Tasked with housing around 185,000 people in over 72,000 homes, Kāinga ra has a big job. It is allocated substantial financial resources to do it but, with thousands more people waiting, there is always more it could be doing. The public therefore expects the agency to manage its finances prudently.
The new government has just completed a review into KO and the results are… not great. Some of the “highlights” are:
Financial Deficits: Kāinga Ora is forecasting operating deficits growing from $520 million in 2022/23 to $700 million by 2028.
Debt Projections: Total debt is expected to increase from $12.3 billion to $23 billion by 2028.
Operating Expenditure Growth: Annual operating expenditure has grown from $1.5 billion in 2019/20 to $2.5 billion in 2022/23.
Rental Debt: Rental debt owed to Kāinga Ora increased from $1 million in 2017 to $21 million in 2023, with more than 450 tenants each owing more than $10,000 in rent at the end of 2023.
Procurement Costs: Kāinga Ora redevelopment costs are on average $35,000 per home more than developer-led acquisitions, excluding land costs.
Work in Progress Growth: The value of unfinished projects is expected to increase from $472 million in 2018 to $2.9 billion by 2028, which will significantly raise interest costs.
High Staff Costs: The cost of delivering tenancy support services increased significantly, with personnel rising from 527 in 2018 to 1,026 in 2023.
Increased Operating Costs: Kāinga Ora's annual operating expenditure rose from $1.5 billion in 2019/20 to $2.5 billion in 2022/23.
Maintenance Costs: Maintenance costs increased significantly, with the review noting that these costs rose from $472 million in 2018 to $3.2 billion in 2023, far above what could be justified by inflation and supply chain issues.
Unsustainable Asset Management: Asset management costs are forecast to become unsustainable, with maintenance and renewal costs projected to increase by $674 million over the next four years due to the aged state of the housing stock.
Social housing in the era of stagnation
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