Treasury halves forecast progress for KiwiBuild; Government to borrow to build 5,800 new public houses over four years

Treasury expects spending on KiwiBuild to be pushed out further into the future.

While at the mini-Budget in December it forecasted the capital injection into KiwiBuild to be $100 million in 2018, $900 million in 2019 and $100 million in 2020, it now expects this to be $100 million in 2018, only $300 million in 2019, $500 million in 2020 and $1 billion in 2021.

Altogether, it still expects to spend around $2 billion on the scheme, which aims to deliver 100,000 affordable houses for first home buyers over 10 years.

Treasury, in its Budget Economic and Fiscal Update 2018, says, “Changes in the timing of capital expenditure on KiwiBuild since the Half Year Update mean the boost to growth occurs later in the forecast period than previously assumed.”

It goes on to say that while at the mini-Budget it expected “additional nominal residential investment” to total $5.4 billion by 2022, it’s now dropped this forecast right down to $2.5 billion.

“This activity is not lost, but instead a greater proportion is assumed to occur outside the forecast period,” it says.

“We make an assumption on the additional residential investment that is generated by KiwiBuild, which incorporates both the direct spending from KiwiBuild as well as policies designed to alleviate the capacity constraints that are currently limiting growth in the construction sector.

"There remains a high degree of uncertainty about the impact that these policies may have.”

One of the policies Treasury is alluding to is the KiwiBuild Buying off the Plans Initiative, which will effectively see the taxpayer underwrite private development. 

Around 80% of the 1,000 'Kiwibuild' homes the Government aims to complete in the 2019 financial year will likely be constructed as part of the initiative. 

Public housing

KiwiBuild aside, the Government’s focus in Budget 2018 when it comes to housing, is largely on public housing.

Public housing is targeted at households that can’t access or sustain a tenancy in the private rental market. Public houses are owned or leased by Housing New Zealand or by registered Community Housing Providers.

The Government has allocated $234.4 million to increasing the public housing stock by 6,400 homes over four years.

Importantly, Housing and Urban Development Minister Phil Twyford has told interest.co.nz that 5,800 will be new builds.

These will also be funded by Housing New Zealand borrowing up to $2.9 billion and investing a further $900 million from its operations.

Twyford says: “This combination of borrowing and international funding by Housing New Zealand began under the former Government to fund the Auckland Housing Programme, and is now being expanded to allow Housing New Zealand to provide additional public housing places.”

Finance Minister Grant Robertson is confident the borrowing Housing New Zealand needs to do won’t throw the Government off its goal of reducing net debt to 20% of GDP in the first five years of it taking office.

He says that if Housing New Zealand borrowed up to the maximum in its cap, net crown debt as a percentage of GDP would end up at 20.1%, rather than the projected 19.1% by 2022.

The Government has also committed to spending $101.0 million (in operational spending) on increasing the transitional housing stock by more than 200 places to reach a target of 2,155 over four years. Its capital expenditure on this will be $68.9 million in 2018/19.

Transitional housing provides short-term housing for up to 12 weeks for people with immediate housing needs, along with support to help them find long-term homes.

Adding operational spending on transitional housing to that on public housing over four years equals $335.4 million.

This makes up 41% of the operational expenditure the Government has classified as “taking action on child poverty, housing and homeless” and 3% of the Budget 2018 operating package.

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?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current Comment policy is here.

65 Comments

Only 90,000 to go. Go Grant.

How did you work that out? I think there's still 100'000 to go

So thats it ................?

More State Houses ?

How many more than National built over the last decade ?

What happened to the Flagship ( or row boat ) Housing Policy ?

We all know It was going to end up that way ... expanding HNZ stock is needed anyway for increasing retired and homeless people .

I suppose that will be counted within the KB program , which looks now that it will never take off the ground as promised.

BiwiBuild...KiwiBuy...KiwiLoan has been a complete flop.

This is the only way Twatford can save face and say that they're on the board.

He's still going to struggle to build anything given current labour shortages, and the private sector not wanting to build cheap housing.

SIX MONTHS IN and not a single house has been consented for a KIWIBUILD

All we have is talk of a swampy piece of land at the Unitech for 9000 houses , which an Iwi we are told is going to kaibosh .

Tonight i'm going to slap a new label on a bottle of single malt "Tears of the rightwingers", and I shall sit back and enjoy a wee dram.

Keep SHOUTING Boatman, it makes you look calm, rational and balanced.. honest ;)

Pour one for me.

I hope Glenlivet French Oak is acceptable. :)

Lagavulin. 16 yr. Otherwise don’t bother so they say.

Peaty, eh. More parts per million of fecal matter.

But it's been sterilised in 57% yeast piss. :)

If you want peaty, Bruichladdich Octomore 8.3 is 309ppm. But much for me, i'll stick to the Ardbeg.

Yes - for goodness sake Boatman - please stop all this shouting nonsense.

It's ridiculous - and frankly annoying,

Show some manners!

I'm pretty sure they have to get consent before they start building them. So that means that yes, there have been consents issued for Kiwibuild homes.

https://www.stuff.co.nz/national/politics/103458716/first-18-kiwibuild-h...

I always wonder what would kids say if they saw their parents write things on forums like this.

You guys have COL's, Twatford etc.

I think a well balanced argument with facts and people would actually listen and maybe agree.

I tell my kids off for saying the word stupid, I hope with the right guidance they don't turn out like this. I would get it if it was funny, but in honesty its pretty sad.

How many more than National built over the last decade ?

Parallel universe?

Labour built under 200 in their last two years in Government - about 184 more than they have even started so far this time -

National supported Housing Corp providers to increase the number of houses available to HNZ and for social housing by over 15,000 whilst they were in power - The NGO's are much more effective and efficient that HNZ in both building and managing their stock - have fewer vacant properties and almost 100% compliance with insulation etc.

In the last two years alone, National funded HNZ to insulate over 50% of their owned properties - Take note National inherited a housing NZ portfolio taht was not only run down and badly in need of maintenance - and over 80% of the properties were not insulated - ie slum landlord -

Its not always about building houses- and the recent ITP will see a continuation of the historic Labour housing policy of building slum houses - its a liscence for developers to build shitty little showboxes with teh poorest quality materials they can find that just meet code and then sell them for $650k guaranteed to government - regardless of what they are really worth -

and here we go again - Labour left saying the cupboard was bare and they had spent all the money - national have left a huge surplus for labour to shower like confetti

cheers

National looked to sell off HNZ houses.

And, what's that? They celebrated other organisations building houses as their own achievements? Well...that's something.

Twatford and Robertson have got absolutely no claim to fame as being successful with anything financial so we should not expect anything being beneficial for NZ.
If you are a supporter of this drop kick coalition then you need to take your blinkers off and see that there is no way that this lot has a clue.
What housing initiatives have they actually carried thew with apart from continued hot air.

"Continued hot air "

Pot Kettle Black ?

Really - "Twatford"!?!

Please desist with such infantile nonsense - your making a absolute fool of yourself!

Custard, not infantile at all!
However, what they touch will turn to your name!,

This Government is frankly a major disappointment in every respect .

KIWIBUILD / KIWIBUY / KIWIBORROW and its various iterations we now know was a hoax .

If anyone had their doubts it was a hoax , they cannot now be left with any doubts whatsoever

They bang on pointing a finger at the previous Government forgetting their remaining fingers are pointing directly back a them .

All we have to show is more tax to pay for the same shoddy outcomes .

In addition we are now going to have to pay for a Pacific Rugby league are part of Foreign Affairs ( to try and out-bid and keep the Chinese chequebook diplomacy out ) .

Lets see how long it takes for this stupid idea to get out-bidded .......... by the same Asians who have out -bidded us from our homes at Auction sales .

We dont learn do we ?

Seriously "Twatford" is where we've got to? I think you lot need to go and have a few more glasses of wine, have a smoke, take some prozac, although having said that if you carry on being so angry there'll be less of you around come next election - so carry on frothing away, bring on the aneurysms.

Lets get things into perspective ............ Helen Clark virtually stopped building State Houses , she realized the futility of doing it , building houses at huge cost for zero return and having them occupied by people with little respect for them .

National built or facilitated the development of about 15,000 State Houses .

National built or facilitated the development of about 15,000 State Houses

Boatman, is this a deliberate lie? Do you have a source for this?

A quick google suggests they were selling off state houses, which surely you'd recall from news coverage.

https://www.stuff.co.nz/national/politics/100039478/government-announces...

Are you trying to rewrite history for political motivations?

Solidname, seriously everyone in the country will need more than just wine before this lot has finished.
The hot air they continue to come out with and then the backtracks etc.
You may not take things too seriously, but people that care about NZ and it’s people do!

Please can you advise us all what financially beneficial thing that Jacinda Ardern, grant Robertson. Winston Peters and James Shaw have done in their lives that has been successful????????

Nothing!!! Snd get they are making these blatantly stupid, ill conceived policies!

Done crying like a baby? Sound like my toddler.

Mine are 6 and 10 and they make more coherent arguments than TM2.

REEEEEEEEEEEEEEEEEEEEEEE

Wine or whine? Because please you're already had enough whines, don't be greedy now...

So if she rented out her last house would that make her successful then. Doesn't sound to hard for her.

You rent out houses, you haven't taken a brand new global scalable idea like a start-up, got investors, marketed your product and brought in customers (which is f&ck@n hard) and taken a company public like Rod Drury. Try coming up with a brand new product and sell it and make a living from it, that is some achievement.

Maybe I'm wrong and you have bought a whole chunk of land borrowed to the hilt, got investors involved and developed a lot of housing, if so I apologise. But if its just buying houses and renting then Jacinda could easily have done that.

Swapacrate, answer the question!
What have those 4 of our so-called current leaders done in their lives that have been financially successfully that would show that we can be confident in their ability to run the country’s finances??????
Please answer this or if you don’t we will know that you have no confidence!

She's a Prime Minister a lot harder then anything you have done.

What's business got to do with it, buy one house, 2 houses and rent it then your in business, contract as a consultant which she can do and your in business. Sell lemons at a lemon stand and your in business. What she does that is very hard in large business, she can articulate ideas, lead meetings, get people moving in a direction, network. She can do all that as a consultant in large corporate environment and she would be raking it in. She could also buy a few houses to satisfy you and rent them out. Its not that hard for someone like her.

But take a start up through to a global company now that's a business, and if your questioning whether she can do that I would agree with you, but I don't think you are. I think your talking about normal every day business, which isn't hard at all.

not "we", certianly not me, ergo not we. So really just you who in reality would never have such confidence anyway.

I hope that the govt has budgeted enough money for the development contributions for these new houses that will be payable to the Ak council. The Ak council consultation on this has just closed and the proposed increase is "material".
Or by being the govt, will it be a freeloader and not pay these?

Things must be tough down there as he gets angrier by the day.

Gordon, currently in Melbourne and then another week in the sun on the GC, so not tough anywhere.
Nothing this COL has done affects our rental business quite the opposite I would say in regards to be able to buy more property at good yields.
However, it is the BS and nillness that comes from this COL and they are not fit to lead NZ and if you can’t see that then you are not looking at it not from a neutral position.
I feel for the average NZ citizen as it shouldn’t be like this.
The people in power have no idea on how to run any business successfully!
What has Robertson done with his life that shows that he should have the portfolio of Minister of Finance?

Are you aware of how mad and outrageously biased you're starting to sound?

Wow you are in Australia. You are a big spender.

On the backs of hardworking people?

On holiday but still insists on posting on here. When do we get a break from it?

Swapacrate, once again you have not answered the question!
You are clearly saying that not one of the 4 have been successful financially!
Yes you are right, no business or financial success from any of them, and they were elected!
Go figure!!

Who cares is what I'm saying. You make a big deal of it. Why do I have to answer your question when its not very valid argument. Making money in business is easy, and she could have done it by now easily. A CEO, a consultant or renting a house, all very easy for her.

Its not a measure to measure her intelligence and her capabilities.

Also TM2 I'm not against National as you are Labour. If National reduced immigration, looked at foreign buyers, add a bit more money to infrastructure, I could very well have voted for them. I have no axe to grind against National other then their poor job they did on the issues I have just spoken about. I'm happy to see if Labour follows what they talk about in election, if they don't reduce immigration, and house prices, then I will gladly listen to National and weigh up who suits my needs best.

True, looking across history, this present assumption that a mercantile background is requisite for politics is slightly odd. Perhaps a product of our time and indoctrination, much like at points it was considered necessary to have military experience in order to govern.

Bill English had no commercial success under his belt, yet all nominally right-leaning voters voted for him. Yet someone of similar background on the left is disparaged.

An ideologically-driven double standard, it appears.

Like the Bloods and the Crips. Hating on someone for wearing the wrong colour.

You have to admit that in the US electing people on there "business prowess" has done them "huge" favours lately =)

agree

Ability to run a business or be a financial "success" does not necessarily transfer into an ability to run a Country. Maybe we could look at Trump as a fine example.....looking like a total, treasonous crook, but well he's supposedly worth billions.

Would have no problem with Labour if I knew they could perform!
However none of the leaders have any proven ability to run a financial business successfully and that is already showing.
They got into power by bring 3 parties of lesser votes than a National and amalgamating them p.
Anyway, the country will be a lot worse off in 3 years time and you are seeing that already with their backtracks and BS.

Remember that we elect politicians to lead people/society and not to run a business.

You're way to hung up on the money thing and forget about the people.

9 years of doing nothing V 3 years of attempting to make things better, hardly going to be worse.

In terms of finance, Labour have said they will reduce debt. From a right wing economics point of view please explain how you see this as in-competent?

I suggest that everyone becomes a bit objective and look at the picture as it is.

What this budget allocation for housing proves is that the KB project and dream was not only an ill calculated project but it turned out to be a deception.

Not only it was pushed few years forward, but the money will be spent on buying community housing stock from "existing" or private built developments and labeled KB ... So not only the money will NOT be recycled 20 times as PT kept telling us, but they will borrow it and pay interest as well for years to come - that does not make them any different from a Landlord. The $2B dollar fate is still a bit ambiguous, it may come later when they decided what to build and find someone to do it - but it is not so clear !

They promised to ADD new supply to the market and everyone jumped to all sorts of conclusions and crash scenarios and counted their chooks... well all that turned to be a hoax and taking people for a ride.

The other deception is for the thousands of young FHB voters who had a hope that they will move in into their new 3 bdrm next year or the year after because daddy was going to start building Additional "Affordable" houses - now that Can looks a be kicked 3-4 years down the road ( if it ever eventuate!) . By that time the $650K will become a more realistic $750K. I am sure that there will be a lot of numbing propaganda prepared for that !

The third deception is that they have been fooling the public with all sorts of announcements and news flashes about KB possibilities and built up the false hope that it's happening - just wait for it, they said ! -- Well the budget has poured cold water on all that nonsense and showed what the real allocations are and if or NOT things are going to happen.

Another $11B hole to follow the last one is coming. This Gov has realised that Tons of money is required to cover that Big Mouth housing policy.
The "borrowed" $3B start up will soon be dissolved in the 5600 community houses alone with no effect on market prices or supply shortage.

My take is that house prices will start rising again, especially in areas of high demand ... and I suppose that treasury's estimations of an average of about 2.8% pa over 4 years is very modest and did not fully consider the effects of this budget on the supply side.

Building is expensive and becoming more so in Auckland thanks to the ACC which has a free hand in milking every new development to cover its fiscal incompetence.

As some of us always expected, the only people who will see some relief will be the poor and homeless , albeit gradually in about 4 years.

Interest team - do you have any rough numbers on how much money the previous government had to spend on welfare/emergency housing for the vulnerable?

Twyford says: “This combination of borrowing and international funding by Housing New Zealand began under the former Government to fund the Auckland Housing Programme, and is now being expanded to allow Housing New Zealand to provide additional public housing places.”

you didnt answer the Q

The other deception is for the thousands of young FHB voters who had a hope that they will move in into their new 3 bdrm next year or the year after because daddy was going to start building Additional "Affordable" houses - now that Can looks a be kicked 3-4 years down the road ( if it ever eventuate!) . By that time the $650K will become a more realistic $750K. I am sure that there will be a lot of numbing propaganda prepared for that !

Such profundity. Where do you get these magical predictions? The local butcher? Fortune cookies?

What magical world is this where Echo Squawk suddenly seems concerned for young Kiwis' ability to buy a house.

I am always concerned about young Kiwis .. I have two of my own, another two in the immediate family, and another 4 in the extended family , not to mention their close friends and colleagues !

Take your blinker off and see things for what they are instead of playing on the emotional cord and portraying others for what they are Not.

What I am concerned about is that you and others who continue to be fooled by a bunch of clueless, inexperienced, and now deceptive lot who shamelessly took almost everyone for a ride and stole their votes .

This CoL is still fooling us around with more lies and pies in the sky.

Eco Bird, you tell it the way it is fortunately, however many on this site are blinkered and if they cling to the fact that this COL will better their financial position they will be badly disappointed!
Anyone that is acutely financially intelligent would’ve seen that the figures that Twyford was spitting out re 4000 homes at the Unitec site, some being freestanding and some for the open market, was not going to be possible.
I too would like to see this Govt. Perform for the betterment of NZ but it isn’t going to happen as the leaders have very little business acumen and with Winston at the helm next, we are in for deep trouble.
What is his claim to fame apart from a flippen Gold Card"???

You forgot the Winebox Saga. Quite appropriate really as we are all going to need more than a box of wine if this clown gets on the helm. I plan to be drunk for the next couple of years until the next election.

...

I have long since avoided reading the diatribes of the likes of EcoBird etc. They have nothing constructive or indeed of any value to information flows.