How to Fix KiwiBuild

Someone who builds houses for a living and understands the market has spoken to Morning Report about some of the issues with the whole KiwiBuild fiasco.

Is it slightly possible that he may have a better understanding of the issues than someone with a doctorate in History?

Matthew Horncastle, managing director of Williams Corporation, told Morning Report he had no confidence that the changes would improve the outcome for KiwiBuild.

He said his company sells 20 houses a month in Christchurch and Auckland with 170 under construction at present. Since Labour had come to power it had delivered 88 houses while the private sector had built 45,000 houses.

While it sounded easy to ease shortages by just going out and building more houses, the government’s approach was too simplistic.

Horncastle talked about the inefficiencies in the current situation:

  • There are hundreds and hundreds of little issues:
  • It’s not just the Resource Management Act
  • It’s not just the building consent process
  • It’s not just the planning rules
  • It’s everything is an issue and everything causes delays and everything causes inefficiencies.”

Horncastle was hopeful that ministers would see all these problems first-hand and write some policy that can make it more efficient for everyone to operate.

Mr Horncastle said he refused to be part of the KiwiBuild programme because he knew it would be slow-going and the private sector is always more efficient. He saw a report recently that said KiwiBuild’s overheads per home produced were $300,000.

“That’s horribly inefficient and unfair on the New Zealand taxpayer to be fronting that sort of bill.”

His company operated from an overhead of $5500 per dwelling produced and that was built into the overall cost.

Another problem with the KiwiBuild policy was targeting it at only first home buyers which he called “inefficient and scary”. As well as first-home buyers, a development needed to attract other potential buyers such as downsizers, immigrants and mum and dad investors.

He said while 60,000 potential first home buyers had messaged the government to say they wanted to buy a home, it did not mean they would follow through. They might decide to go on holiday, start a business or buy a new car.

“We just saw too much risk, probably brand risk, in building a beautiful development and because we could only sell to one piece of the market not having the sales completed in the most efficient way possible.”