Kāinga Ora’s financial viability and sustainability is in serious doubt and Labour has no idea what to do about it, National’s Housing spokesperson Chris Bishop says.

Leaked briefings have revealed that Housing officials advised Housing Minister Megan Woods in June that:

• Current financial modelling shows Kāinga Ora is unable to repay its full $28.9 billion of forecast debt within the next 60 years;
• On current projections, by 2025 Kāinga Ora will be recording negative net operating cash flows, so that Kāinga Ora will be issuing more debt to pay the interest costs on its existing debt.
• On its current track, Kāinga Ora will not be able to cover its depreciation costs, and will have to issue debt on the same asset again to pay for its replacement or renewal;
• The forecast accounting losses for Kāinga Ora are $2.4 billion over the next four years;
• Officials say that “without prudent changes to funding settings and efficiency savings… there is a risk that poor financial metrics will trigger to drop in Kāinga Ora’s standalone credit profile”, meaning higher interest costs on debt.

“Kāinga Ora is an utter basket case and is in deep, deep trouble,” says Chris Bishop.

“It is no surprise that officials told Minister Woods to question whether or not Kāinga Ora is complying with its obligations under the Crown Entities Act to prudently manage its assets and liabilities and be a successful going concern.

“Despite these dire warnings and the officials clear unease with Kāinga Ora’s financial performance, Labour seems to have done nothing.

“Minister Woods should be demanding urgent action from Kāinga Ora but the Minister seems to be asleep at the wheel.

“Answering on behalf of the Housing Minister today, Carmel Sepuloni wouldn’t even confirm that Minister Woods had called in the Kāinga Ora board to demand a plan for a return to financial sustainability.

“Labour have created this mess. They gave Kāinga Ora the capacity to max out its credit card but have saddled it with ever-increasing responsibilities, well away from its core role as a social housing provider.

“Labour remains ideologically obsessed with Kāinga Ora being a massive government-owned housing provider, which crowds out the community housing sector.”