“Every dollar saved on interest is a dollar that can go into building homes and supporting tenants,” Labour’s housing spokesman Kieran McAnulty said.
Since 2019, the Community Housing Funding Agency and its manager, Community Finance, have facilitated more than $530 million in lending.
McAnulty stressed that while Labour was committed to helping CHPs, it still wanted to see Kāinga Ora – Homes and Communities play a key role in building state houses.
He wouldn’t say whether Labour would scale Kāinga Ora up to the size it was when the party was last in Government.
The current Government clipped Kāinga Ora’s wings, putting more of the onus on CHPs to build state houses.
“If we’re going to make a credible dent in the housing shortage in this country, and address the growing need for social housing, we can’t be one or the other. We’ve got to support both,” McAnulty said.
He said Labour would make further policy announcements on both Kāinga Ora and CHPs.
He noted the Community Housing Funding Agency had been asking the Government to guarantee the bonds it issued, so it aligned with its counterparts in Australia and other parts of the world.
But in October, the Government instead committed to guaranteeing 80% of eligible bank loans to CHPs. Treasury has some experience guaranteeing bank loans to businesses, including from the pandemic.
Housing Minister Chris Bishop said the Government would keep its Community Housing Provider Loan Guarantee Scheme in place until June 2027, with loans written under the scheme remaining Government-backed for five years.
McAnulty said he would look to extend Bishop’s underwrite beyond June 2027 on Treasury’s advice.
As at March 31, $109m of bank lending had been approved under the scheme.
None of the $900m the Government put aside to backstop the scheme had been drawn down on – yet, at least – as there hadn’t been any loan defaults.
Labour said it would put $950m aside for its Community Housing Funding Agency bond underwrite in Budget 2027.
Community Housing Funding Agency chief executive James Palmer welcomed the policy, and assured that international experience suggested the Crown was highly unlikely to be left out of pocket.
Indeed, the agency would have to use its capital if it couldn’t meet its obligations to its investors, before it tapped into the Crown underwrite.
Palmer believed Labour’s proposed underwrite would help the agency continue growing, with scale delivering efficiencies for the sector.
He also believed the guarantee would see the agency’s A+ credit rating upgraded.
Palmer didn’t see the Government’s bank loan underwrite as a threat to the agency, noting it had more than doubled the number of CHPs it lent to over the past year to 34.
He recognised the need was huge. Several billions of dollars would be required to build new houses to accommodate the 19,704 applicants on the public housing waitlist.
Jenée Tibshraeny is the Herald’s Wellington business editor, based in the Parliamentary press gallery. She specialises in Government and Reserve Bank policymaking, economics and banking.
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