David Farrar: Observations from the Kāinga Ora Chair

Simon Moutter is the Chair of Kāinga Ora, formerly known as Housing NZ. He sent the e-mail below to a few acquaintances of his, and one forwarded it onto me. With permission, I am blogging it below because I think it is such a good and interesting read.

As you may know, I [Simon Moutter] took on the role of Chairing the Board of Kāinga Ora in June 2024, with the intent of doing some service-oriented work for our country. Like many New Zealanders, I’d heard a lot about them through the media. Back then, Kāinga Ora had no friends. The media savaged it on a daily basis. Practically every stakeholder viewed it as a poorly run organisation and the public perceptions of its performance were in many respects, far worse than the reality. As I got to understand the organisation, I came to appreciate the critical role Kāinga Ora plays in housing 200,000 mostly very good, albeit sometimes very vulnerable, people. I also came to respect the passionate team from all walks of life who work at

Kāinga Ora and the many other organisations that play important roles in the social housing system.

Right from the get-go, it struck me as an opportunity to figure out if the application of the business transformation methodologies I’ve learned over my career could be successfully applied to a Government agency. Just 18 months on, it turns out they can! The first step was to align with Ministers Willis and Bishop on a future which narrowed Kāinga Ora’s focus to its core mission – improve tenant outcomes, be a firm but fair landlord and provide and manage social housing in a financially sustainable way. Then, with the help of some seriously capable business leaders; Adrian Littlewood (who helped build the Reset Plan), Matt Crockett (who took on the CEO role for 15 months), a strong line-up of new Board Members and a handful of other experienced business transformation people, the outcomes have been extraordinary. It is the fastest and most dramatic turnaround in performance of a large business that I have been involved with. I’ve been amazed at what Kāinga Ora’s people have been able to do with clarity of focus, good leadership, faster operating rhythm and some top-shelf transformation methodologies learnt many years ago from McKinsey and taught to them by Matt and a few others we brought in from the old Spark team and a couple of other companies Matt has worked with.

Before the Reset, our tenant and community outcomes were inconsistent at best. Today our tenants are more satisfied with their homes, more satisfied with our maintenance, they feel safer in their homes and 5000 of them have moved out of rent debt, a massive stress in their lives.

Before the Reset, the organisation was on an unsustainable pathway toward annual operating deficits approaching $800m and running up debt at a rapid rate, rising from around $14bn and expected to hit $28bn within a few years, which would have put the Government’s books under enormous pressure. Post execution of the Reset Plan, we have already halved the deficit (forecast FY26) and the organisation is on track to get close to an accounting surplus by FY29. Driving this is a big improvement in operating earnings (EBITDA) which was at only $200m and falling pre-Reset, where we are now on track to deliver $1000m of EBITDA in FY27. This big improvement in operating cashflow, combined with reduced unit costs for construction, a sensible moderation of construction activity volumes and greater recycling of capital from the sale of old properties unsuitable for social housing, means debt will now peak at around $20bn, a huge relief to the Government’s books.

Before the Reset, Kāinga Ora had around 3,400 staff. Today we are down to 2,285, yet every KPI is still heading in the right direction, a reminder that with the application of strong commercial disciplines, even Government organisations can be efficient.

Matt finishes his contract period with us this month (the most I could get out of him was 15 months unfortunately) and he is handing over to Tracey Taylor, who has been Matt’s key partner in executing the Reset Plan. I am confident she will carry on with the True Transformation phase ahead of us and deliver the next wave of improvements over coming years. We all owe Matt our gratitude for his outstanding leadership and the tremendous work he has done to the benefit of New Zealand’s vulnerable people and taxpayers.

If you have 10 minutes, please click on the link below and take a look at the Stakeholder Update presentation and notes we published on our website last week. If you like what you see, please feel free to share the link with your associates. My agenda is simple – I’d like all Kiwi’s to reconsider their perceptions of Kāinga Ora, and give the organisation and its people the benefit of the doubt a bit more in future and some positive feedback when it’s due.

Regards

Simon Moutter

https://kaingaora.govt.nz/assets/About-us/Change-is-happening-at-Kainga-Ora-big-visible-change.pdf

David Farrar runs Curia Market Research, a specialist opinion polling and research agency, and the popular Kiwiblog where this article was sourced. He previously worked in the Parliament for eight years, serving two National Party Prime Ministers and three Opposition Leaders