Matthew Hooton: Why Housing Minister Phil Twyford must go

Housing Minister Phil Twyford. Photo / Mark Mitchell

COMMENT:

More than a year ago, I began predicting in columns and on Newstalk ZB and other radio that the number of houses to be built under Phil Twyford's KiwiBuild scheme would be zero.

How my left-wing interlocutors guffawed!

The Beehive, they advised listeners, was well on track to deliver KiwiBuild's 100,000-home target and at least 1000 before the end of June 2019.

Since then, Twyford announced his Buying Off The Plans scheme, as well as using part of his $2 billion fund to buy houses which were already built but had failed to sell. Even including them, the June 30 2019 target was cut to a mere 300.

Twenty months after its formation, the Government now admits that only 122 dwellings have been labelled "KiwiBuild", including those bought off the plans or after completion. Of those, fewer than 100 have sold. There is no visible progress whatsoever towards the 1600 KiwiBuild homes Twyford announced for Pt Chev, or the 3500 for Māngere or 2400 in Mt Roskill.

The best estimate of the number of houses actually built because of KiwiBuild continues to be zero. With KiwiBuild set to be abandoned, that seems likely to remain its permanent legacy.

I made the zero forecast 14 months ago not because I know anything about property development, alas. I made it because I have a wide range of trusted contacts in the industry who had been briefed by Twyford or his officials and confidently told me the approach the Government was taking would completely fail. They had communicated something similar to officials, albeit more gently.

Moreover, it wasn't just Auckland property developers who were telling Twyford he was on the wrong track. More than a year ago, Treasury officials had told him much the same, prompting him to slam them publicly as "kids ... fresh out of university and ... completely disconnected from reality".

The best estimate of the number of houses actually built because of KiwiBuild continues to be zero. Photo / Jason Oxenham.

As the Prime Minister considers her first reshuffle, the current Beehive line is that perhaps Twyford should remain Minister of Housing now that he has learned about the industry and from his complete failure so far.

This extraordinary suggestion may have something to do with Twyford's popularity among Auckland Labour Party activists for his campaign work over many years.

But there is precious little evidence that Twyford, now 56, is a person who can listen and learn. KiwiBuild, after all, is not a new policy. It was announced by Labour back in 2012 with Twyford responsible for building and construction all the way through.

Had the former Oxfam boss listened to anyone in the construction industry since then, he would have known it is not possible to turn $2 billion into 100,000 houses over a decade just by recycling capital. It seems not even to have occurred to him that, were it possible, private developers would already have done it. Even a $15,000 slice of each pie would turn the penniless entrepreneur into a billionaire.

Had Twyford listened to anyone, he would have learned that were anything like KiwiBuild to be possible, it would have to be done at scale, utilising the Crown's procurement power, rather than as a collection of much smaller projects.

Better still, he would have implemented KiwiBuild as the construction of 100,000 new state houses which would then be sold to tenants under a rent-to-buy scheme. While the Labour left would have whined about privatisation, such a scheme would be a beautiful fusing of the politics of Michael Joseph Savage and Margaret Thatcher.

Ardern may have hopes that even Twyford could oversee something so obvious and relatively simple, but surely the Prime Minister must hold him accountable for the tens of millions he has wasted on his initial folly – and for the embarrassment he has caused her personally including the cringe-inducing McLennan Road "street party" complete with Dave Dobbyn wailing out "Welcome Home".

More substantially, Ardern should reflect on the relationship problems that seem to emerge whenever Twyford is involved. The extent to which he is to blame is unknown, but it was certainly unfortunate to lose the chief executives of both KiwiBuild and the New Zealand Transport Authority (NZTA) in a single year.

More mysterious was the sudden and largely unexplained departure of the highly regarded Auckland business leader and confidant of the Prime Minister, Michael Stiassny, as chairman of NZTA after just one-year in the job. The scuttlebutt suggests a disagreement about the proper limits of ministerial authority with respect to an independent Crown agency such as NZTA.

Housing and transport are both critical to preventing New Zealand's already near-unlivable commercial hub and major population centre from completely breaking down, and – not unrelatedly – to Labour's re-election in 2020 and 2023. The portfolios are also inextricably linked.

Ardern owes it to Aucklanders in particular to appoint the very best of her ministers to look after both jobs, not leave them under the control of someone whose credibility among everyone from first-home hunters to the country's most senior business leaders is so low.

David Parker is already overloaded and so probably unavailable while Stuart Nash is not on the same ideological page as some of his senior colleagues. Ron Mark might be considered after his good work in defence procurement. But if a NZ First MP is not an option, that leaves Kris Faafoi as the only competent minister available to step up.

- Matthew Hooton is managing director of PR and corporate affairs firm Exceltium.