The Government has announced an independent review into Kāinga Ora, with the Housing Minister saying he is "deeply concerned" about the organisation's operating deficit.
The move is one of those signalled in the coalition Government's 100 day plan, which includes beginning "the Kāinga Ora clean-up" with the review.
Today, Housing Minister Chris Bishop announced the independent review, which will look into the organisation's financial situation, procurement, and asset management.
The review panel will be led by former Prime Minister Sir Bill English.
Bishop said Kāinga Ora was the country's "biggest landlord" and its operations had a significant impact on the Crown's books.
It had total assets of $45 billion and an annual expenditure of $2.5b, he said.
“A recent report by the Treasury and Ministry for Housing and Urban Development found that Kāinga Ora’s level of debt had grown from $2.7b in 2018 to $12.3b in June of this year.
"Advice released last year suggests that if Kāinga Ora continues on its current trajectory, their debt would reach $28.9 billion by 2033.
“I am deeply concerned about the operating deficit which is already at $520 million in 22/23 and which is forecast to continue increasing. This deficit has a direct impact on OBEGAL (operating balance before gains and losses) and continues to put pressure on the return to OBEGAL surplus.
“Since coming to office, ministers have received further worrying advice about the financial situation of Kāinga Ora. We are not releasing that information at this time as it is commercially sensitive, but it confirms that an independent review is the right course of action."
Bishop said the independent review would build on work already done by Treasury and the Ministry of Housing and Urban Development.
It would provide a report to the Government by the end of March next year, he said.
“Former Prime Minister Bill English will lead the review team alongside vastly experienced financial expert, Simon Allen, who helped deliver ultrafast broadband to New Zealand, and Ceinwen McNeil who brings significant experience in the role of the construction and urban development sectors."
He said the Kāinga Ora Board is currently being consulted on the review's terms of reference, which would be released later this week, once this consultation is complete.
“It is critical that Kāinga Ora is focused on efficiently building social houses for people in need while also delivering value for taxpayers’ money, and this review will be able to provide recommendations to ensure that these objectives are being met.”
Kāinga Ora was formed in 2019, merging Housing New Zealand, its development subsidiary Homes, Land, Community and Kiwibuild.
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