When Infometrics slam your plans you know you are in trouble

As I was listening to parliament I heard the Minister of Finance speaking highly of a report from Infometrics regarding health expenditure, which the Labour party have been using for months. He said:

This reflects the consistent, year-on-year underfunding of the health system, which, based on work by independent economic agency Infometrics, is estimated to have been $2.4 billion over the last nine years.

I sniggered because Infometrics, in another report, have looked at Phil Twyford’s KiwiSlum plans and found them wanting.

Actually, worse than wanting; their headline on their website is “KIWIBUILD – OTHERWISE KNOWN AS “PULLING NUMBERS OUT OF YOUR ARSE”.

Infometrics explain how they came to such a conclusion:

In summary, the net effect of the government’s KiwiBuild policy could see as few as 9,200 additional properties added to the dwelling stock over the next four years, representing less than one-third of the programme that is pencilled in for that period. Additionally, this figure does not allow for any crowding out of private sector activity, which could reduce the net boost to total construction activity any further.

The government could also find that its definition of “affordable”, particularly in Auckland, is still not cheap enough to enable many renting households to get into their own home. Leaving aside questions about the ability of people to save a deposit, a first home of $500,000-600,000 requires a higher income than Phil Twyford has guessed.

Finally, there must be questions whether the government can deliver properties at the price points it has nominated. Any costs not properly allowed for will either make the properties even less affordable for first-home buyers or result in the government making a loss on its developments.

All in all, Labour’s KiwiBuild policy is looking like much less of a game-changer for the construction sector and housing affordability than the government has made it out to be. The policies aims might be admirable, but we think that solving Auckland’s housing crisis will prove to be a lot more complicated than Labour has thought.

That much is obvious to anyone with half a brain. When a government minister uses parliamentary privilege to attack private citizens, who incidentally are right when the minister is wrong, then you know the wheels are coming off the policy.

Infometrics identified three keys areas where Phil Twyford’s thinking is shonky.

  1. Overstating how much work KiwiBuild will really create.
  2. Understating how much income you’ll need to buy a property.
  3. Missing out important components of the overall cost.

What that shows is gross negligence or wilful misdirection on the part of Phil Twyford. The missing out of important components in the overall cost is particularly alarming. Infometrics highlight just some of those:

CoreLogic has also criticised the government’s assumption that it will be able to build its houses for about $2,000/sqm. Although this figure is broadly in line with the average per-square-metre (PSQM) cost of consents over the last year, it fails to take into account:

  • regional building cost variations – construction costs are higher in Auckland than in other parts of the country
  • design and architect fees and consent fees
  • costs of site preparation, particularly if the land is not flat
  • local council development contributions
  • the cost of supplying essential services to the site
  • the systemic under-recording of the value of work on consent applications to reduce fees
  • the higher PSQM costs typically associated with attached and/or multi-storey dwellings
  • the higher PSQM costs generally faced by smaller dwellings (see the last house at Is tiny living really so terrific? for an egregious example).

Although some of these costs are likely to be captured in the land price rather than the construction component of the final dwelling, the list of upside risks to the KiwiBuild costs highlights the potential that Labour will not be able to deliver on its targets once work gets underway.

That is basic stuff that Phil Twyford is leaving out, and the sort of things that lead to massive blow outs in costs.

When the much-vaunted Infometrics are howling down your policy, and they have a history of being extremely helpful to left-wing governments, then you know the policy is a dog. KiwiBuild should be renamed KiwiSlum and Phil Twyford needs to come clean with the real numbers.



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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet. Cam Slater doesn’t do quiet and, as a result, he is a polarising, controversial but highly effective journalist who takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him, you can’t ignore him.

To read Cam’s previous articles click on his name in blue.

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