Part 2: Setting direction for the housing and urban development system

2.1
In this Part, we discuss:

• the Ministry's role and mandate;
• the system's strategic framework;
• implementation plans for achieving housing and urban development outcomes; and
• the work the Ministry has done to start addressing the challenges with housing and urban development.

2.2
The Ministry is a relatively new organisation, and was set up to provide leadership of a complex system under intense pressure. We expected the Ministry, as a system leader, to have:

• a good understanding of the system and the critical stakeholders it needs to work with;
• a shared vision and a clear, well-informed strategy that sets the system's direction; and
• a coherent plan to achieve that strategy's outcomes.

Summary of findings

2.3
The Ministry led the process to develop the Government Policy Statement on Housing and Urban Development (the Government Policy Statement). It also worked with Te Puni Kōkiri to develop MAIHI Ka Ora – The National Māori Housing Strategy 2021-51 (MAIHI Ka Ora).

2.4
To prepare both documents, the Ministry used its understanding of the system's current state and engaged significantly with groups and organisations involved in housing and urban development. This engagement broadened the Ministry's understanding of who else it should engage with in the future. People we spoke to mostly supported the strategic framework that these two documents set.

2.5
Taken together, the Government Policy Statement and MAIHI Ka Ora set out a clear long-term vision for the system, as well as focuses and priorities for the medium term. Implementation plans that further define the medium-term priorities and actions to achieve them support these documents.

The Ministry has a mandate to provide system leadership and oversight

2.6
In May 2018, the then Minister of Housing and Urban Development prepared a Cabinet paper that described the system as lacking clear leadership, coherence, and effective long-term stewardship.

2.7
The Cabinet paper said that although housing was a central priority for the Government and it had a significant work programme under way, the current leadership arrangements, mandate, and resourcing did not reflect that programme's importance and complexity. There was no:

• designated leader or leaders with accountability to Ministers for delivering the strategy and the programme as a whole;
• formal leadership mandate or governance arrangements to ensure that agencies were aligned and collaborating on a central strategy; or
• comprehensive centre of expertise to support leadership for individual agencies and at the system level.

2.8
In response, Cabinet agreed to set up the Ministry and gave it a mandate to lead the system. This leadership role included:

• leading the design, implementation, and review of the housing and urban development strategy;
• providing strategic advice about all aspects of the system;
• leading the design, implementation, and review of urban development strategies; and
• monitoring and reporting on progress, including collecting better data and improving data-analysis capability.

2.9
The Ministry began operating on 1 October 2018. As well as the Ministry's system leadership responsibilities, it was also responsible for housing and urban development services, regulatory functions, and initiatives that had previously been carried out by other public organisations (see Figure 1).

Figure 1
Functions transferred to the Ministry of Housing and Urban Development

Agency	Functions
Ministry of Business, Innovation and Employment	Housing and urban policy roles, including the administration of funding for HomeStart, Welcome Home Loans, the legacy Social Housing Fund, and Community Group Housing
	KiwiBuild
	Community Housing Regulatory Authority
Ministry of Social Development	Housing policy for emergency, transitional, and public housing
	Housing Business Group (responsible for purchasing emergency, transitional, and public housing)
The Treasury	Monitoring of Housing New Zealand (now part of Kāinga Ora – Homes and Communities) and Tāmaki Redevelopment Company

2.10
None of the groups and organisations involved in housing and urban development are accountable to the Ministry, and each have their own priorities. The Ministry cannot direct them to work in a collaborative or aligned way. However, collaboration and alignment are crucial for the system to effectively address challenges with housing and urban development.

2.11
The Ministry formed relationships with groups and organisations working in different areas of housing and urban development. One of the ways it has done this is through developing the Government Policy Statement and MAIHI Ka Ora.

The Government Policy Statement sets a clear strategic framework for housing and urban development

2.12
When leading a complex system, it is important to have a clear strategic vision, long-term outcomes, medium-term objectives, and well thought-out plans to achieve them. This gives groups and organisations involved in housing and urban development clarity about what they need to achieve, what role they play, and how their role might need to change over time.

2.13
To get groups and organisations to support the system's strategic vision, they need to be consulted when the strategy is being developed.

2.14
During our audit, we expected to see that the Ministry has the key elements of an overarching strategic framework for housing and urban development. We expected the strategic framework to include an agreed vision and long-term outcomes. We also expected the strategic framework to set out medium-term objectives or priorities for action.

2.15
These elements were in various documents that the Ministry prepared or contributed to at different times. Figure 2 summarises where these elements can be found, how they fit together, and their relationship to individual initiatives.

Figure 2
The relationship between the different elements of the strategic framework

Note: The documents listed in the lower half of this figure are examples, not a complete set.

2.16
In our view, the Government Policy Statement and MAIHI Ka Ora together provide a shared strategic vision and shared outcomes for the system. Therefore, the Ministry can use these documents to support the groups and organisations in housing and urban development to work together. These documents were published on 28 September 2021.

The Ministry consulted widely to develop the Government Policy Statement

2.17
Ministers must issue a Government Policy Statement under section 22 of the Kāinga Ora – Homes and Communities Act 2019. The purpose of the Government Policy Statement is to:

• state the Government's overall direction and priorities for housing and urban development; and
• inform and guide the decisions and actions of groups and organisations involved in housing and urban development and the necessary or desirable activities.

2.18
The Government Policy Statement sets out a clear vision for the overall system:

Everyone in Aotearoa New Zealand lives in a home, and within a community, that meets their needs and aspirations.

2.19
Figure 3 shows that this vision is supported by four outcomes, six focus areas, and four ways of working.

Figure 3
Overview of the Government Policy Statement on Housing and Urban Development

Vision	Everyone in Aotearoa New Zealand lives in a home, and within a community, that meet their needs and aspirations.
Outcomes	Thriving and resilient communities – Everyone is living in communities that meet their needs. The places where people live are accessible and connected to employment, education, social and cultural opportunities. They grow and change well within environmental limits, support people's culture and heritage, are resilient to natural hazards, and help us reduce emissions and adapt to the impacts of a changing climate.
	Wellbeing through housing – Everyone lives in a home, whether rented or owned, that is stable and affordable. The quality, accessibility, size, and features of our homes support people and families to live healthy, successful lives.
	Māori housing through partnership – Māori and the Crown are working together in partnership to ensure all whānau have safe, healthy affordable homes with secure tenure. Māori housing solutions are led by Māori and are delivered locally. Māori are able to use their own assets and whenua Māori to invest in and support housing solutions.
	An adaptive and responsive system – The system is integrated, self-adjusting and delivers in response to emerging challenges and opportunities. Land-use change, infrastructure and housing supply is responsive to demand, well-planned and well-regulated.
Focus areas	Ensure more affordable homes are built.
	Ensure houses meet needs.
	Enable people into stable, affordable homes.
	Plan and invest in our places.
	Support whānau to have safe, healthy, affordable homes with secure tenure.
	Re-establish housing's primary role as a home rather than a financial asset.
Ways of working	Te Maihi o te Whare Māori (MAIHI) – Acknowledges the history of Māori housing and responds to these needs through kaupapa Māori approaches. MAIHI sets a precedent for collaborating between agencies and working with Māori to increase housing supply.
	Place-based approaches – Communities access and develop housing and urban solutions that work for them in each place. Solutions are developed collaboratively and are targeted to meet their needs.
	Genuine and enduring relationships – Effective relationships, and co-ordinated planning, investment and decision-making deliver outcomes and support capability and capacity building throughout the system.
	Sustainable and reliable funding – Long-term certain and sustainable public and private funding is paired with regulatory and system reforms to support and incentivise housing and urban development outcomes.

Source: Adapted from New Zealand Government (2021), Government Policy Statement on Housing and Urban Development.

2.20
The Ministry started discussing the process for developing the Government Policy Statement with Ministers from August 2019. In developing the Government Policy Statement, the Ministry had to consult Kāinga Ora and people or groups interested in housing and urban development.⁸

2.21
The Ministry consulted with these people and groups over a period of 18 months. Although the consultation process was interrupted by the Covid-19 pandemic, it included:

• three online workshops, with one focused on issues of interest to iwi and Māori;
• workshops with particular stakeholders on specific issues; and
• engagement with individuals, organisations, and Kāinga Ora.

2.22
The Ministry wanted to take a broad view of the issues facing the system. Therefore, its workshops encouraged different groups of stakeholders to talk to each other and the Ministry about the challenges their communities faced.

2.23
The Ministry also consulted with the public on its Discussion Document: Government Policy Statement on Housing and Urban Development in June and July 2021. The discussion document was informed by the Ministry's understanding and monitoring of the system. For example, the Ministry included data about the current state of the system and the housing outcomes New Zealanders were experiencing.

2.24
The Ministry also identified "megatrends" that the Government Policy Statement needed to consider. These trends included population increase and distribution, climate change, empowered Treaty relationships, and urban and regional dynamics. The Ministry published a summary of these trends for the public and asked for feedback as part of the consultation process for the discussion document.

2.25
The Ministry received more than 540 submissions from a range of sectors, age groups, regions, and ethnicities.

2.26
We spoke to people who participated in the consultation process. They expressed a range of views. Most felt they were engaged with well and at the right level. Others felt they were engaged too late in the process. However, all those we spoke to broadly supported the intent of the Government Policy Statement. They told us it said many of the right things and had the right objectives.

2.27
Ministry staff told us that the number and range of responses they received helped them to broaden their thinking about the scope of the Ministry's engagement on the Government Policy Statement and its other responsibilities.

MAIHI Ka Ora sets out a strategy for Māori housing

2.28
In 2018, the Government identified achieving equitable housing outcomes for Māori as a priority. In 2020, the Ministry worked with Te Puni Kōkiri and Te Matapihi he tirohanga mō te iwi Trust on an approach called Maihi o te Whare Māori – the Māori and Iwi Housing Innovation Framework for Action (MAIHI Framework for Action) – to respond to urgent and long-term issues Māori were facing.

2.29
The Ministry, supported by Te Puni Kōkiri, developed MAIHI Ka Ora, which builds on the MAIHI Framework for Action. MAIHI Ka Ora guides how the government will work and where it will focus its energy and resources to help improve housing outcomes for Māori. MAIHI Ka Ora also describes how Māori and the Crown can work in partnership towards these goals.

2.30
The vision of MAIHI Ka Ora is:

All whānau have safe, healthy, affordable homes with secure tenure, across the Māori housing continuum.

2.31
MAIHI Ka Ora identifies six priority areas for Māori housing. The priorities, and their associated goals, are:

• Māori Crown partnerships – The Crown and Māori work in partnership to achieve balance through a collaborative work programme that strengthens housing solutions for whānau.
• Māori-led local solutions – There is a significant increase in the number of quality, locally-led Māori housing solutions that meet the needs of whānau.
• Māori housing supply – The number of Māori-owned homes and iwi- and hapū-owned houses meet the housing needs of all Māori.
• Māori housing support – Whānau have better access to effective support that is fit for purpose and enables them to attain and maintain their preferred housing option.
• Māori housing system – The system supports Māori to accelerate Māori-led housing solutions.
• Māori housing sustainability – Whānau are supported to achieve mana-enhancing housing solutions on their whenua. Māori are able to sustain a connection to their own land through housing, and their housing is innovative and responsive to the effects of climate change.

2.32
Recognising the need to work in partnership with Māori to address housing inequities, the Ministry prepared a set of principles to guide the Ministry's, and other agencies', work on Māori housing over the next 30 years. These principles recognise the need to work in partnership with Māori to address housing inequities. They place te Mauri o te whānau, the life force of the whānau, at the centre to build strength and resilience from within. The principles are:

• Mauri – Enabling the life force, an essence for revival and fulfilment to be sustained in wellbeing.
• Whakamana – Empowering whānau intergenerationally.
• Manaakitanga – Key mechanisms of engaging and building relationships.
• Tino Rangatiratanga – Self-determination of self-sufficiency through creating your own sense of belonging.
• Whanaungatanga – Delivery services for Māori through a whakapapa lens.
• Tikanga – Doing things right, being in the right place at the right time.

2.33
When developing MAIHI Ka Ora, the Ministry and Te Puni Kōkiri drew lessons from:

• the previous He Whare Āhuru He Oranga Tangata – The Māori Housing Strategy;
• claims made under the Waitangi Tribunal Wai 2750 – Housing Policy and Services Kaupapa Inquiry;
• the Aotearoa/New Zealand Homelessness Action Plan (2020-2023); and
• the National Policy Statement on Urban Development 2020.

2.34
After receiving feedback on its engagement in preparing the MAIHI Framework for Action, the Ministry engaged more widely in preparing MAIHI Ka Ora. The Ministry and Te Puni Kōkiri engaged with the National Iwi Chairs Forum, hapū, iwi, whānau, Te Matapihi he tirohanga mō te iwi Trust, marae, and Māori housing providers, and ran six regional wānanga. The Ministry and Te Puni Kōkiri also consulted with relevant central government agencies, including the Ministry of Social Development, Kāinga Ora, and the Department of Internal Affairs.

2.35
We heard mixed views about the quality of the consultation on MAIHI Ka Ora. These ranged from the view that MAIHI Ka Ora was widely-consulted, to the view that time for face-to-face discussions was too short and that there should have been greater emphasis on co-designing MAIHI Ka Ora. Some participants we spoke to also emphasised the importance of the Ministry having the right capability to apply the MAIHI principles.

2.36
Overall, we heard that there was broad support for the strategic framework for addressing Māori housing inequities, including the intention of working in partnership with Māori.

Implementation plans clarify how outcomes will be achieved

2.37
Implementation plans break down a strategy's long-term vision and desired outcomes into short to medium-term actions.

2.38
Six months after MAIHI Ka Ora was published, its implementation plan was released. The Government Policy Statement's implementation plan was released 12 months after the Government Policy Statement was published. Both implementation plans focus on the actions to be delivered over three years to advance their strategic visions.

2.39
Some stakeholders told us that the gap between publishing the strategy documents and the implementation plans meant it was sometimes hard to understand what was expected of them, who they needed to work with, and how to plan their own work programmes. This lack of clarity risked undermining the value that people saw in developing the common vision and strategy for the system.

2.40
Some of the actions in the implementation plan for MAIHI Ka Ora are included in the Government Policy Statement's implementation plan. This is because the repeated actions are important for improving the system's overall performance. In our view, this indicates that the two plans are designed to work together.

2.41
As the Ministry starts to lead the implementation of the strategic framework, it will need to ensure that MAIHI Ka Ora and the Government Policy Statement remain aligned.

2.42
The Ministry also has 10 place-based partnerships that allow central government and local partners to work together to address challenges with housing and urban development in their community.⁹

2.43
In each of these 10 locations the Ministry worked with local partners, such as councils and iwi, and other government agencies, such as Waka Kotahi, to develop actions, plans, and strategies to help address the housing challenges in that particular area. These include the Kāinga Paneke, Kāinga Pānuku – Hastings Medium and Long Term Housing Strategy, the Rotorua Housing Accord, and a joint spatial plan that is part of Grow Well Whaiora in Queenstown.

2.44
The implementation plans for MAIHI Ka Ora and the Government Policy Statement outline significant initiatives, deliverables, and estimated time frames. The implementation plans also describe, at a high level, the roles and responsibilities of groups and organisations leading the delivery of the initiatives (see Figure 4).

Figure 4
Two actions under Action Area 1: Reduce barriers to building in the Government Policy Statement's implementation plan

Action	Deliverables	Who is involved	Timeframe
Reviewing barriers to building on whenua Māori – Government will review the barriers that make it difficult for Māori to use their land for housing development, which prohibit them from establishing a physical connection to their own whenua.	Assessment of barriers to Māori utilising their whenua with recommendations for change. Work programme to reduce barriers will be developed and piloted.	The Ministry (lead). Te Puni Kōkiri. Input from Te Kooti Whenua Māori and Councils.	2023 to 2024.
Establishing a Long-Term Funding and Investment Approach – Long-term work programme to make housing and urban development funding more reliable, sustainable, and strategic. Will increase funding stability and encourage long-term investment in housing and urban development.	There will be an initial focus on making investing for outcomes and providing expert strategic advice on value for money and realising benefits throughout the system a key capability for the Ministry. Longer-term deliverables will be identified when this work programme starts.	The Ministry (lead). Kāinga Ora. The Treasury. Community Housing sector. Consultation with other system partners.	Start in 2022.

Source: Adapted from New Zealand Government (2022), Implementing the Government Policy Statement on Housing and Urban Development.

2.45
In our view, the implementation plans will help groups and organisations understand what is expected of them, help them plan their own work programmes, and understand who they need to work with.

2.46
The implementation plans will also help the public understand how the desired outcomes will be achieved and provide a basis for holding groups and organisations to account for progress.

2.47
The actions in the implementation plans for the Government Policy Statement and MAIHI Ka Ora are broadly aligned with their outcomes and priorities. However, the actions in the implementation plan for MAIHI Ka Ora are more clearly linked to the outcomes in the strategy. This makes it easier to understand which priorities the actions are helping to advance.

2.48
The Kāinga Ora – Homes and Communities Act 2019 requires the Ministry to review the Government Policy Statement at least every three years. This means the Ministry needs to review it in 2024. The Ministry also intends to review the Government Policy Statement's implementation plan and the MAIHI Ka Ora implementation plan at the same time.¹⁰

2.49
We suggest that as part of updating the Government Policy Statement and its implementation plan, the Ministry considers how it can more clearly link the actions in the Government Policy Statement implementation plan to the outcomes.

2.50
In our view, the Ministry could usefully align the process for updating and seeking comment on the Government Policy Statement and the implementation plans for the Government Policy Statement and MAIHI Ka Ora. This will help stakeholders to better understand the connections between the different documents and to provide comment on the complete strategic framework for setting direction and prioritising actions for the system.

The Ministry also has responsibilities for delivering initiatives

2.51
At the same time as setting itself up as an organisation and developing the strategic direction for the system, the Ministry has also been required to deliver a range of services, regulatory functions, and initiatives.

2.52
When the Ministry was set up, it became responsible for delivering several initiatives and programmes previously delivered by three other public agencies. One of the programmes the Ministry assumed responsibility for was KiwiBuild, which, at the time, was expected to build 100,000 houses by 2028. The Ministry also became responsible for expanding access to transitional housing by increasing the number of places available for people in need.

2.53
From 2018/19 to 2022/23, the Ministry became responsible for more initiatives, including:

• expanding the Housing First programme – The programme aims to improve the social and housing outcomes for chronically homeless people. The Government provided funding to increase available placements for homeless people into accommodation and for associated social services;
• expanding transitional housing – The Government has provided additional funding to increase the supply of long-term transitional housing places in areas with the highest need, and to provide associated social services;
• setting up the Progressive Home Ownership scheme – A scheme to help people into their own homes through arrangements like rent-to-buy, shared ownership, or leasehold schemes. In 2020, the Government provided funding that included $85 million over five years to deliver the scheme, and $400 million for the Progressive Home Ownership Fund;
• setting up Kāinga Ora – Homes and Communities – This involved drafting new legislation and merging Housing New Zealand, its subsidiary Homes, Land, Community, and the Ministry's KiwiBuild Unit to form a new Crown entity. This new Crown entity is the Government's provider of public housing and urban development agency, with the Ministry as the monitoring department;
• work on supporting improved housing outcomes for Māori, including developing the MAIHI Framework for Action, working with Te Puni Kōkiri on Whai Kāinga Whai Oranga, and preparing MAIHI Ka Ora;
• setting up the Housing Acceleration Fund – In 2021, the Government provided $3.8 billion over four years to increase the pace and scale of new housing supply through supporting the provision of infrastructure and housing and expanding the Land for Housing programme; and
• responding to the Covid-19 pandemic, including working with other agencies and public housing providers to support vulnerable people and house homeless people during the pandemic. The Ministry also worked with others to prepare for expected pandemic impacts, such as an increase in unemployment.

2.54
The Ministry had to increase both its capacity and capability to progress these initiatives. The Ministry needed to:

• engage with other agencies, councils, and non-governmental organisations to develop options and work programmes associated with these new initiatives;
• seek feedback and approval from Cabinet;
• request additional funding; and
• deliver these initiatives, either independently or in co-ordination with other organisations.

2.55
The increase in responsibilities is reflected in the increase in funding administered by the Ministry through Vote Housing and Urban Development appropriations. Figure 5 shows funding increased from $1.22 billion in 2018/19 to a budgeted $5.14 billion in 2023/24 (excluding appropriations for technical matters and Kāinga Ora debt).

Figure 5
Funding available through Vote Housing and Urban Development appropriations, 2018/19 to 2026/27

Actual and budgeted funding available to the Ministry through Vote Housing and Urban Development appropriations (excluding those for technical matters and Kāinga Ora debt) increased by about 320% between 2018/19 and 2023/24, from $1.22 billion to $5.14 billion. Total appropriations are estimated to then decrease to $3.66 billion in 2026/27.

Source: Based on data from the Ministry of Housing and Urban Development.
Note: Overall funding from Vote Housing and Urban Development appropriations decrease in later years mainly because current funding for some initiatives is time-bound, such as for the Housing Infrastructure Fund Loans and the Progressive Home Ownership scheme, and funding for Kāinga Ora and Tāmaki Regeneration Company.

2.56
The increase in responsibilities is also seen in the number of staff (permanent and fixed term) at the Ministry, which increased from 250 in 2018/19 to a budgeted 403 in 2023/24 (see Figure 6).

Figure 6
Actual and budgeted staff numbers, 2018/19 to 2023/24

The number of actual and budgeted staff has increased by over 50% between 2018/19 and 2023/24.

Source: Based on data from the Ministry of Housing and Urban Development.

2.57
These responsibilities (delivering services, regulatory functions, and initiatives), alongside the Ministry's strategic leadership responsibilities, show the complexity of the Ministry's work.

2.58
We discuss how effectively the governance of the system is set up to deal with this complexity in Part 3 and the work the Ministry is doing to further increase its organisational capability in Part 4.

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8: Section 24 of Kāinga Ora – Homes and Communities Act 2019.

9: These are in Northland-Te Tai Tokerau, Auckland, Hamilton-Auckland corridor, Tauranga-Western Bay of Plenty, Rotorua, Gisborne-Tairāwhiti, Hastings, Wellington-Horowhenua, Greater Christchurch, and Queenstown Lakes.

10: The priority actions in the MAIHI Ka Ora implementation plan are reviewed annually by the MAIHI Whare Wānanga.