CHA’s summary of Housing New Zealand Statement of Intent

The publications are available at the following link: http://www.hnzc.co.nz/our-publications

The Statement of Performance Expectations, originally due in July/August; does not appear to predict any significant impact in the current financial year (to June 2015) of stock transfers- whilst noting as a priority “contributing to the growth of the social housing sector”. On Page 7 we note “Output Class 2 – Asset Management” indicates a performance measure that “Percentage of the portfolio divested during the year – 1.1%” which CHA estimates to be about 700 homes.

A further statement on page 11 is “We also expect to incur a $33 million loss on sales and write-offs, largely related to changes in our portfolio. In 2014/2015 Housing New Zealand expects to spend $554 million on asset purchases and improvements, and receive $86 million from the sale of housing assets. Payments to the Crown totaling $317 million in 2014/15 will consist of income tax of $112 million, interest costs of $97 million and the 2013/2014 dividend of $108 million.”

From what we can tell, the $554 million on purchases and improvements would be funded through a combination of insurance proceeds, and self-funding through operations – it does not appear to be funded through further Crown investment. Which to us seems to support the case that the Tax and Dividend amounts are wholly returned to the Crown, for use on other purposes.

As a point of reference, two years ago the dividend was reported as $77m and tax paid of $100m; last year dividend was reported as $90m and tax paid of $87m. The total for each of those years was $177 million. Note the projection for year end 2015 above would increase this total to $220 million – a $43 million increase paid to the Crown.

Only $10M/year in the 2015 budget for capital grants? A limit on IRRS to CHO’s for only new tenants? Exclusion of TLA’s?

Back in July, the Investment Plan that CHA put forward suggested a combination of land value and capital grants programme of $250 million/ year each for the next five years- to facilitate our sector building 15,000 new homes by 2020.

Seems like there is enough money on the table. What’s the holdup?