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Peter Dunne: Drop the dogma if KiwiBuild to be saved

Megan Woods is now in charge of resetting the KiwiBuild shambles. A dogmatic reassertion of the original policy won't help win the confidence of the housing sector, so what will? Peter Dunne has some ideas.

A week on from the Cabinet reshuffle, while the immediate dust has settled, things remain pretty much as they were beforehand. 

Housing, and the KiwiBuild programme in particular, continues to be a major headache for the Government, and the sacrificial replacement of the previous lead minister is touted as clearing the decks for a reset of the policy. The Prime Minister, for one, still appears to believe will see Kiwibuild delivering the promised 100,000 houses over time.  

However, to quote Gilbert and Sullivan, "things are seldom what they seem, skim milk masquerades as cream". While Minister Phil Twyford has been removed from KiwiBuild, a none too subtle hint that he has been labelled the scapegoat for the policy failure to date, he has been given responsibility for Urban Development, of which the construction of a substantial number of affordable homes will surely be a significant component. Minister Megan Woods, on the other hand, has been given overall responsibility for resuscitating KiwiBuild, in concert with new rising star, Minister Kris Faafoi. The potential for this interlocking trio of ministers becoming a gridlock, rather than a clearance, has to be high.

Perhaps the most remarkable thing about the reshuffle was the Prime Minister's admission that housing was a complex issue that was taking more time to resolve than the Government had anticipated when it took office. That confirmed a suspicion that the Government had no real appreciation of the complexities of government upon the assumption of office, and just expected things to happen the way it wanted. It has been reminiscent of President Harry Truman's observation when General Dwight Eisenhower was elected to succeed him: "He’ll sit here, and he’ll say, ‘Do this! Do that!’ And nothing will happen. Poor Ike—it won’t be a bit like the Army. He’ll find it very frustrating." 

Governments can wave their arms all they like, but the practical detail of turning those gestures into reality still lies with the public service. While they are extremely professional and loyal to the government of the day, even they cannot turn skim milk into cream.

Truman's allusion was to the complex Washington bureaucracy, and the American political system generally. However, it does have some relevance to the current New Zealand scene. Governments can wave their arms all they like, but the practical detail of turning those gestures into reality still lies with the public service. While they are extremely professional and loyal to the government of the day, even they cannot turn skim milk into cream. The mere act of saying something will happen is no guarantee it can happen.

The Government's prevailing assumption seems to have been that the years that preceded it were years of inaction, where nothing happened, nor was even contemplated. Indeed, I recall a conversation with a senior minister, shortly after the Government came to office, who expressed genuine surprise at the range of initiatives he had come across in his portfolio alone that the previous government had either implemented, or rejected as unworkable. Others have reported similar reactions across many areas of government activity.

Against that backdrop, it becomes a little easier to understand the monumental failure of KiwiBuild and why, perhaps, Twyford has been a somewhat unfortunate scapegoat. Ministers clearly assumed that just the frequent statement by the Government of its prevailing intention to build 100,000 new homes over 10 years would be enough to ensure its achievement, and are clearly frustrated this has not been the case. This may be why it is now talking about a ground-up review of the form and structure of the public service.

Because of its preconditioned assumption that housing had previously been a policy vacuum, the Government equally assumed that this mere new assertion of leadership would be welcomed and quickly adopted. And, hey presto, the houses would begin to appear. And, anyone offering cautionary or contrary advice was simply being obstructive.

The Government's 'cards too close its chest' approach to date has not only failed, but has made an area that should have been a strength a mounting liability. 

What they failed to appreciate was that there are other stakeholders in the housing field that have not only a viewpoint, but also a direct interest and involvement, who needed to be considered, involved, accommodated as necessary, and taken seriously. Local government, building companies, downstream supply industries, and developers are all part of the equation, yet the Government, typified by Twyford's approach, appeared neither willing to listen to them, nor heed their concerns, lest they detract from the stunning political triumph (rekindling memories of the first Labour government's post-Depression state housing programme) that KiwiBuild was supposed to be. 

The policy reset that Woods has been charged with overseeing is the Government's last chance to get it right. It needs to be a back-to-basics approach, not just a rejig of existing settings. One of the consequences of the policy shambles of the last 18 months has been that there now appears to be little faith amongst any of those involved in the housing sector that the Government knows what it is doing in this area - or is prepared to listen. So, Woods' first task, even before the policy is recalibrated, will be to win the confidence of the sector.

Dogmatic reassertion of the ambition of the original policy, which has so palpably failed, will not achieve that. Woods appears sufficiently astute to appreciate that, but it is not yet clear how she proposes to restore the confidence and credibility that has been lost over the past 18 months.

One step the Government could take is to bring together a national housing summit. Such a summit would bring together all the key players - for example, the Government, Local Government, the building industry, the banks and financial sector, social housing providers, iwi housing providers, industry trainers, town planners, land developers - to develop, first, an agreed national statement of the scope and impact of the housing problem, and the priority areas for action, and second, an accord, to which all parties would be required to sign up, regarding the approach, the timetable, and general accountabilities.

Arising from this, regulatory agencies like Central and Local Government and the Reserve Bank would have certain agreed responsibilities (such as agreed changes to legislation or local plans to remove impediments, or policy instruments like interest rates and deposit ratios for first home buyers). The overall aim would be the development of a coherent, attainable policy objective to which all parties were committed, with equally clear measurable targets, and review periods to adjust the policy along the way.

Clearly, the Government has been unwilling to date to surrender the initiative in such an important social and economic area, critical to its whole image as a progressive and caring administration. While it wants to solve the problem, it also wants to be assured of securing any political dividend that derives from it. Its "cards too close its chest" approach to date has not only failed, but has made an area that should have been a strength a mounting liability. 

So, as Woods and the other members of the housing troika take up their new responsibilities, it would be timely for them to recognise that more 'arm waving' and lofty statements of expectation will not work. The Cabinet reshuffle and promised policy reset for KiwiBuild provide for a much more inclusive and consultative approach than has been the case to date. The extent to which that happens will determine whether Twyford's demotion was anything more than symbolic, sacrifical gesturing, and whether KiwiBuild will now become a worthwhile policy, or remain just a bad joke.

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