What the future holds for Kāinga Ora

The agency was found to be underperforming and 'not financially viable'.

Mōrena, and welcome to The Bulletin for Tuesday, May 21, produced in partnership with Blind Low Vision NZ.

In today’s edition: Cold and flu medications containing pseudoephedrine are back on the shelves, John Key has been accused of insider trading, and a look ahead to the OCR announcement. But first: a major report into Kāinga Ora.

A damning report

A government-ordered report into Kāinga Ora has found the housing agency is underperforming and “not financially viable”, prompting a major shake-up. The Herald broke down the key details here, reporting that the highly critical report headed by Bill English found Kāinga Ora was facing annual deficits of $700m. Seven major recommendations about the future of Kāinga Ora and the wider social housing system were contained in the report, of which the government has already agreed to four, including replacing the agency’s board. A new chair, Simon Moutter, has already been appointed. Bishop expressed concern that there “had not been a clear separation between the board’s governance role and operational management”. The government’s also agreed to put “Kāinga Ora on a more level playing field with community housing providers”, to issue a “simplified direction” to the agency as the agency’s remit had become too broad, and to “set an expectation that the Kāinga Ora board will develop a credible and detailed plan to improve financial performance with the goal of eliminating losses”. Over on BusinessDesk (paywalled), Victoria Young took a closer look at the report’s recommendations and the financial trouble the agency has been facing.

Will this mean a state house sell-off?

The review determined that Kāinga Ora’s recent scaling up had resulted in a “high-cost structure and poor financial discipline” that wasn’t delivering the best results for tenants, within the context of an underperforming wider social housing system. As Interest reported, the agency would need a $21 billion cash injection over the next four years to cover its growing losses. But Bishop has ruled out a mass sell-off of state houses. Pointing to one of the accepted recommendations around community providers, Bishop said the government would be “agnostic” as to who delivered homes, pointing to community groups like the Salvation Army. The door has been left open to transferring homes to other providers. Writing for The Spinoff last week, poverty campaigner Alan Johnson said that while Kāinga Ora’s debt problems were concerning, so too was the need for social housing in New Zealand. Speaking to RNZ’s Checkpoint, Bishop said that he did not see a future where the government doesn’t own state houses, but partnering with the community housing sector would help tackle the housing crisis we have. “The number of social houses that the government funds and supports will grow.” As Owen pointed out, this is different to the number the government owns. Asked by Newstalk ZB’s Heather du Plessis-Allan whether any homes would be sold, Bishop said that forecasts showed Kāinga Ora would have to sell 10,200 homes over the next four years. “We will not be doing that,” said Bishop, but the government would consider a mix of asset management, renewals, sales, demolitions and new builds later in the year. 

A broader housing shake-up

Bishop also signalled a full government review of all housing initiatives would be carried out, reiterating his intention to scrap Kiwibuild and take a close look at schemes like the First Home Loan, as discussed in this Spinoff report from April. On Checkpoint, the minister said that announcements around broader funding settings for housing would be made “in due course”, and noted the wide continuum of housing funds in New Zealand. The Kāinga Ora review was highly critical of the agency’s growth from a state landlord to a major proper developer and provider of schemes like Kiwibuild. The report also noted that social housing was not always delivering the best results for tenants or providing “quality housing”, while Bishop said the agency had done a “suboptimal” job at looking after people with complex needs. In March, a Kāinga Ora tenant described the property they were living in to The Spinoff as “unpleasant”. Just a few days ago for The Post, Hanna McCallum reported on a Kāinga Ora tenant living in a home that did not meet his needs. 

What’s next?

Bishop told RNZ’s Checkpoint he’s expecting the new board and chair will provide a “turnaround plan” by November this year. He’s expecting “significant” financial savings, potentially into the hundreds of millions. Cabinet will also consider the remaining recommendations made in the report in August, including whether to consolidate government funding for housing outcomes under the housing minister. In response to the review, Labour’s housing spokesperson Kieran McAnulty said there remained no new funding for social housing. “The government has made a lot of promises when it comes to housing, but at the end of the day they’re making things worse. The lack of certainty is stalling the momentum Labour had built in social housing and the construction sector,” said McAnulty.

‘Be most vigilant when you’re at your worst, because that’s when you’re most vulnerable.’

After falling victim to a phishing scam, Russell Brown spent the day with One NZ’s cyber defence and fraud prevention teams to see the work they do to stop millions of scam attempts every year. Read more about scam defence on The Spinoff now, in paid partnership with One NZ.

Pseudoephedrine back on the shelves for winter

Cold and flu medications containing pseudoephedrine are back on the shelves, reported NZ Doctor (paywalled). It fulfils a pledge in the coalition agreement between Act and National. The products can be purchased over the counter at pharmacies, without the need for a prescription, 13 years after they were banned. The Detail podcast has a useful episode explaining the big deal about pseudoephedrine, which you can find here.

Key says ‘no merit’ to claims of insider trading

Interest’s Juha Saarinen was first to report that former prime minister John Key has been sued in the US by the shareholders of Palo Alto Networks for alleged insider trading. According to reports, the alleged actions took place between August last year and February 2024, with lawyers for the shareholders asking for a jury trial to take place. Interest reporter Dan Brunskill noted on Twitter that it’s not uncommon for people to be sued in the US, especially by shareholders. But the former prime minister has said there is “no merit to the claims” and that he has followed the rules, as reported by Stuff. 

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Click and Collect

• Looking to tomorrow’s OCR announcement, here’s a helpful scene setter.

• I had some reader feedback about the way the New Caledonia crisis has been covered from New Zealand. Here’s an interesting piece from The Spinoff that centres on the Kanak voices in the conflict.

• I saw the new Mad Max prequel film Furiosa last night – and loved it. Indiewire has a great review.

• Heavy rain has slammed parts of Auckland overnight, leading to flooding. Stuff has the details here.

• Inside the Succession-esque battle to take over Disney.

Right now on The Spinoff

Alastair Crawford argues that there's a silver lining to the Ministry of Education job cuts. Shanti Mathias reports on a campaign to make private jet owners pay for their emissions in some way. Lucinda Bennett considers the pain and pleasure of cooking. Joseph Xulué argues that in stories of unrest in New Caledonia, Kanak voices should not be an afterthought. How are the stocks of the fish on the iconic chippie poster doing? "Munted," one expert tells Asia Martusia King. Here's all the new movies and TV on streaming services this week.

What you should be reading

Staff writer Shanti Mathias (who was behind several of the biggest stories we published last week) has some picks for your reading list.

• This very long long read from the New Yorker about the high-profile case of the British nurse found guilty of killing seven babies, has been blocked due to ongoing legal proceedings in the UK. It's a compelling example of the role of magazines in looking beyond the headlines of a troubling story.

• I love The Economist's Drum Tower podcast, especially this recent episode about a day on the beach in China, complete with CCTV cameras, ocean swimmers and holiday outfits. (Paywalled)

• My boyfriend sent me this beautiful photo essay of water deliveries in Bangalore, India's water-stressed technology hub, and was completely correct that I thought it was fascinating

• Such a fun piece from New Zealand Geographic about the world of prehistoric insects being discovered in Otago amber.

That’s it for today, thanks for reading. Apologies for the delay sending this out, my laptop did not want to play ball. I’ll catch you tomorrow morning.

Got some feedback about The Bulletin, or anything in the news? Get in touch with me at thebulletin@thespinoff.co.nz.

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