Fears construction jobs could go as Kāinga Ora pauses thousands of homes

There's concern in the construction industry tradies will be forced out of business because of the Government's revamp of Kāinga Ora.

Kāinga Ora is the biggest home builder in New Zealand and currently has work underway on 5299 homes.

However, Newshub can reveal that 3001 consented homes are now under review while a new board comes up with a plan to turn around the state housing provider. That plan is due in November.

The construction industry is worried that delay will push tradies out of business.

"We're not getting enough clear signals from the Government about when that's going to change and pick up," said NZ Construction Industry Council's Tommy Honey.

"We're going to see a lot more construction companies at risk of going to the wall if they can't get the work that they've been getting over the last few years."

A review led by Sir Bill English found that Kāinga Ora's board should be refreshed and a turnaround plan put in place.

As a result, Kāinga Ora is reviewing its consented but not contracted homes.

General manager of construction and innovation Patrick Dougherty said in a statement that "as at 31 May 2024, Kāinga Ora had 5229 new social houses under construction throughout Aotearoa".

"In addition we also have a further 833 consented homes planned for delivery by 30 June 2025, where construction has not yet been contracted. A number of these developments will proceed as we confirm value for money and alignment with the Ministry of Housing and Urban Development (MHUD) priority locations through our reassessment process."

Dougherty also said: "We have a further 2168 houses consented but not yet contracted that are planned for delivery post 30 June 2025. These projects are currently paused while we work with MHUD on our asset management strategy, including understanding priorities and financing for our housing renewal programme."

It's a blow for the construction industry when residential building consents in April were down by 24 percent for the year.

Honey told Newshub: "In some ways the indecision or the pause, that Kāinga Ora is actually contributing to the recessionary effect on the construction sector."

Housing Minister Chris Bishop has indicated private Community Housing Providers could play a greater role, allocating them $140 million in this year's Budget.

Over the previous two terms of the last Labour Government, Community Housing Providers built more than 2000 homes.

Paul Gilberd from Community Housing Aotearoa told Newshub: "We are match-fit, good to go and I feel confident we can deliver the 1500 homes announced in the Budget."

He also said with Kāinga Ora having 80 percent share of the social housing market, any pause in building is a big problem.

"For a couple of years now residential construction consents and activity have been in a really steep decline and we have been arguing with the ministers of housing there is a role to play because we are really worried how deep that decline is going to go," Gilberd said.

Newshub asked Housing Minister Chris Bishop about the construction industry's concerns and what will happen to the 3001 consented but not contracted Kāinga Ora homes.

The Minister said in a statement: "I've made my expectation clear that Kāinga Ora must ensure their focus is on delivering their basic functions as a landlord well, and that their activities represent value for money. Kāinga Ora have certainty of funding right now and a lot of contracted work to do to deliver their current projects."

The Ministry of Housing and Urban Development was also asked about Kāinga Ora's future pipeline of construction.

It said, "Budget 2024 decisions did not provide for growth in the Kāinga Ora portfolio at this time. This does not mean that there will not be a build programme for Kāinga Ora but the focus will be on renewing the ageing stock where the need is the greatest.

"Kāinga Ora is due to present to Ministers a proposed approach to priorities and financing of a housing renewal programme over the coming month. The financing of the renewal programme will be within the borrowing appropriation already included in the 2024 Budget."

As of April this year there were  24,466 people on the Public Housing Register with each applicant waiting an average of 218 days to be allocated a state home.