This week, The New Zealand Initiative published my report "Owning less to achieve more: Refocusing Kāinga Ora". It addresses this question.
The foreword to the publication was written by the Right Honourable Sir Bill English. He chaired the Independent Review Panel inquiry into Kāinga Ora in 2024, which showed that it had become a financial basket case. Hundreds of millions of dollars have been written off.
Under the previous government, operating surpluses became deficits and debt spiralled from open chequebook spending. Problems emerged of chronic rent arrears and insufficiently addressed intimidating behaviour and property damage.
The foreword's key point is that ownership is not critical. More important is how to best meet people's needs for support and provide the right house in the right location.
The report itself documents why continuing dominant government ownership intractably puts taxpayers at risk of excessive costs while disempowering tenants by restricting their housing choices.
Political pressure will inexorably cycle between fiscal profligacy and belt-tightening. These cycles make consistently good landlord performance unattainable.
Even in prudent times, the government’s incentives to control costs are weak compared to those of private landlords. The report provides evidence that Kāinga Ora's operating costs could be approaching twice those of private sector benchmarks.
Government ownership also creates conflicts with its regulatory and funding responsibilities, favouring the state provider at the expense of broader public interest – an intractable problem.
International practice demonstrates that government financial assistance does not require dominant government ownership.
The Netherlands provides 75% of rental housing through independent housing associations. When Britain transferred 1.7 million council homes to housing associations and owner-occupancy, housing satisfaction increased. Germany uses time-limited subsidies to private providers rather than perpetual state ownership.
Greater use of housing vouchers, reliance on localised housing associations and private landlords, and less land hoarding offer more sustainable approaches.
Tenant choice empowers people to move from unresponsive landlords or dangerous neighbourhoods. Competition between providers reduces costs and improves service.
The efficacy of government assistance should be assessed through the greater use of the social investment approach to find which programmes produce the best results.
Asking whether government needs to continue owning 78,000 houses to help people is not uncaring. It asks how government can help people most effectively.
Under the previous government, operating surpluses became deficits and debt spiralled from open chequebook spending. Problems emerged of chronic rent arrears and insufficiently addressed intimidating behaviour and property damage.
The foreword's key point is that ownership is not critical. More important is how to best meet people's needs for support and provide the right house in the right location.
The report itself documents why continuing dominant government ownership intractably puts taxpayers at risk of excessive costs while disempowering tenants by restricting their housing choices.
Political pressure will inexorably cycle between fiscal profligacy and belt-tightening. These cycles make consistently good landlord performance unattainable.
Even in prudent times, the government’s incentives to control costs are weak compared to those of private landlords. The report provides evidence that Kāinga Ora's operating costs could be approaching twice those of private sector benchmarks.
Government ownership also creates conflicts with its regulatory and funding responsibilities, favouring the state provider at the expense of broader public interest – an intractable problem.
International practice demonstrates that government financial assistance does not require dominant government ownership.
The Netherlands provides 75% of rental housing through independent housing associations. When Britain transferred 1.7 million council homes to housing associations and owner-occupancy, housing satisfaction increased. Germany uses time-limited subsidies to private providers rather than perpetual state ownership.
Greater use of housing vouchers, reliance on localised housing associations and private landlords, and less land hoarding offer more sustainable approaches.
Tenant choice empowers people to move from unresponsive landlords or dangerous neighbourhoods. Competition between providers reduces costs and improves service.
The efficacy of government assistance should be assessed through the greater use of the social investment approach to find which programmes produce the best results.
Asking whether government needs to continue owning 78,000 houses to help people is not uncaring. It asks how government can help people most effectively.
To learn more about Bryce's research, read the full report, watch the webinar and listen to our podcast.
Dr Bryce Wilkinson is a Senior Fellow at The New Zealand Initiative, Director of Capital Economics, and former Director of the New Zealand Treasury. His articles can be seen HERE. - where this article was sourced
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