Foreign social housing providers would be cash-flow positive for NZ, PM Key says

Monday 29th June 2015

Foreign organisations bidding for the government's social housing stock would have to stump up a lot of cash upfront, meaning it would be a very long time before they would be able to repatriate any profits back home, Prime Minister John Key says.

Speaking at his weekly post-Cabinet press conference, Key said an overseas bidder would have a large capital outlay in buying housing stock and participating in a social housing provision contract, which would be cash-flow positive for the nation. Key's administration is looking at selling housing stock to groups or consortia to provide wraparound social services in a bid to get better results for the tenants, while freeing up government funds to reinvest elsewhere.

Queensland-based not-for-profit Horizon Housing has expressed interest in participating in the programme, though hasn't lodged a bid, Key said. That foreign interest attracted criticism from opposition parties, though Key said he was more concerned about the results than where an entity is domiciled.

"The capital flows are likely to be much, much larger coming this way than going the other way because they're going to have to pony up with a pretty big deposit, and that's money they will have earned not in New Zealand, and that money will be used in the provision of social housing in New Zealand," Key said. "It would take a very, very long period of time before cash flows would be going to Australia."

The government planned to sell between 1,000 and 2,000 state houses this year and as many as 8,000 over three years to registered community housing providers as part of plans to overhaul Housing New Zealand's stock of 65,000 homes it says aren't suited to the needs of tenants. Social Housing Minister Paula Bennett has since said she doesn't expect the first sales to be completed until next year.

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