62 million.

The Unit is struggling to get the money out door.

Attacked for this in the committee, Jones said he was a victim of his own success, in that the diligence the Unit exercised in dotting the Is and crossing the Ts before parting with its cash was what made the regime robust.  

The PGF Unit has already allocated $2.3 billion to different projects – $1.4 billion of which has essentially been recycled straight back into government agencies for the Billion Trees programme, Crown Infrastructure Partners, KiwiRail, the Ministry of Transport and the Tourism Infrastructure Fund.

Jones, in the committee failed to answer questions – largely from his shadow minster Paul Goldsmith – to evidence exactly what the PGF had achieved.

“I think there’ll be a bout of serendipity, that the closer we get to the end of next year, there’ll be an ordinate number of projects in operation,” he said.

He couldn’t say how many jobs the PGF had created.

Jones conceded that even though NZ First campaigned on reducing immigration and getting his “nephs off the couch” and into jobs, he needed to talk to the Immigration Minister about bringing in more workers from the Pacific to help plant trees for his Billion Trees programme.

He even went so far as to admitting: “I’ve tried to tone down my approach to this fund, to ensure the fund – the way it’s operated – is not completely eclipsed by my political personality. There’s no guarantee this will happen.”

Importantly, when asked by media whether he could commit to getting at least $2 billion out the door within this electoral cycle, Jones said: “I don’t want to hang myself with a figure.”

Hear that Twyford: “I don’t want to hang myself with a figure.”

Jones then commented, without any authority, that the PGF would remain operative should he get into government again.

Politics and tangible targets

So there you have it – two ministers who have to date overpromised and under-delivered on programmes designed to address issues that need addressing long-term.

Yet Twyford will continue to cop flak, deservedly or not, which will ultimately weigh on his performance. While Jones will continue to ward off criticism with his clever turn of phrase.

Why? Politics and tangible targets. We can see those KiwiBuild houses. Exactly where the PGF’s funds are going and whether they’re creating jobs is more ambiguous.

But, as I said at the start of the year, “the easier it is for a minister like Jones to avoid scrutiny of what they haven’t done, the more difficult it’ll be for them to prove what they have, come election time”.

Judging Jones’ performance this week, he has a long way to go.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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24 Comments

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'At the margins, “undeserving” people will always benefit, while “deserving” people will miss out.'
Answer: combine KB with PGF (KGB PF) and Shane can fund the 'deserving' people into their own Kiwibuilt home and hey, everyone wins .... everyone except the taxpayers.
Enjoy your day.

The issue is that labour set themselves a unrealistic target, which JC and national are hitting on...

Second is that national do not want kiwibuild to be successful, as that is labours biggest policy . So if they get PT out, that is a massive victory for national and will be the long road to hell for labour

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So much expected and sadly not delivered.
At the start of this year we were told that this was to be the year of “delivery” but again looks to be sadly falling well short.

They are both arrogant men, who don't listen.
But I back Jones to survive, because while he's a buffoon he's smart and cunning.

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I think its fair to say that Nationals previous policy for getting people into homes worked marvellously. If you happened to be a foreign national or a moneyed up Party supporter you were easily able to buy up ex state houses buy the dozen. After all they were helpfully put up for sale by Nick Smith despite his own officials telling him it was simply going to put vulnerable people on the streets as a consequence...

Isn't hindsight a wonderful thing.

Ppl told Nick Smith selling NZH stock was a bad idea and its proven so, what has that got to do with hindsight except its proof.

Big promises, but in the end Twyford didn't want to hit the target enough. He didn't listen to good advice, hired a bunch of lifetime Government employees (no one who knows how to achieve a real world goal) without any knowledge of development. He should have taken action when they failed: it's time for a restructuring and for many of the people in the housing commission to disappear from public service permanently. The consequences for Labour are significant and real but apparently not for the people that failed the Government.

e: https://www.stuff.co.nz/business/property/113453987/house-prices-nationw...

Apparently Treasury is predicting a price increase of 18.3% in house prices over 4 years. Given that the year on year increase in owner occupier mortgage value is 7.2% they may be aiming a bit low based on the trend. Never mind that GDP growth is only 2.3%. Although any growth in house prices assumes that everything will carry on as normal even though we are rapidly turning into Iceland.

Yeah, and scrapping SHAs was really bad. They may not have been perfect, but they achieved plenty of good outcomes.
I'm sure it came down to political pettiness ie. Twyford didn't want to continue a National Party policy.

Apparently Treasury is predicting a price increase of 18.3% in house prices over 4 years. Given that the year on year increase in owner occupier mortgage value is 7.2% they may be aiming a bit low based on the trend. Never mind that GDP growth is only 2.3%. Although any growth in house prices assumes that everything will carry on as normal even though we are rapidly turning into Iceland.

I saw this. I would love to see their what their forecast is modelled on. I can "guarantee" that it is based on broad parameters and whatever income variable used will positively affect house prices. I can also "guarantee" that the modelling is based on an assumption that the credit tap keeps flowing. This is NZ after all where the AngloSaxon 'lending into existence' money creation model has found something of a Garden of Eden.

We are approaching two years of this government, does anyone know where progress is at on removing Auckland's RUB? That was one of Twyford's key policies. I presume the 'secret meeting' with Goff might have been to discuss that.
Personally, I don't think it would achieve anything given most of the readily developable land around Auckland is zoned already, but I want to see it gone to prove that to the simplistic neo-libs.

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.. why the heck didn't Labour just pile the Kiwibuild munny into getting state houses built . . avoiding being seen as the party of middle class welfare , by actually assisting income stressed families into homes ?

If their win had been more emphatic I am pretty sure that is exactly what they would have done. The sorting of all this mess is in our hands, really, not just the pollies

KiwiBuild promises predate Phil Twyford. They were first announced by David Shearer and Annette King in 2012? Annette was then the Labour Housing spokesperson -in her bibliography she writes about this policy initiative and where the 100,000 house promise came from. KiwiBuild is very popular within the Labour Party and politically it has been very successful. So Phil absolutely needed to back it.

Also on the political spectrum National doesn't believe in government backed build programmes -they would have sold off state housing and Judith Collin's continues to state that RMA reform is the solution to the housing crisis even though in 9 years National were never able to implement any effective RMA reforms to tackle the housing crisis. So Labour promoting a government backed build programme is a clear ideological difference between Labour and National. Given this political reality Labour will not scrap KiwiBuild.

The difficulty Phil has had in government is to implement a proper government backed building scheme meant the creation of the new Ministry of Housing and Urban Development (it has been operational for less than a year -opened 1st Oct 2018) and for it to be given a development tool that has all the powers of local government. That development tool is called the Urban Development Authority. This has taken time. Legislation is going through Parliament now for the creation of the Urban Development Authority.

An Urban Development Authority absolutely can build affordable housing in any NZ housing market where there is housing demand -including Canterbury where I am from. But it has to target the entire cross section of demand to be successful. If it only focuses on KiwiBuilds for middle income earners or only on subsidised state housing for the bottom decile it will fail. Because there will not be enough demand to make the 100,000 target and not enough demand to make the Urban Development Authority's low-cost economies-of-scale schemes successful.

Here is an article of how a Wellington based Urban Development Authority scheme could build houses for middle and low income earners for about $400,000 or less.
https://medium.com/land-buildings-identity-and-values/can-a-eco-city-sol...

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It's brilliant if you think about it. A political red herring like failed KB gives National something to whine about, gives Labour the grey area needed to do nothing about housing, and thus nothing gets done about housing. Thus protecting the property price. Thus, banks are happy. The memo is: don't make housing affordable. Say you will try. Try. Fail. Complain. But for Goldman Sach's sake, don't make housing affordable. And when it drives the population crazy, put more money into Mental Health.

Awesome comment.

Yes. well said JediNight. Regardless, of all the political Kabuki, affordable housing would be like hitting an economic reset button. NZ, and Australia, are too far deep into this credit-driven reality now. We seen to be carrrering into an economic future been built on a kind of neo-feudalism (with young people, the disadvantaged, and migrants as the serfs) and a neverending wealth effect. Middle NZ has come into great riches (or at least that's what they need to think) even though there appears to be little to indicate that NZ is doing anything spectacularly productive to generate this

Not necessarily young Middle NZ....

'But, it’s easy to knock someone when they’re down, and Twyford’s admission that KiwiBuild needs a “reset” makes him easy fodder for those on the prowl'
Yes, agree but perhaps you forget Twyford's abrasively stinging criticism of Smith when in opposition and his loud bombastic certainty that he had the solutions. The 'knocking' now he is failing so badly would not be as severe had his approach been less arrogant. He's receiving a deserved comeuppance.

Its really simple, the principle and theory of having the less well off in homes while sound is a disaster when it meets reality. The problem is it was the wrong method, what needed to happen is HNZ needed a big injecton of capital to build homes for the really needy. Instead it was "ownership" for the not so needy and the ensuing disaster we see was pretty obviously going to happen. If you want to deal with the lack of housing build community housing run by the state, for the really poor, nothing else works as well.

when the less well off are having to be supported into homes, you know you have a problem! Kiwibuild sounded like a good idea to increase building supply but more importantly "at affordable prices". So the real culprit is that affordability is out of wack with wages and band aiding the problem is always going to be difficult but to solve the issue would be just to have a DTI rule implemented that decreases over time to your target DTI. That forces building to be done in a manner that is competitive to appeal to that segment of the market and affordability becomes "real" again!

The less well off were basically always supported into homes in NZ. Housing Corp, government build activity in the past et al.

it simple... Shane Jones is spending our money... why would give him schtick for not spending it fast enough.

Kiwibuild however supposedly funds itself .... so pointing out its failure given Labour were happy to push it forward as the silver bullet to the housing market doesn't cost us a cent.

Labour seem to do better with there are no "targets" involved with their policies ... they rely on "feelings" to appease voters.