Many Grey Power members grew up in or around state houses, the first of which was built in 1937. Two generations of hard-working kiwis enjoyed the benefits of well-built decent housing with affordable rents, and proportionally more Maori benefitted from them than Pakeha. But by the 1980s, the state house had become associated with a beneficiary culture, and we have had three generations since who are dependent on government handouts.
This story is not about beneficiary bashing. Housing affordability is a serious problem that has left tenants without any alternative. Homes that were once aspirational for raising families are now in need of some serious TLC.
Post covid, the previous Labour government committed Kainga Ora to a two-year renovation programme that has upgraded 750 state houses since April 2023 at a cost of $251m. That works out at $335,000 each (1 RNZ, 11th Jan 2024 ). A further 820 are planned, which will take the total budget well over half a billion dollars.
At a glance, this could be seen as a good investment – it gives the old houses a new lease of life, while improving living conditions with better insulation and double-glazing that should lead to fewer health problems. This epitomises the Build Back Better concept.
But to any builder or architect, the cost per house leaps out like a sore thumb. The average size of a state house is 90 square metres. This means the average cost per square meter for the renovations is $3,722. Building new homes costs around $3,145 per square metre (Canstar, 31 Oct 20232).
If Kainga Ora had simply knocked the houses down and built new ones, they could have saved over $50,000 per house.
As construction standards have improved, the end result would have been superior in every measure to the renovated results.
There are further missed opportunities. The old state houses had large sections with the house in the middle. New multi-storey units could have made better use of expensive land, saving a typical section price of $400,000 per unit. As state houses are usually in groups, combining the sections and using modern urban design could have created better communities, even helping to reduce crime. An additional 250 new homes could have been built.
But wait there is MORE! Cost that is. The latest from news from BusinessDesk NZ under the headline “Kainga Ora Budge retrofits at 7x build cost inflation3 (BusinessDesk 12th Jan 2024), notes that the cost for the next 820 renovations is $323m which is almost $394,000 per house3.
Is the cost of running Kainga Ora the problem? A large proportion of the budget appears to be spent on layers of bureaucratic management and, no doubt, communications (PR). It will take the new government time to get a handle on just how inefficient the system is, but the sooner they start taking a surgical knife to it, the better off even the beneficiaries will be.
This is all part of a broader issue for NZ. As a taxpayer and ratepayer myself, I am concerned about Value for Money. Every dollar you pay in tax should be a dollar well spent. I fully support the renovation of homes to support kiwi’s in need, the question I ask is - Is the money being well spent? Is the money going to where it is actually needed?, or is it being used to cover the costs of bureaucratic bloat, high paid public ‘servants’, unnecessary consultancy charges, and corporate welfare?
These are questions as a public representative I must ask. They are also questions as taxpayers that you need to constantly seek the answers for from your public servants. If not the cost of living crisis will never be resolved and the quality of life of the majority of kiwi’s will slide until they grow wings and fly…
1Canstar, Bruce Pitchers, 31st Oct 2024, “How much to build a new house in NZ?”, https://www.canstar.co.nz/home-loans/how-much-to-build-a-new-house-in-nz/#rising
2 RNZ, 11th Jan 2024, “Kainga Ora’s half-billion dollar state home renovation programme, https://www.rnz.co.nz/news/national/506498/kainga-ora-s-half-billion-dollar-state-home-renovation-programme#:~:text=It%20is%20part%20of%20K%C4%81inga,to%20undergo%20renovations%20this%20year.
3 Brent Melville, BusinessDesk, 12th Jan 2024 “Kainga Ora budgets retrofits at 7x build-cost inflation. https://businessdesk.co.nz/article/property/kainga-ora-budgets-retrofits-at-7x-build-cost-inflation
Note: The regular Hamilton Grey Power Coffee Meeting and Presentation will be held on Tuesday the 30th of January (Next Week), rather than the regular Monday time due to the Anniversary Day holiday.
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