Part 1: Introduction

Leading New Zealand’s approach to housing and urban development

1.1
In this Part, we describe:

New Zealand faces significant challenges with housing and urban development

1.2
Adequate and affordable housing contributes to social and economic well-being. In 2021, the Government stated that "all New Zealanders deserve to live in a safe, warm, dry home that they can afford"5 and identified housing as a priority.

1.3
New Zealand faces significant challenges with housing and urban development. These include increasing house prices and significant disparities in rates of home ownership. For example, 58% of New Zealanders identifying as Europeans own or partly own a house, compared to 31% of those identifying as Māori and 21% of those identifying as Pasifika.6

1.4
Inadequate and unaffordable housing leads to poor health, education, economic, and social outcomes. Māori and Pasifika communities, people with disabilities, unemployed people, and one-parent families are most likely to be negatively affected.

1.5
Strong leadership and effective co-ordination between a range of public and private organisations is needed for the system to work well. This would improve the lives of thousands of New Zealanders.

The housing and urban development system is complex

1.6
In its November 2020 Briefing for Incoming Ministers, Te Tūāpapa Kura Kāinga – the Ministry of Housing and Urban Development (the Ministry) highlighted four reasons why New Zealand is experiencing challenges with housing and urban development:

  • Not enough houses have been built in the right places, for the right prices, or at the right time to meet people's needs.
  • Urban development has not been responsive enough, including to population increases, demographic change, and changing preferences and needs.
  • Rising house prices have encouraged investors to treat housing as a commodity, leading to higher house prices and rents and fuelling inequality.
  • The system needs to be co-ordinated to achieve the outcomes New Zealand needs.

1.7
Addressing these challenges is complex. Many different groups and organisations are involved in housing and urban development. They include:

  • government agencies, such as the Ministry of Social Development;
  • Crown entities and Crown companies (including Kāinga Ora and Crown Infrastructure Partners);
  • councils;
  • non-governmental organisations, such as community housing providers;
  • iwi and hapū; and
  • businesses.

1.8
This report's snapshot "Those involved in housing and urban development" provides an overview of the system and the groups and organisations involved.

1.9
The Ministry does not have many direct levers to improve the system's performance, and the groups and organisations that do have those levers have their own priorities and are not accountable to the Ministry.

System leadership is vital to address housing challenges

1.10
Effective system leadership is vital to setting up the public sector to respond to the challenges with housing and urban development. Several factors influence effective system leadership.7

1.11
In our view, the most important of these factors for the Ministry are:

  • understanding how well the system is performing and knowing what changes are needed to improve outcomes;
  • developing a strategy that has a vision and an action plan that all those in the system share, and that provides direction, prioritises initiatives, and aligns actions throughout the system;
  • sound governance that has collective accountability for decision-making and risk management, where appropriate, and that is supported by good management to co-ordinate action and resolve operational issues;
  • regularly reporting on the system's current and projected performance to identify corrective actions and support accountability and transparency; and
  • building and maintaining effective relationships with people and organisations to support the system's strategic direction.

Why we did this audit

1.12
The Ministry was created in 2018. Because healthy and secure housing is important to New Zealanders' health and well-being, we wanted to:

  • assess how well the Ministry has carried out its system leadership role since it was set up and how effectively it is planning its stewardship of the system; and
  • identify any additional actions that would better support the Ministry to succeed in its system leadership role.

What we looked at

1.13
Our main audit question was How well-placed is the Ministry to lead the housing and urban development system now and in the future?

1.14
We looked at how well the Ministry was set up to lead the system. We wanted to understand whether the Ministry has a system-wide strategy, an implementation plan, appropriate governance arrangements, clear roles and responsibilities, and the resources and capabilities it needs for its leadership role.

1.15
We also looked at the Ministry's oversight of the system. We wanted to understand whether the Ministry has effective arrangements to monitor and report on system performance, identify and manage significant risks and opportunities, and guide and support others working in housing and urban development.

1.16
We did not look at:

  • the Ministry's effectiveness in delivering individual projects and programmes, including procurement and contract management (although we refer to some projects and programmes for context); or
  • the Ministry's monitoring of Kāinga Ora – Homes and Communities or Tāmaki Redevelopment Company.

How we carried out our work

1.17
We reviewed more than 200 documents, including strategies, reports on activity and programmes, Cabinet papers and minutes, and accountability documents. We also did a targeted literature review of system leadership and the housing market in New Zealand and overseas.

1.18
We talked to more than 60 people in 37 interviews. Of these, 14 interviews were with the Ministry's staff. We also carried out 23 interviews with people from 18 other organisations – 11 central government agencies and seven local government or non-governmental organisations. People we interviewed included chief executives, managers, advisors, and planners.

1.19
We analysed financial and performance data from 2016 to mid-2023, including Budget information and public housing statistics. We also assessed the Ministry's process for collating and using data.

1.20
We carried out much of our fieldwork in 2021 and 2022. Since then, to keep our findings and recommendations current, the Ministry has provided us with regular updates on progress in developing its approach to its system leadership.

Structure of this report

1.21
In Part 2, we discuss how the Ministry sets the system's direction and plans to achieve its strategic outcomes.

1.22
In Part 3, we discuss how the Ministry uses its information and governance arrangements to monitor and oversee the system.

1.23
In Part 4, we describe how the Ministry is increasing its leadership capability.

5: New Zealand Government (2021), Government Policy Statement on Housing and Urban Development, page 3, at hud.govt.nz.

6: Based on Census 2018 housing data from Statistics New Zealand, at stats.govt.nz.

7: For example, see Controller and Auditor-General (2019), Using "functional leadership" to improve government procurement, Office of the Auditor-General, at oag.parliament.nz.