$2 Million Cost Blowout for Senseless Development Demonstrates Everything Wrong with Kāinga Ora

The Taxpayers’ Union is dumbfounded by the endless examples of failure at Kāinga Ora – Homes and Communities that continue to come to light. Ruapehu District Council and Kāinga Ora’s $5.2 million housing development has blown out by over $2 million to $7.5 million according to a Crown Infrastructure Partners’ contracted projects document.

Commenting on this development proposal, Taxpayers’ Union Campaigns Manager, Connor Molloy said:

“Just last month, an Auditor General report rightly slammed the decision-making and delivery process behind the previous Government’s covid ‘shovel-ready’ slush fund, and this is a prime example of why.

“The rationale behind this development project was flawed from the get-go. So much so that the initial proposal was turned down twice from Crown Infrastructure Partners due to the unlikelihood of it delivering planned outcomes and benefits, with the site even deemed a ‘no go’ on one of their early due diligence documents.

“It has also been blatantly apparent that both Council and Kāinga Ora have failed to engage with the community, with even Ruapehu’s own Councillors admitting how poor the consultation process has been.

“Ohakune has virtually no social services, no local GP, and a population of just over 1,500 people. With just 11 families on the current Ministry of Social Development Housing Register in Ohakune, it would have made far more sense to absorb applicants into existing stock, and reduce barriers to renting out existing private properties.

“Even this morning, we saw reports of more than a thousand new Kāinga Ora homes sitting completely empty. The failure of Kāinga Ora to deliver sufficient housing while continuing to waste money demonstrates why the Government should not be involved in house building and should instead cut cost-bloating red tape to allow a housing market which can deliver affordable homes.”

NOTES TO EDITORS:

In July 2020 (see page 2), Ruapehu District Council applied for Infrastructure Reference Group (IRG) funding to Crown Infrastructure Partners (CIP) for a ‘shovel ready’ project to enable the delivery of more affordable social housing in the district. It was initially turned down, as it was deemed unlikely to deliver outcomes or benefits, and that empty sections would potentially sit unoccupied.

A Due Diligence Matrix was conducted in September 2020 looking into potential sites, where the eventual Tei Tei Drive option was deemed a ‘no go as a priority site.’

After being turned down a second time in December 2020, RDC applied once more in August 2021, which was eventually agreed to by the Minister and the Ministry of Housing and Urban Development. Both an agreement between Kainga Ora and MHUD and Kainga Ora and RDC were signed on April 1 2023.

The cost of the development has now run out to $7.5 million, more than $2 million over the initial funding proposal.

Minutes from a Ruapehu District Council meeting on September 27 outline admissions from councillors that the local community had not been consulted thoroughly enough. (See page 5 onwards)