Parliament’s social services and community select committee has been used to expose the shonky dealings of Kainga Ora squeezing others out of an inflated property market. Nicola Willis seems to have the goods on this:
Kainga Ora is rejecting claims that it is pushing up land prices by “waving around the taxpayers’ chequebook”.
Chief executive Andrew McKenzie appeared this morning before Parliament’s social services and community select committee, alongside Housing Minister Megan Woods, and Associate Housing Ministers Poto Williams, Peeni Henare and Marama Davidson.
A $2 billion fund has been set aside for Kainga Ora to buy land for housing, and National’s housing spokeswoman Nicola Willis asked Woods about a land purchase in Auckland at 686 Swanson Rd.
“I am told that Kainga Ora entered a tender for that piece of land. Ten private sectors developers also bid for that land, and the Kainga Ora tender blew every single private developer out of the water,” Willis said.
She said that proper processes weren’t followed, and Kainga Ora was “waving around the taxpayers’ cheque book” with a bid that was $10 million higher than the next highest bid.
McKenzie rejected Willis’ numbers, but said the Crown agency had a bid that was $2m higher than the bid that eventually won.
Kainga Ora’s bid was subject to due diligence and later withdrawn due to issues with the land’s water infrastructure, he said.
“There was no market pressure that forced us to stop buying that land. There isn’t this enmity with the development community.”NZ Herald
It would take about five minutes of judicious calling for a journalist to ring around the Auckland developers market to establish that what Nicola Willis is saying is true. Moreover, the calls would also confirm that the Chief Executive is lying about this.
My source, who emailed me this story from the NZ Herald, also told me that Andrew McKenzie is being extremely economical with the truth. He is right to say there was due diligence, but the real reason Kainga Ora withdrew from the sale was because the deal it entered into had not gained board approval.
On top of that Kainga Ora only bid $2m more than the successful bidder because one of the underbidders had to pay more than their initial bid due to Kainga Ora’s interference in the market. Kainga Ora then negotiated down from their initial bid and then pulled the rug out from under the deal because they still didn’t have board approval. Now they are scrambling because National has rumbled them.
Megan Wood won’t have liked being embarrassed about all this so it is little wonder that memos were firing across departments all afternoon finger-pointing and trying to blame others for how National managed to rumble this epic cock-up.
The bottom line is this: Kainga Ora is acting in the market, they are over-bidding the private sector and their high-handed and doctrinaire behaviour is annoying those market players. When you add in the assault on property investors you don’t have to be a rocket scientist to work out that there is more than a little bit of utu at play here from within the sector.
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