KiwiBuild failure is more than a broken promise, it's a betrayal

Phil Twyford at the launch of the Construction Sector Accord at a Manurewa building site.
Phil Twyford at the launch of the Construction Sector Accord at a Manurewa building site.

OPINION: Housing was the best issue the Labour opposition ever stumbled upon.

As house prices shot up in Auckland and other centres, the National government seemed almost cartoonishly unconcerned. There was no crisis. Kiwis could go on Trade Me and find plenty of affordable houses. A house making more money than most workers in a year - tax-free - was basically fine.

Against this, one of Labour's most competent opposition MPs was armed with a very memorable plan: KiwiBuild.

KiwiBuild's key strength was the specificity of its ambition. Labour was not going to build "more" affordables homes "at some point" - it was going to build 100,000 new homes in 10 years.

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Now, specificity is its biggest problem. People remember a big number. Suddenly Housing Minister Phil Twyford is telling people he can't guarantee that number any more, as the entire policy is "under review".

The review follows a string of smaller failures. The interim goal of 1000 in the first year was scrapped when it became clear KiwiBuild would have difficulty hitting even 100 homes. National has found cases where KiwiBuild underwrote developments that were already well underway. And some of the homes have had trouble even selling.

This might look like a buildup to a currently-popular Prime Minister Jacinda Ardern just scrapping KiwiBuild, as she did the capital gains tax, and firing Twyford while she is at it.

But there is too much momentum to completely end KiwiBuild now.

The KiwiBuild unit within the Ministry of Housing and Urban Development is hard at work signing up developers - the disappearance of the interim target and installation of new leader Helen O'Sullivan has allowed the team to re-assess what went wrong with some of the earlier developments.

It's understood the team is now much more focused on getting family homes off the ground, as first home buyers just don't seem that keen on apartments. There's also work underway to let the KiwiBuild unit cooperate with Housing New Zealand on building opportunities, instead of competing with them.

The underlying issue for KiwiBuild is that it is a policy from the middle of last century transplanted into the 2010s. When Labour dreamt up KiwiBuild the party was in the middle of a profound identity crisis, and looked to its history for inspiration - a history that involved the first Labour Government building tens of thousands of state homes. But that Government did it with state-employed builders, a politically-controlled interest rate, and a very cushy deal for a guy named James Fletcher.

That is simply not the way Governments are run these days. Treasury would have a heart attack. The media and opposition would find thousands of problems to pick through. The public sector just doesn't get its hands dirty like that any more.

Twyford and the Government have realised this. They have also realised that the cooling housing market - thanks in part to some of their other measures - has taken the housing issue off the boil somewhat, giving them a bit of room for this breather and "reset" that will involve completely de-emphasising KiwiBuild, putting it in the same league as any other piece of housing policy.

But to think they will get away without some level of punishment would be a mistake. House prices might have slowed their rise or even fallen somewhat but they remain well out of reach for many young people. With no real changes to tax settings or planning laws looking possible this term this is not just one promise broken - it's a betrayal of the very foundation Labour built its election campaign on. 

Housing-conscious voters probably aren't going to head over to National, who still have the baggage from last term stuck to them. But Labour can expect a whole lot more hostility, of distrust in their promises. Its best issue has gone from go-to to embarrassment. It's hard to come back from that.

Sunday Star Times