Construction problems – addressing ‘risky contracts’

At a time when a major construction boost is needed things look a bit shaky.

Fletcher Construction has had major problems – Roll call of Fletcher Buildings’ massive loss-making construction projects

Earlier this month: Ebert Construction in receivership, major apartment site locked down

KiwiBuild “socialism for the rich”

Phil Twyford and Labour talked up their ambitious KiwiBuild policy while in opposition, but have found implementation in Government difficult.

This week Twyford announced eligibility criteria for going in the ballot to get a KiwiBuild house which includes income caps of $120k for a single person and $180k for a couple. This has raised fresh criticisms.

Barry Soper: KiwiBuild scheme looking more and more like middle-class welfare

Phil Twyford was, in his words, opening the door to affordable home ownership, which was little more than a public relations exercise. He invited aspiring home owners to register their interest in a ballot for a KiwiBuild home which was a bit like taking a stab in the dark.

Far from opening the door, there’s still not a door to open – the first house has yet to make its appearance and over the next year just 1000 doors will beckon the ballots. And to qualify for a key to your phantom household you’ll have to be earning less than $120,000 if you’re a singleton and $180,000 if you have a partner.

Unfortunately it looks as though it’s shaping up to be a middle class housing programme where you’d certainly need that level of income to cope with the mortgage, with the current average expected to be $650,000 and rising.

$120-180k is hardly middle classes. It’s double average incomes.

The Government has also been criticised for it’s expensive fee-free tertiary education policy mostly benefiting better off students. And for it’s ‘winter warmer’ handout going to all pensioners, including far from poor ones like Winston Peters.

Bryce Edwards’ Political Roundup: Kiwibuild is now “socialism for the rich”

If there was any excitement brewing at being able to enter a lottery to buy an affordable Kiwibuild house, it was certainly short-lived, as further details revealed that the “lottery of birth” has probably already scuttled most people’s chances. Disappointment is setting in as more people realise that the scheme is really only going to benefit the rich.

This is because the houses are priced so high that few will be able to afford to even enter the final ballot for them. What’s more, many are asking why the income caps have been pitched so high that the scheme seems destined to be dominated by rich buyers who are after a good investment.

Newshub’s Jenna Lynch was highly critical: “in effect there is no real income cap. Only the top eight per cent won’t be able to buy these homes. It’s a free for all. This is not going to help those on low or middle incomes – they’ll be locked out by relatively high wage earners” – see her column: Kiwibuild a free for all.

According to Stuff journalist Henry Cooke, the “sky-high income cap”, together with any lack of “weighting for need or income like there is for state houses”, means the rich will benefit the most: “Needy families who could really use the help will be out in the cold hard private rental market while a couple of doctors making $80k each will happily move into a nice new home” – see: Why the Government is letting the rich buy KiwiBuild homes.

But Cooke reports that there is some logic behind this “socialism for the rich” approach. First, Twyford argues that there will be a trickle-down effect whereby the rich buying the Kiwibuild houses will eventually benefit the poor through other houses becoming cheaper (or just not getting more expensive).

I thought that ‘trickle down’ was a dirty term these days, especially on Labour’s left.

Second, there’s the need, electorally, for Labour to keep the rich happy, with the idea that Kiwibuild is also for them: “Setting the income cap so high also invites quite a lot of middle-class buy-in.”

In other words, handing out houses to a voting demographic. Some may call that vote buying (using taxpayer money).

Third, there’s a likelihood that the Government will actually need rich people to be buying the houses, given that they will be unaffordable to most others.

New houses are usually too expensive for lower income first home buyers.

There’s a line being run by the Government that the lottery-element of Kiwibuild is a great equaliser – because poor applicants have just as much chance of having their name picked as rich applicants. Twyford has said “Everyone has an equal shot in the ballot so people who are on a low income, or a high income, as long as they fit the criteria … then they can have a crack at doing this” – see Jane Patterson’s Ballot will keep Kiwibuild equal, Twyford says.

“Great equaliser’ is a nonsense claim.

It is an equal chance for those who can afford a half million dollar plus new house to be drawn from the ballot, but only some will be able to win a prize house.

From Reddit:

When even avowed lefty Bryce Edwards is calling you out with such a brutal headline you have a problem Phil.

This whole thing has been a complete and utter disaster from Labour. They campaigned on a fantasy and instead the lower and middle classes’ tax dollars are going straight into the pockets of property developers and investors.

He even used the trickle down argument!

Twyford seems to be stumbling from Pr disaster to disaster, and at best it is going to take some time for KiwiBuild to actually build any significant number of houses.

And by trying to show that he is making progress well before significant progress has been made could backfire.

If people who could afford to build their own home decide to sit and wait in the ballot hoping for a windfall capital gain thanks to the Government it could reduce new house building further in the private sector.

 

 

Response to KiwiBuild ballot criteria

There were nearly 6,000 registrations of interest for KiwiBuild homes on the first day people could apply.

There were also a number of criticisms of the generous income criteria for those eligible to buy tickets in the government housing lottery. Few houses are likely to be available this year, and not a lot next year either.

RNZ: Ballot will keep Kiwibuild equal, Twyford says

Requiring people to ballot for Kiwibuild homes would help to ensure those on lower incomes still have a good chance, Housing Minister Phil Twyford says.

The income caps are $120,000 for sole purchasers and $180,000 for couples.

To be eligible, buyers must be purchasing their first home, or be “second chancers” – those people who have not yet had an opportunity to own their own home or who no longer own one.

They must be New Zealand citizens, permanent residents or those who ordinarily reside in New Zealand, and intend to own and live in the house for at least three years.

As of early evening there have been nearly 6000 registrations of interest in KiwiBuild since it opened online at 10am, and the numbers are climbing.

The balloting system would help to avoid those on the higher incomes blocking out those earning less, Mr Twyford said.

“Everyone has an equal shot in the ballot so people who are on a low income, or a high income, as long as they fit the criteria … then they can have a crack at doing this.”

He defended the high threshold for the income cap saying there were “not many” houses in Auckland people earning more than $100,000 could afford.

But some people will be more equal than others – those who can afford deposits, and those who get drawn from the ballot.

National’s Amy Adams: KiwiBuild a fail for lower-income families

The Government is admitting that its ‘affordable’ KiwiBuild houses are out of reach for many lower and middle income families by having to lift the eligibility criteria to $180,000, National’s Finance spokesperson Amy Adams says.

“Housing Minister Phil Twyford has set the eligibility criteria for KiwiBuild so wide that 92 per cent of first home buyers are eligible. That’s because he knows he will fail to deliver houses that are affordable to lower and middle income earners.

“Having such a wide criteria and a ballot system to determine the lucky few to get a subsidy is unfair and will mean struggling families could miss out in favour of higher income families and people with significant cash assets.

“There are 24,000 first home buyers a year and the Government is now only planning to deliver 1,000 homes in its first 20 months in office – so they should be targeted to lower and middle income families.

“It is ironic that Labour doesn’t think that someone on the average wage deserves a tax cut, but believes families earning $180,000 deserve a subsidy to help them buy their first home.

Some people on lower incomes will be able to benefit from low rent state houses.

But KiwiBuild is likely to be dominated by people on higher incomes who see an opportunity to make some capital gain from a cheaper Government funded/built house.

Qualifying for Kiwibuild ‘affordable home’

Ahead of an announcement expected today Stuff has details on eligibility to buy a Kiwibuild home, optimistically labled ‘affordable’ in Couples earning up to $180k will be able to buy homes

The income test is $120,000 for a sole buyer or $180,000 for a couple. Both citizens and New Zealand residents will be eligible.

The homes will be available to all first-home buyers and most “second-chancers” – usually people who go through a divorce and have lost property. Second-chancers must not have assets exceeding $120,000 in Auckland, $100,000 in most other cities, or $80,000 for the rest of New Zealand.

First-home buyers will not be subject to a financial asset test – they will simply need to be buying a first home.

Housing Minister says this will allow 92% of first home buyers to be eligible. Presumably the other 8% earn too much. And presumably, most of them should be able to buy a house without Government help.

Occupation and resale requirements:

Those who purchase a home will need to live in it for at least three years without selling it, but will be able to rent out spare rooms to flatmates.

Some purchasers will be able to sell the home within three years if special circumstances such as a death or serious illness occur – but they will need to apply for permission from the Government, who will consider each person on a case-by-case basis.

Scoring a Kiwibuild house will be a type of lottery for those who pass eligibility tests.

For the first years of the scheme, the homes will be balloted, meaning every eligible buyer who enters will have an equal chance of buying a home.

As has been widely noted, ‘affordable’ is still a hell of a lot for first home buyers.

Three-bedroom homes in Auckland and Christchurch will cost $650,000 or less, with two-bedroom homes costing $600,000 or less and one-bedroom homes costing $500,000 or less.

All KiwiBuild homes outside of Auckland or Christchurch will cost $500,000 or less.

That’s still a lot of money – and for most wanting a new house it will mean a lot of mortgage, if they can get one.

First, houses will need to be built. Actually no, first sufficient suitable land will need to be found and pass Resource Consent requirements.

Transmission Gully may be tolled to discourage use

Another change of mind by Labour – they are now considering tolling the Transmission Gully motorwaywhen it opens – to discourage use.

Stuff: Transmission Gully motorway looks likely to be user-pays after Labour shifts gears on tolling

A briefing document from the New Zealand Transport Agency to Transport Minister Phil Twyford, released to Stuff under the Official Information Act, recommended he green-light investigation of a Transmission Gully toll to “shape demand” for the new four-lane expressway, which will connect northern Wellington to the Kāpiti Coast when it opens in 2020.

Twyford has since confirmed he gave the recommendation his blessing. This signals a significant lane-change for the Labour Party, which did not publicly support the idea of a toll when it was in Opposition.

The Transport Agency briefing document says tolling the 27-kilometre gully motorway would help make the main commuter route between Wellington and Kāpiti more “mode neutral”, meaning everyone does not simply drive.

When open, the motorway was expected to reduce the cost of road travel, which would encourage more people to get into their cars at the expense of public transport, primarily rail, the document said.

Tolls could counter the perceived cost reductions of travelling by road.”

Twyford told Stuff he was not opposed to tolling roads if it was the right option for a particular project.

But Twyford’s position appears somewhat at odds with what Labour was saying during negotiations to form the current Government back in October, when he said the party did not support tolling the motorway.

“My understanding is that past modelling has shown that a toll on Transmission Gully risks making the road so poorly used that it defeats the purpose of building it in the first place,” he said at the time.

Now he supports tolling the road so it is poorly used?

Automobile Association spokesman Mike Noon said he wanted to see the “maximum amount” of traffic using the new, safer motorway, and the idea of discouraging drivers from using it would be like “a safety own-goal”.

“It’s pretty dumb when you’ve put the infrastructure in.”

 

 

Speaker reprimands Phil Twyford

The Speaker Trevor Mallard has come down quite hard on Minister of Housing and Urban Development Phil Twyford for giving flippant answers to written questions submitted by Judith Collins. Twyford wasn’t in Parliament to face the flak.

The Opposition (National) were given 20 additional supplementary oral questions, which seems quite a significant penalty for the Government.

Mr SPEAKER: Replies to some written questions to the Minister of Housing and Urban Development have been drawn to my attention. In particular, I have considered the answers to written questions Nos 12234, 12225, 11652, 11710, and 11715. The answers are an abuse of the written question process. In my view, they show a contempt for the accountability which a Minister has to this House. The Minister knows that they would be completely unacceptable as answers to oral questions, and the same rules apply.

Ministers are required to endeavour to give informative replies to questions—Speaker’s ruling 177/5. While the Speaker is not responsible for the quality of answers, I do expect Ministers to make a serious attempt to provide an informative answer. These questions do not come close to meeting that standard.

As a result of these answers that I have seen, I rule that: (1) the Minister will provide substantive amended answers to the questions concerned by midday on Tuesday, 3 July; (2) since the Opposition has been denied an opportunity to use written questions to scrutinise the Government in a timely manner, they will receive an additional 20 supplementary oral questions, to be used by the end of next week.

I have also written to the Minister indicating a form of reply he is using to avoid giving substantive answers is unacceptable, and that he has until next Thursday to provide corrected answers.

There was more later when Leader of the House Chris Hipkins raised a point of order.

Hon CHRIS HIPKINS (Leader of the House): I raise a point of order, Mr Speaker. At the beginning of question time today, you made a ruling regarding written question answers that my colleague, the Hon Phil Twyford, had put forward. I’ve had a chance to now look at those questions. I know that you have written to me about this matter as well.

Certainly I can understand the concern that you have raised about some of the answers that my colleague has given, and I agree with you that some of the flippant comments that he has made in those do not reflect well on the House. However, the question that I would like to raise with you is around some of the ironic expressions that are made in some of the questions themselves and whether, in fact, one or two of those answers were in fact appropriate given the context of the question. For example, in question No. 11652, the operable part of the question was how many more sleeps are required before a decision is made regarding KiwiBuild eligibility rules and income testing, to which the Minister replied, “it depends how frequently the member sleeps”. The point that I would make there is that the question itself did set itself up for that kind of answer. So—

Mr SPEAKER: No, you will sit down.

Hon CHRIS HIPKINS: I fully understand a more rigorous approach to the answers and I wouldn’t contest that at all. The question that I would ask of you, Mr Speaker, is that a rigorous approach is also taken to the accepting of the written questions themselves, because some of these questions do invite answers that would not reflect well on the House because the questions themselves don’t reflect well on the House.

Mr SPEAKER: I can deal with that point of order very easily. If the Minister of Housing and Urban Development had not used the expression “not many more sleeps” in this House to the member when she asked the oral question, then I would not have allowed it in the written question. The original offence, the original irony, was quoted from the Hon Phil Twyford, and, from my perspective, that is an acceptable use within a written question. If the Minister had not used the expression, he wouldn’t have been subject to what looks like an ironic question but, actually, is just a straight response to what was almost certainly an inappropriate comment that he made in the Chamber.

Hon CHRIS HIPKINS (Leader of the House): A further point of order, Mr Speaker. Are you, therefore, ruling that the phrase “so many sleeps” is out of order, because that is an answer that has been given for many, many, many questions in the House.

Mr SPEAKER: No, no, I’m not doing that. But what I am indicating is that when that is quoted or used in a written question which relates to the answer given in the House, I’m not going to rule it out; whereas if it didn’t have a context, then at that stage it could well be considered ironic.

Twyford has frequently shown signs that he hasn’t been able to step up to the responsibilities of being in Government and being a Minister.

Nation: Twyford on Kiwibuild progress

This morning NewsHub Nation interviews Minister of Housing Phil Twyford on progress on the ambitious but slow  Kiwibuild programme.

@Jasonwalls92

Twyford says he has been talking to bother overseas and NZ investors about preprefab investment.

He says when KiwiBuild is up and running, he wants roughly half to be prefabs.

Twyford will not names of investors, but says the Superfund has shown interest. They have also expressed strong interest in Auckland light rail.

100 proposals for development of KiwiBuild homes Twyford says. Can’t say how many will get the contracts but will be making an announcement within the next few weeks.

On prefabs, it’s an area where banks have in the past been reluctant to issue mortgages because of the complex nature of the homes. Will be interesting to see what Twyford does to get around this issue, or how he’s going to work with the banks.

@NewshubNationNZ

Housing Minister Phil Twyford says the Kiwibuild unit in the Ministry of Building, Innovation and Employment is the ’embryo’ of the Urban Development Authority he hopes to establish next year.

The Government will formally “invite expressions of interest” from construction firms both internationally and in New Zealand on creating a prefabrication industry to meet Kiwibuild targets.

International construction firms? Chinese construction firms perhaps?

The Nation: Housing Minister Phil Twyford (transcript) http://www.scoop.co.nz/stories/PO1806/S00262/the-nation-housing-minister-phil-twyford.htm

Foreign buyer rules relaxed

Prior to getting into Government Labour talked up the effect of foreign buyers on the New Zealand housing market, and copped a lot of criticism for their ‘Chinese sounding names’ claims. They were also accused of exaggerating the impact of foreign buyers – and this has turned out to be true with foreign buyers being just 3% in recent statistics.

Once in power Labour restricted foreign buyers despite warnings of what that would do to discourage new housing developments. They have now partly backtracked.

RNZ:  Government relaxes rules on foreign buyer ban

The government’s overseas buyers’ ban on New Zealand homes has been softened, with some multi-storey apartment buildings now being exempted.

New Zealand officials and minister have also been negotiating with Singapore as the ban contravenes agreements between the two countries – that has now been resolved with Singapore securing an exemption, along with Australia.

Since the legislation has gone through select committees the government has acknowledged some fish hooks, that may have actually put the brakes on housing supply in Auckland.

Broadly, they apply to developers concerned about not being able to complete big projects if they can’t sell individual apartments to foreign buyers.

Another issue was overseas corporates getting caught up in the ban when they wanted to buy residential land – for example to build cell phone towers.

They were valid concerns, Trade Minister David Parker said.

“The advice we had from officials was that if we didn’t allow investment in apartment buildings then the whole complex was more likely not to proceed so there would be fewer purchase choices for New Zealanders,” Mr Parker said.

Parker has admitted they rushed to implementation of the changes and have had to reconsider when it became apparent it was having an adverse effect on trying to get more houses and apartments built.

Under the new regime, overseas investors would be able to invest in new housing, particularly apartments, new rentals, and homes available to purchase under rent-to-own or shared-equity arrangements.

The new rules allowed foreign buyers to purchase apartments ‘off the plan’ but they had to sell them once built. They can now retain ownership, but can’t live in them themselves.

This seems weird, especially when the government says they want to get more Kiwis into home ownership.

And the changes announced yesterday are still being criticised.

Phil Twyford in Opposition in 2016: Foreign buyers’ data selective and ineffective

The Government’s newly released foreign buyer data doesn’t give an accurate picture because it was collected at a time when offshore speculators had temporarily deserted the market, Labour’s Housing spokesperson Phil Twyford says.

“The Government is out of touch with the 70 per cent of New Zealanders that support Labour’s policy to ban offshore speculators from buying existing homes. National should back my Bill when it comes before Parliament next month, instead of supporting foreign speculators against the interests of Kiwi first homebuyers,” Phil Twyford says.

Twyford as Housing Minister in December 2017: Ban on overseas speculators a step closer

“This Government welcomes foreign investment in houses to add to our housing supply,” Phil Twyford says.

“However, purchases of homes by offshore speculators push first home-buyers and families out of the housing market.”

Phil Twyford says the legislative changes demonstrate the Government’s determination to make it easier for New Zealanders to buy their first home.

“We expect the law to be passed early next year fulfilling a key pledge in our 100 Day Plan. The previous National government said it couldn’t be done without breaching trade agreements. They just didn’t try and in doing so, they put foreign buyers ahead of New Zealanders.

“This Government prioritises home ownership and housing affordability for all New Zealanders. This Bill will ensure that house prices are set by New Zealand-based buyers, not international buyers,” Phil Twyford says.

The National opposition now say: Twyford’s numbers badly wrong on foreign buyers

“When challenged on the AM Show today and faced with official statistics, Phil Twyford failed to defend his previous stance that foreigners – particularly Chinese – dominated New Zealand’s property market,” Mrs Collins says.

“He originally claimed that 30 per cent of homes in New Zealand were being sold to foreigners. In the face of irrefutable evidence – he could not defend those numbers.

“Official statistics released yesterday show foreign house buyers make up just three per cent of New Zealand’s residential property market, exactly what the previous National Government maintained.

“In the lead up to the election Labour and Phil Twyford ran a scare campaign claiming buyers with ‘Chinese sounding names’ were not real New Zealanders deserving of a home and were responsible for ‘pricing first-home buyers out of the market’.

RNZ: Overseas house buyer problem ‘was never real’

Many developers are still opposed to a ban on the sale of existing homes to foreigners despite a slackening of the proposed new rules.

Only a fraction of New Zealand’s housing stock is foreign-owned and there are developers who think banning or restricting that investment discriminates.

In the first draft of the Overseas Investment Amendment bill, overseas buyers could buy apartments off the plans, but would have to sell them once the building was completed.

The new draft has softened that, now allowing developers to sell up to 60 percent of their apartments off-plan, without the requirement for buyers to sell within a year.

Official figures show nationally 3 percent of people who bought residential property in the last quarter didn’t hold New Zealand citizenship or resident visas.

Mr Church and other developers believe these figures prove the whole law should be scrapped.

“It indicates that the hyperbole around this issue being a much larger problem is just that, it was never real.”

Interestingly Twyford didn’t feature in yesterday’s announcement, it came from David Parker as Associate Finance Minister.

Foreign buyer screening law reported back

The Bill putting in place the Government’s policy of banning overseas buyers of existing houses has been reported back to Parliament by the Finance and Expenditure Select Committee.

Under the new regime, overseas investors will be able to invest in new housing, particularly apartments, new rentals, and homes available to purchase under rent-to-own or shared-equity arrangements.

“This will help first home buyers to get their foot on the property ladder,” David Parker said.

All permanent residents and resident visa holders who spend the majority of their time in New Zealand will be able to purchase homes under the regime without obtaining consent.

Australian and Singapore citizens and residents will be treated the same as New Zealand citizens and permanent residents.

Australia was always a special case. Singapore was not happy with the initial changes and also pushed for an exemption.

 

 

 

Will housing ‘super ministry’ address RMA restrictions?

Phil Twyford is announcing a housing ‘super ministry’ It will only help fix the housing shortage if it finds a way of increasing land supply and significantly reducing section prices.

RNZ: Housing super ministry ‘will help fix crisis’, says Twyford

Housing Minister Phil Twyford will announce the establishment of the Ministry of Housing and Urban Development this morning, which will provide policy advice on affordable housing, homelessness and urban development.

“Having a more focused and capable public service to deliver the [government’s] reform agenda will ultimately allow us to build more houses, better houses, more quickly,” Mr Twyford said.

The new organisation will include functions currently spread between the Ministry of Business, Innovation and Employment (MBIE); Ministry of Social Development (MSD) and Treasury.

Mr Twyford said the new ministry would cost about $8 million in the first year, and it be funded from existing operational budgets of the units that shift to the new ministry.

The new ministry will be established on 1 August, and officially start operating on 1 October.

Mr Twyford remains confident the new ministry will help address some of the challenges.

“It’s only a small part of it … (but) it certainly will help us fix the housing crisis,” Mr Twyford said.

An RMA reform super ministry may do more good.

Twyford rules out meth house apology, then apologises

Phil Twyford was criticised yesterday for failing to be apologetic over the meth house debacle, but his seems to have changed is approach overnight.

RNZ: Twyford rules out apology over meth tests

Phil Twyford has ruled out any compensation or an apology to the victims despite having relentlessly championed their cause when he was in opposition.

When Mr Twyford became housing minister last year he immediately asked the country’s top scientist to review the country’s meth contamination standards.

Sir Peter Gluckman’s report was released this week – and revealed the country has been gripped by a moral panic – and meth residue posed no risk to health at all.

Mr Twyford said hundreds of tenants were needlessly evicted by Housing New Zealand and it wasted more than $100 million on unnecessary decontamination.

His colleague, Justice Minister Andrew Little, last night said an apology was warranted.

“If Housing New Zealand or any landlord has kicked out a tenant on the basis of testing that we now know to be bogus … and has totally uprooted an innocent person’s life then at the very least they are owed an apology,” Mr Little said.

Mr Twyford would not be interviewed today, but in a statement said there would be no apology or compensation from the government.

But this morning: