Buyers' Remorse

Taxpayers' Taken For a Ride

Phil Twyford used to "work" for Oxfam.  He rose up the ranks, firstly by becoming the Executive Director of Oxfam New Zealand. Then he moved on to Washington.  According to his "blurb", 

Phil’s strong belief in justice led to him becoming Oxfam’s Global Advocacy Director, based in Washington DC. 

From there his "strong sense of justice" led him to entering politics in New Zealand and becoming the present Minister of Housing.  He took this very responsible position with no commercial experience.  Mind you, deleterious as this may be, it is not unusual.  Most Labour MP's in New Zealand either worked as bureaucrats or unions, before entering politics.  But because Phil made it to Washington, he was regarded within the ranks as a bit of a genius.

His first great achievement as Minister of Housing was to launch KiwiBuild.  This madcap scheme put the Crown as the guarantor of houses for first-home buyers.  This cohort had been identified as the most needy.  Once they got on the "property ladder" they would be away, able to move "up the ladder" by selling and buying houses as they chose.  This was just the sort of scheme a bureaucrat with no commercial experience and zero understanding of how free markets actually work would put together.

How is the madcap scheme going?

Another KiwiBuild development backed by taxpayer money is failing to generate buyer demand - prompting more calls for Labour's flagship programme to be dumped.An artist's impression of a KiwiBuild home to be built in Spreydon, Christchurch. Photo: Supplied / Mike Greer HomesThe Wanaka development has already come under scrutiny after slow sales - now KiwiBuild houses are sitting unsold in Canterbury. Under the contracts, the developer can now either sell them on the open market at a cheaper price, with the government topping up any shortfall, or require the government to buy the properties back.

That happens under the underwrite agreed to for several developments - hundreds of millions of taxpayer dollars committed to shift the risk from property developers to the Crown by promising a guaranteed price.

Back in February the government announced it would partner with Mike Greer Homes to build 104 houses in Auckland and Christchurch and the outer suburbs - 65 in Canterbury. 

Last November, ministers were told there were 4083 people on Kiwibuild's Register of Interest in Christchurch, with an estimated shortfall of 1000 houses.

Housing Minister Phil Twyford said in parliamentary responses to National's Judith Collins none of the houses in the Canterbury developments had been sold; all had gone on offer on 20 February.  Mike Greer is currently marketing seven KiwiBuild homes, with prices ranging from $459,000 to $480,000. [Emphasis, ours.  NZ Herald]

So, the developer has zero risk in this scheme; in the end, all the risk is taken by the poor, stupid taxpayer, whose funds are being sprinkled around like pixie-dust, courtesy of the Housing Minister, Phil Twyford.

Judith Collins, Opposition spokesperson on housing is not amused.

However, Ms Collins said KiwiBuild should be dumped. "It was not well thought out in opposition and has been a dire failure in government.
"So early in the piece to have a major platform like this fail means the only way forward is a retreat from it and to get into community housing... not trying to compete in the market with and against other property developers."

Now it was at the point, she said, where the developer could just recoup his losses courtesy of the taxpayer, with many more houses covered by the underwrite.  "Well, we've got these contracts in place and the government really can't walk back from them unless they want to pay out the developers.

"But we've also got situations such as Wanaka where's there's almost 200 more homes that the government has signed up for - they can't sell the ones they've got now."  The government may have to start negotiating with the developer to try to get out of what is a "difficult situation", she said.

Both Mr Greer and Mr Twyford refused to be interviewed. 

Aah.  Those glorious days swanning around Washington DC for Oxfam must seem like nirvana now.  It's the difference between commercial reality and believing in pixie dust.  Phil has found out that reality puts everyone between a rock and a hard place.

The real tragedy is that he is wasting millions of taxpayers' funds to get his very expensive education in how human beings and commerce and markets really work.  Let's hope his "strong sense of justice" leads him to firing himself as Minister of Housing.