Final Board response to Interim Review Report OI 24 305.pdf

Kainga Ora Review Report - Final Board response to Interim Review Report
Kāinga Ora Board response to the dra  review of Kāinga Ora
15 April 2024
The following comments reflect the feedback of the Kāinga Ora Board to the draft independent report
on the performance of Kāinga Ora, received on 9 April 2024.
Recommenda ons
We are broadly comfortable with the report system recommendations. We touch briefly on the key
points below. We also note some areas we believe are critical to system performance that are not
covered in the report recommendations.
Strengthening government accountability for social housing outcomes
We support the establishment of a single funder of social housing across government.
HUD being an ac ve purchaser of housing outcomes through a social investment approach
We support developing more nuanced understanding of housing needs to inform the Public Housing
Plan, with HUD taking a role in purchasing housing outcomes. This will require better data sharing
across the system – particularly between HUD and MSD, and some resolution of privacy constraints.
Place-based approaches
There is real merit in continuing to progress the place-based approach to resolving housing
challenges. This is consistent with recent structural  hanges within Kāinga Ora (and HUD) to be more
place-based, to better understand local needs and preferences, and have stronger local relationships
to improve delivery effectiveness and outcomes.
Increasing the role of other providers
We support recommendation four relating to  he role of other providers, and the system funding and
financing settings, including:
 Establishing a single purchasing  ontract for Kāinga Ora and CHPs.
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 Changing se ngs in the system to level the playing ﬁeld between Kāinga Ora and CHPs
 Ensuring the funding model incen vises delivery where needed and is responsive to the diﬀerent needs
of tenants.
We also note and support the direction around increasing contestability. However:
 There are ongoing opportuni es for col abora on that are also important to foster. Kāinga Ora has a
number of important partnership rela onships with the CHP sector and it is important to con nue to
cul vate arrangements where diﬀerent par es can play to their strengths.
 Contestability needs to be in conjunc on with long-term planning and certainty. Crea ng some form of
spot market for delivery would not be eﬀec ve – a pipeline is key.
Simplifying expecta ons and direc on
We agree with recommendation five that improving the overall system settings is needed to address
challenges. We support the review comments and recommendations in relation to:
 The complexity of the housing support landscape, and sugges ons on enhancements
 Simpliﬁca on and clariﬁca on of direc on to Kāinga Ora.
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Kainga Ora Review Report - Final Board response to Interim Review Report
 Tightening the delivery focus for Kāinga Ora to social housing, which could include the repeal of the
Kāinga Ora – Homes and Communi es Act and by extension the removal of our statutory urban
development responsibili es. However, we do not support any shi  in responsibility for urban
development on our own land, including delivery of LSPs, due to the intricacies of rehousing and
tenancy management, and release of full land value is crucial to long-term planning and ﬁnancial
sustainability.
 Kāinga Ora becoming a Crown-owned company.
Improving ﬁnancial sustainability
We support recommendation six in the report, regarding improving financial performance. This aligns
with a lot of work underway looking into major spend areas and leading to the identification of
considerable savings in support service costs, construction costs and asset management and
maintenance costs. The Board has approved these savings in recent budgets and is happy to be held
to account for delivery of them.
The drive to respond to severe waitlist pressure, meet challenging delivery targets, and incorporate a
multiplicity of new objectives (including density, accessibility, building innovation, Homestar etc) at
the direction of the previous government, has resulted in additional costs above standard build costs.
However, we have worked hard to improve construction costs and investigated many initiatives to
leverage scale and drive better performance1.
Beginning in 2021, through the development, deployment, and ongoing optimisation of HDS, we are
now achieving 40%-60% construction cost reductions in pilot p ogrammes.  This has been achieved
through detailed task scheduling that has doubled labour productivity, the reduction of trade supplier
and head contractor margins and rebates through direct sourcing, and removal of materials waste
though precise schedules of quantities.
We also support the comments in relation to greater flexibility in the management of stock and
landholdings (p19-20), including sale of land and homes where they are economically unviable to
retain or develop. This is a core part of our longer-term planning, as we look to renew our aging
portfolio, but has been difficult to pursue due to high demands to grow the portfolio in line with the
previous government priorities. Achieving market value for these sales is also an important funding
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mechanism for this renewal programme.
Asset stewardship
The report does not touch on the primacy of the Board’s role as asset stewards of ~$50b of Crown
assets, and the importance of funding and financing model certainty to ensure this key government
infrastructure asset is appropriately maintained and ultimately renewed over its life. Short term
decision making, a lack of long-term planning, and funding and financing uncertainty has historically
undermined this function with a backlog of end-of-life housing driving considerable operating costs.
1 Including, from 2018 onwards: investigating and trialling various off-site manufacturing technologies; trialling innovative build
products such as cross-laminated timber; establishing infrastructure alliances in Auckland and Wellington; deploying capacity partnering
contracts (where work is guaranteed to build partners in exchange for better pricing); financial incentives such as underwrites to reduce
financing costs for build and development partners; new outcome-based procurement contracts with maintenance partners. These
efforts have led to minor improvements but did not address underlying performance issues across the construction sector and did not
lead to the efficiency gains that are both possible and needed. Consequently, we have shifted approach, and are deploying a
comprehensive top-to-tail transformation of the way we deliver via HDS.
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Kainga Ora Review Report - Final Board response to Interim Review Report
There are no settings to address this issue or recommendations in the report to address it. This is an
issue that has recently received a lot of attention from the Infrastructure Commission2, and which is
something that needs to be addressed urgently.
Long-term certainty
Building sector capability, enabling planning to respond, building partnerships, securing land ahead of
need, driving innovation, and providing certainty to the sector could all be materially enhanced by
establishing more systematic longer-term perspective of demand for social housing and the funding
and financing settings to support it. We have a history of turning on and off investment, which
completely undermines the ability to drive faster delivery and more cost-effective outcomes  The
report is largely silent on this issue, though we agree with review comments in relation to a lack of
long-term certainty of the availability of government funding and policy settings. We be ieve this a
fundamental requirement of an effective system.
Comments on the report
We have structured this feedback based on the terms of reference of the review.
Financial viability of Kāinga Ora
The Board believes that action taken recently has reset the organisation’s financial viability, and in the
Board’s opinion Kāinga Ora is financially sustainable. Though this wil  continue to be challenged if
more social housing growth is sought under the same funding and financing model:
 The ﬁnancial sustainability challenges cited in the review relate to the failure of the housing system to
match supply with demand. Prices are increasing far quicker than incomes, construc on cost inﬂa on is
outpacing wage inﬂa on, and this means that more and more people are being priced out of access to
housing and are requiring some form of subsidy from the government.
 The current social housing system is based on the use of market rents to fund supply. That does not
work in NZ’s market condi ons, where realising capital gains is required to make a return on
investment. Addressing these root causes is fundamental for changing the performance of the system.
 The current ﬁnancial model for Kāinga Ora as set by government for delivery of social housing involves:
o 100% of the cost of new housing being ﬁnanced through debt – i.e. we borrow from the Crown
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to deliver the new housing
o We invest in new assets with this capital, and charge rent for them, which is paid for by the
Crown (via IRRS and OS) and the tenants (via IRS).
o We use this rent to meet al  our opera ng cost obliga ons AND to service the debt.
o This means our level of debt is directly related to the numbers of houses we are asked to
deliver
o Ini ally returns do not cover costs, however as rental inﬂa on takes hold, over  me we can
recoup the cost of investment.
 The review refers to a June 2022 brieﬁng on ﬁnancial sustainability challenges prepared by Kāinga Ora,
to highlight emerging cost pressures in the construc on sector. It followed a series of earlier brieﬁng
notes to Shareholding Ministers on the delivery challenges associated with Covid, and other emerging
pressures3. We were being asked to delivery unprecedented volumes of new homes at a  me where
2 Build or maintain? | Research & insights | Te Waihanga
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3 Proac ve-release-of-brieﬁng-papers-impact-of-covid-19-ﬁnancial-sustainability-9-Dec-2022.pdf (kaingaora.govt.nz)
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Kainga Ora Review Report - Final Board response to Interim Review Report
construc on cost inﬂa on was running at around 18%4 and interest rates were also increasing, at a
much faster rate than our rental streams. Against that background we were directed not to back away
from delivery, and that mee ng housing delivery targets remained paramount.
 These factors were severely undermining the funding and ﬁnancing model which had been established
and agreed to deliver the growth programme, as it relies on 100% debt ﬁnancing. Higher than expected
construc on costs led to higher debt, and higher interest rates compounded into signiﬁcantly higher
opera onal costs to service the debt.
 These cost pressures also played out in our maintenance spend which jumped considerably due to
inﬂa on, the required roll out of the Healthy Homes Programme and our ageing asset base.
 The purpose of the brieﬁng was to signal these challenges and to outline poten al op ons, levers and
trade-oﬀs that could be considered to address the challenges.
 The funding and ﬁnancing review, which was requested by Kāinga Ora, was intended to look at the
eﬀec veness and sustainability of the funding and ﬁnancing model but did not in the end cover these
areas of scope.
 Notwithstanding this, as noted elsewhere we have been making considerabl  changes to address these
issues through a range of cost savings ini a ves.
 Concluding Kāinga Ora is not ﬁnancially sustainable fails to recognise  hat we retain a strong balance
sheet, with fungible assets and very strong current and projected rental ﬂows. Our longer-term
ﬁnancial model ing demonstrates the situa on improves drama cally.
 Given the savings we are beginning to achieve, the Kāinga Ora Board believes the organisa on is
ﬁnancially sustainable. However, to con nue growth in new social housing will require changes to the
funding and ﬁnancing model to be er reﬂect current market condi ons.
Asset procurement and management approaches
There is little evidence provided to support the comment that asset procurement is not transparent
or effective. For example:
 The report refers to analysis from the funding and ﬁnancing review sugges ng homes built by Kāinga
Ora are $35,000 more expensive than homes built via developers, a er allowing for land value. This is a
consequence of land development costs. Developers tend to acquire sites that are simple and
conducive to development while we are suppor ng intensiﬁca on by redeveloping land we already
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own and which, in many cases, are complex and costly to prepare but do make be er use of exis ng
land.
 Comments on the top of page 19 seem to be based on anecdotes rather than evidence, therefore it
does not seem appropriate to either include them or base conclusions on them.
 The comments on land holding costs not being factored into decision-making for Kāinga Ora Land
Programme purchases is incorrect. We have only conducted a handful of acquisi ons, but in each case,
they are independently valued, and that value is not based on an assump on of opera ng funding for
holding costs.
 Page 19 asserts that costs could be reduced from interest costs on work in progress (WIP). This is simply
not the case. Growing WIP is a reﬂec on of the growing number of homes in construc on – for context
we have 4-5  mes as many homes in construc on today as we did in 2018. Homes take  me to build
before they are able to generate revenue. We can of course reduce holding costs by building homes
more quickly, and this is a focus for the organisa on through the introduc on of HDS.
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4 Annual inﬂa on at 5.6 percent | Stats NZ
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Kainga Ora Review Report - Final Board response to Interim Review Report
 In terms of transparency, we follow all government procurement rules as is required for all Crown
en es.
The report also states that asset management costs are forecast to become unsustainable. Page 19 of
the report discusses increasing maintenance costs and notes the impact of ageing assets, supply chain
constraints and inflation. It concludes however that recent growth in costs are “wel above what could
be reasonably expected…” [from those cost drivers]. We don’t agree that this is a reasonable
conclusion to have drawn. We note:
 the rate increases we have experienced are in line with industry reported experience.
 it does not recognise the signiﬁcant recent spend on the Healthy Homes Programme which is has
added to total costs over the implementa on period.
 we had a signiﬁcant slowdown in maintenance work during Covid as we were unable to access homes.
This led to a signiﬁcant backlog of work, which has only recently become normalised.
 that between 2007 and 2017 there was almost no renewal of homes. This led to a ba klog of renewal
needs of around 10,000 homes. These end-of-life assets add considerably to the maintenance burden.
We are interested in understanding whether those factors have been considered and in seeing the
analysis that supports the conclusions reached.
This section of the report also talks about recent savings that have been adopted into Kāinga Ora’s
budgets fol owing an independent review of the asset management and maintenance system. The
report states that “the credibility of these savings is difficult to assess but seems unlikely based on
past results”. What past results does this refer to? We were not asked for further information in
relation to these savings, but would be happy to pro ide this and our approach to implementing
them.
The report makes several comments in relation to the Kāinga Ora build programme:
 It incorrectly suggests that acquisi ons are not part of the Kāinga Ora build programme (p18). For the
vast majority of developer-led projects, we iden fy and work with the developers from an early stage,
fully commissioning the build of a project. The primary dis nguishing feature between a developer-led
project and a Kāinga Ora build project is that in the la er case we already own the land. They are a key
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part of our build programme, as:
o
they are more eﬀec ve at adding to the total stock as they don’t involve a demoli on to
establish new homes
o they do not necessitate rehousing of exis ng tenants
o they help us to grow and diversify our landholdings (we could not achieve the targets fully on
our own land).
o As noted elsewhere, developers can also have access to be er quality land and deliver cost
eﬀec vely.
 more recently we have taken advantage of favourable market condi ons to grow the number of
developer-led acquisi ons.
The report also mentions that we have struggled to meet delivery commitments. The delivery
numbers have been challenging and have involved a major uplift in capability and capacity for the
organisation. However:
o We have had addi onal volumes loaded into the targets at rela vely short no ce, including for
transi onal housing and refugee housing.
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o We have had to operate through signiﬁcant disrup on due to two major Covid lockdowns, and
the upper north island weather events.
o Despite this we are on track to complete our targets by the end of June 25.
o Over the seven years of the PHP programme (July 2018 – June 2025) we will have delivered
about 21,000 homes, including 14,000 addi onal homes and 7,000 replacement homes, and
completed a substan al retroﬁt of another ~3,000.
o This equates to renewal of ~15% of our stock and ~20% growth in stock over seven years.
Tenancy management including the approach to delivering be er outcomes for tenants and
communi es
It is not clear how the conclusion that tenancy management is not delivering value for money has
been arrived at, based on the evidence provided.
The report refers to Kāinga Ora’s tenancy management function having grown from 666 in 2018 to
1330 in 2022. The correct numbers as provided through the discovery process for the review are 329
to 706 if you exclude the call centre.
The report cites MSD analysis (from the integrated data infrastructure) that effectively creates a proxy
for complexity based on the extent of interactions with various services over the previous 12 months,
e.g. justice system, mental health services etc.
This MSD analysis found that tenants in private housing receiving the Accommodation Supplement
had higher needs than those in social housing. This analysis also finds that those on the social housing
register have even more complex needs, and those in emergency housing the most complex needs of
all.
Based on this data the report concludes that those in social housing, who are receiving relatively
expensive assistance (though not the highest level of assistance as stated – Emergency Housing is
considerably more expensive for the government), may not have the highest need. We do not agree
this conclusion follows from the evidence:
 Firstly, the people coming into social housing – either from the register, or from emergency housing,
have more complex needs. The customers already in homes, have lower needs. By deﬁni on the larger
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pool of all social housing tenants will have fewer complex needs than the smaller pool on the register
and emergency housing. This aligns with our experience, that people coming into social housing have
higher needs than those already present.
 It excludes data on the general popula on which is a fundamental point of comparison in the MSD
analysis – and demonstrates that people in social housing have signiﬁcantly higher levels of complexity
than the general popula on.
 Gaining stability of tenure through social housing is helping to address some of the issues that are
presen ng in, and are poten ally exacerbated by, insecure housing. The more responsive tenancy
management approach adopted by Kāinga Ora is also contribu ng to these be er outcomes for people
coming oﬀ the waitlist or out of emergency housing. We have an evalua on programme underway to
assess the impact of our new approach to tenancy management is having and to reassess the case for
this investment.
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 There is a signiﬁcant body of evidence that points to the importance of tenure security5 including
ﬁndings that:
o
social housing tenants have (on average) higher levels of wel being than private renters,
despite the fact they have (on average) much lower incomes
o
the disparity between social housing and private tenants reduces as length of tenure increases,
which the researchers argue indicates that the lack of tenure security in private rentals is a
driver of this gap.

There is also a range of evidence that shows that private tenants have significantly less tenure secur ty
than those in social housing6.

There is also recent evidence that after transitioning into social housing tenants previously in
emergency housing had decreased incidences of hospitalisation and mental health outpatient use7.
Considering whether the remit of Kāinga Ora is conducive to good performance of its core
func ons
As noted earlier, we support recommendations to simplify expectations and direction. This should
include tightening and prioritising the range of objectives set for the organisation through various
mechanisms.
Kāinga Ora has a core statutory role in urban development, that is not addressed in the report. It
would be helpful for the report to address:
 The regulatory role we play in administering Speciﬁed Development Projects
 The role we play in administering the IAF
 The extensive role in delivery of urban development projects on our landholdings including Hobsonville
Point and LSPs in Mangere, Mt Roskill, Pori ua, Northcote and Tamaki (on behalf of the Tamaki
Redevelopment Company).
 The role in administering Crown products including Kiwibuild, First Home Partner, First Home grants etc.
These functions involve significant teams and investment and have been an important factor in the
organisation’s growth, including growth in staff, in recent years. It is not clear from the report or the
report recommendations what the panel’s view is on these core delivery functions, and what
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elements should be retained under a more streamlined set of responsibilities.
9(2)(f)(iv)

5 For example see: "Micro-geography and public housing tenant wellbeing". Motu Working Paper 23-08. Motu Economic
and Public Policy Research. Wellington, New Zealand.
6 For example: “Residen al mobility for a na onal cohort of New Zealand-born children by area socioeconomic depriva on
level and ethnic group” BMJ Open 2021;11:e039706. doi: 10.1136/bmjopen-2020-039706.
7 “The impact of transi ons from emergency housing to public housing in Aotearoa New Zealand”, He Kāinga
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Oranga/Housing and Health Research Programme, University of Otago, Wel ington, New Zealand
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Kainga Ora Review Report - Final Board response to Interim Review Report
9(2)(f)(iv)
Ins tu onal arrangements
As noted earlier we agree with many of the recommendations relating to organisational form and
structure.
However, the report does make a number of comments about the role of the Board and its
performance. We believe these comments are inaccurate and lack supporting evidence.
We have a comprehensive governance framework that is comparable with other large, complex
organisations including other Crown agencies and NZX listed companies, involving:
 A range of subcommi ees for members to interrogate issues more deeply, including:
o An Investment Delivery commi ee
o A Finance, Risk and Assurance commi ee
o A Public Housing commi ee
o An Urban Development and Planning commi ee
o And a Māori Housing commi ee
 These are complemented by:
o The Construc on Panel Advisory Commi ee which consists of external members with deep
land and housing development exper se, and who provide advice both to development teams
directly, and monthly to the Investment and Delivery Commi ee
o Our external auditors, EY, who operate on behalf of the Oﬃce of the Auditor General, and an
ac ve internal audit programme that interrogates speciﬁc func onal areas as directed by the
Board.
o Several external experts who sit on commi ees to augment the exper se in the room.
 An extensive delega ons framework that includes ministerial, cabinet, board, commi ee and
management delega ons
 An Investment Management Framework that reﬂects Treasury Be er Business Case requirements
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 Monthly performance and housing delivery reports to the Board, regular repor ng on urban
development projects and LSPs
In addition, we have a range of central government requirements that sit ‘above’ board
governance, including:
 Monthly and quarterly repor ng to ministers via HUD
 For larger projects, in accordance with Treasury investment guidance, we follow ministerial consulta on
requirements for larger projects.
 The LSPs have been through Treasury’s Gateway Review processes on three separate occasions without
any major red ﬂags
 Individual LSP precinct business cases have shareholding minister and cabinet approval steps.
 DPMC’s implementa on unit has conducted a review of LSP and housing delivery, which provided a
number of useful recommenda ons that have or are being adopted
 Monitoring agencies have access to our Board repor ng, including our budgets, have a ended sub-
commi ee sessions for periods of me, and regularly review and comment on monthly, quarterly, and
annual repor ng.
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 We also note that our predecessor agency Housing New Zealand, received the highest investor
conﬁdence ra ng in the now defunct ICR process.
We are happy to provide further information on any of the above frameworks, processes or reviews.
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Factual errors
We consider there are several factual errors within the report that we would like to see corrected.
Presenta on of ﬁnancial informa on
 The report frequently confuses funding and ﬁnancing. In rela on to social housing, Kāinga Ora is funded
via market rents (paid by tenants and the Crown), and by Opera ng Supplement for addi onal stock.
Capital costs are ﬁnanced through debt (100% for addi onal housing), which is repaid over me
through funding streams. We are also able to ﬁnance capital through sales, which can support the
renewal of homes.
 Page 18 of the report refers to a total forecast cash cost to the Crown of $21b over four years which
includes all Kāinga Ora cash spend, including capital and opera onal, and that this is the “most accurate
way of measuring the cost of social housing”. This logic is ﬂawed as it is double coun ng by adding the
funding cost and ﬁnancing cost:
o The Crown pays Kāinga Ora IRRS rents of ~$1.5b per year (in today’s dollars)
o The Crown also lends Kāinga Ora money to meet its capital costs, and receives interest
payments from Kāinga Ora. The Crown in turn borrow that money from debt markets, with
their interest costs more than met by Kāinga Ora. This element of the model has no cost to the
Crown
o The only cost to the Crown is the commitment to pay IRRS rents and OS.
 In addi on, the $21b:
o includes the cost of urban development func ons (e.g LSP investments), not just social housing
o excludes rents received from tenants which are not a housing cost to the Crown
o excludes sale revenues of surplus land and assets which can oﬀset costs.
 Page 9 of the report makes the claim that total government housing support will average $8b a year
over the next three years and Kāinga accounts for 56% of this cost. This is incorrect. Our forecast
income from the Crown is ~$2b per year over this period8.
 Also on page 9, there is a reference to Kāinga Ora spending and debt between 2019/20 and 2022/23. It
compares our capital expenditure over the period with our total debt. It would be more appropriate
and useful to compare addi o al capital expenditure (~9b) with addi onal debt ~8.8b. This is an
important correc on as it shows that debt has been invested in new assets.
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 More generally there are several comments about “easy access to debt”, “the use of debt to cover
ﬁnancial losses” (p13), “easy access to debt has enabled a lack of ﬁnancial discipline” (p14) etc that are
not substan ated.
o Debt is and always has been the vehicle to deliver the signiﬁcant volume of homes asked of us,
and for the upfront delivery of LSPs. Not linking debt with the investment and the income
genera ng assets created for the Crown provides only a par al picture.
o Accessing debt has not been “easy”. We have always worked through both government budget
processes and debt protocol requirements.
o All investments we make are required to work through an Investment Management Framework
which reﬂects the Cabinet Oﬃce Circular and Treasury business case guidance.
 On page 10 there is a comment that the panel has found it “diﬃcult to obtain deﬁni ve ﬁnancial
informa on…”. It is unclear exactly what is meant by this comment, and in what sense the extensive
ﬁnancial informa on provided has not been sa sfactory.
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8 Including IRRS, OS and appropria on revenue
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Kainga Ora Review Report - Final Board response to Interim Review Report
Budget packs provided to the Board
The paper states that budgets provided to the Board are not sufficiently clear or detailed (p14-15).
Specifically, it states:
 That the budget assumes several billion dollars of new funding from the government will be approved.
This is not the case. The budget assumes funding for addi onal social housing concludes at the end of
the approved Public Housing Plan. The only excep on is an assump on that funding will con nue fo
the Homes and Communi es Appropria on beyond one year of approvals. This is a rela vely modest
sum, and we would need to roll back the costs if it is discon nued. This assump on is clearly noted in
the board papers.
 The May budget does assume we have access to addi onal debt i.e. ﬁnance to con nue our renewal
programme. At the me of ﬁnalising the budget, debt allowances for renewal had been approved for
the ﬁrst three years only. The budget papers do signal that we will come back to the board with op ons
that stay within approved debt limits. This is being worked on and will be the basis of our FY25 budget.
 While recent budgets did not include a full forecast balance sheet, they do extensively traverse balance
sheet implica ons and risks. We also provide a long-term outlook based on a 60-year model that helps
contextualise the longer-term implica on of decisions and investments – which is key for a long-term
asset owner. In addi on, the board does sign oﬀ the budget balance sheet through the SPE process,
and did so at the same Board mee ng in which the budget was agreed.
 Our budget process and the pack for the Board focus on agreeing the economic (and other)
assump ons that drive our forecasts, iden fying key issues and risks including to ﬁnancial sustainability,
outlining changes from previous budgets, seeking approval for any new investments in people or
technology, reﬂect the capital budgets to meet Crown expecta ons, and incorporate a range of op ons
and sensi vity tests.
Accommoda on supplement and IRRS
The discussion on the relative cost of IRRS and AS on pages 12-13 is not correct.
 Both AS and IRRS are based on ne d but have diﬀerent criteria. While the subsidy on average for AS is
materially lower than for IRRS, there are situa ons where a tenant would receive more from AS than
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from IRRS – typically rela vely high-income earners will become ineligible for IRRS before they become
ineligible for AS. This is relevant as the recommenda ons are focused on transi ons between IRRS and
AS support. As both subsidies are needs-based and means-tested its important to understand
diﬀerences in subsidy levels for individual circumstances rather than on average.
 For example, some tenants whose circumstances have changed (improved) since entering social
housing, may now be paying market rent in a Kāinga Ora home, and no longer a rac ng any IRRS
payments. However, if they were to move into a private rental, they may be eligible for AS. In this sense
they actually do have an incen ve to leave IRRS, which is at odds with the statement at the bo om of
page 12.
 We also note that there are several reference to IRRS being the most expensive form of government
housing support (page 12), and quickly links this to Kāinga Ora (“social housing provided by Kāinga Ora
remains the dominant way of providing housing assistance and is higher cost than other op ons” page
12). We note:
o this isn’t correct, and contradicts Figure 2 in the report, which correctly iden ﬁes that
Emergency Housing and supported housing are both more expensive than social housing.
o accommoda on supplement is far more prevalent than IRRS, and is the dominant way of
providing housing assistance
Releas
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Kainga Ora Review Report - Final Board response to Interim Review Report
o Kāinga Ora is not IRRS – this is the subsidy system not our system – it conﬂates us with being
more expensive rather than IRRS being more expensive.
Comments on delivery
 We note the comments including in the correspondence on page 43 of the report that states that CHPs
have delivered 55% of new stock over the last 5 years. This is not correct – CHP deliveries are primarily
recycling of exis ng stock from other forms of subsidised housing.
 Between June 2017 and February 2024 there are 14,785 addi onal IRRS places9 (excluding transi onal
and supported housing delivery):
o 8314 of these are CHP places of which 2190 (26%) are new stock. The balance are exis ng
houses redirected into IRRS places10 (mostly from a diﬀerent funding source).
o 6471 of these are Kāinga Ora places (involving 14,056 gross and 7,585 disposals). 11,137 (79%)
of the gross delivery for Kāinga Ora is new builds.
 Page 13 of the report claims “Kāinga Ora has had the advantage of…a near monopoly on IRRS as a
source of revenue”:
o This is clearly incorrect. As per the numbers above, CHPs have taken up 56% of new IRRS
funded places since June 2017.
o Regardless, this comment is odd. We do not enjoy any advantage in rela on to IRRS, the
previous government asked us to deliver a share of places through the PHP and we only get
paid IRRS for delivering homes.
Appendix E
It isn’t appropriate to include Appendix E, which is primarily unattributed hearsay, has not been fact
checked, includes errors and misconceptions of Kāinga Ora’s role, and lacks any contextualisation.
Examples include:
 P41 “Kāinga Ora tenancy management cost ($4,000 per person) vs CHP cost ($2,700 per person)”.
Unclear the basis or source of these ﬁgu es but we es mate our direct tenancy management costs at
~$2,200 per household. (See response to Q29 in the data request.)
 P43 “Reset the housing regist r criteria and alloca on criteria”. This is an MSD func on.
 P43 “Tenant complaints that maintenance and upgrades are slow to occur, done badly and cost too
the Official Information Act
much”. Our latest quarterly tenant survey (December 23) has sa sfac on with repairs and maintenance
at 79%. This is our highest ever result, 9% higher than for December 22 and above our SPE target of
75%.
 P41 “Acknowledge systemic equity issues that exist within Kāinga Ora (capability at Board level, CE and
execu ve), the number of Māori on the register and in public housing, and the need for dedicated focus
on allevia ng Māori housing stress and u lising Māori CHPs to do this.” This is an MSD / HUD area. We
don’t have any funding for Māori housing delivery, we don’t control the register, or have any role in
se ng register criteria, and we don’t have a commissioning role for CHPs.
9 Change in public homes - Te Tūāpapa Kura Kāinga - Ministry of Housing and Urban Development (hud.govt.nz)
Releas
10 Including the lease of ~950 exis ng homes from Kāinga Ora’s Porirua por olio
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