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National’s HCNZ cash problem

Written By: - Date published: 12:03 pm, October 15th, 2016 - 13 comments
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I have said it before. This Government is a government of spin. Thanks to Crosby Textor advice and assistance it has well honed skills in making bad news sound good.

But there are limitations. National MPs are uncritical supporters of laissez faire free market neoliberalism.  No matter how you dress up the PR this will always fail in delivering a society that is best for all of us.  And people are noticing more and more regularly that beneath the carefully crafted veneer we have a typical right wing government.

This week has been an interesting week. I don’t know if it was planned or not but on Thursday if National had intended to run with news about how things were great because we had a stonking surplus it chose the wrong day to do so. Because this was also the day that news broke that Housing Corporation is going to run out of cash.  Soon.

It may be that National rushed out the surplus story to try and lessen the damage but if this is so then they just wasted a big positive story on damage minimisation. No matter what they had a very bad day.

A primary reason for the surplus is the immigration surge.  Vernon Small in Stuff said this:

The change of fortunes is down to a combination of things; high immigration, low interest rates and surprisingly strong growth. Together they turbo-charged the tax take by $3.8b to a total of $70 billion.

Tunnelling down into the data released by Treasury shows there are not only more of us, we are working longer.

The population grew by 2 per cent, thanks to migration peaking at 70,000, while average income and employment grew by a similar amount. Total hours worked were up 3 per cent.

No wonder this week’s moves to lower immigration levels were more symbolic tweaking than substantial cuts. Slashing immigration would cut off the supply of golden eggs.

But the Crown accounts were not all sunshine and giggles.

Despite the headline surplus borrowing continued to increase in dollar terms; by $1.3b.

And the operating balance including gains and losses was savaged by the accounting treatment of ACC and the Government Superannuation Fund as well as losses on the revaluation of carbon credits, leaving $5.4b of red ink.

The Housing Corp news will hurt at many levels. It attacks every meme and idea National and Crosby Textor has built up over eight long years.

For instance National’s status as genius economic managers is clearly a joke. Solid Energy is in flames and selling state houses to bolster the balance sheet of a social housing provider is not the sort of thing a competent economic manager does.  And running out of cash makes you wonder how Bill English is going to achieve National’s Kiwibuild lite programme.  Especially with this sort of report which was provided a few months ago.


It looks like the Government’s announcement by Stephen Joyce tweet earlier this year that it was not going to take dividends from HCNZ was actually calculated rather than a massive brain freeze by Joyce. Because given the way HCNZ’s financials were crashing there was going to be no dividend anyway.  At least one of any meaningful size.

On July 10, 2016 the day of the tweet Joyce must have known that no dividend was going to be paid.  Because on May 20, 2016 Bill English was sent HNZ’s draft plan and this showed a return of $14 million in the next financial year.  The dividend was going to be minimal at best.

But clearly there had been a change in position and it was not all down to a Joyce tweet.

And you have to wonder about National’s recent announcement that it will implement Labour’s Kiwibuild programme, even if it is a lite version.  Where is the money coming from?

HCNZ believes that its funding model is not sustainable and it has requested a new model be looked at.  It appears that it has a very good case.  Looks like that surplus is not going to last long.

13 comments on “National’s HCNZ cash problem ”

  1. Barfly 1

    to quote the great Homer “DOH !! “

  2. Draco T Bastard 2

    For instance National’s status as genius economic managers is clearly a joke.

    National’s portrayal of themselves as genius economic managers has always been a lie. Our economy always suffers under a National government.

    Solid Energy is in flames and selling state houses to bolster the balance sheet of a social housing provider is not the sort of thing a competent economic manager does.

    But it is the type of thing that a set of psychopaths that are looking to transfer the nations wealth into private hands does.

    Where is the money coming from?

    They’re going to borrow it from John Key’s mates in the banking sector so that they can have a government guaranteed income.

    The banks will, of course, just create the money. There won’t be any ‘loaning’ involved.

  3. Tamati Tautuhi 3

    It is called State Asset Stripping?

    • Keith 3.1

      Questions I have is:

      Why is Housing NZ almost insolvent? Is it because they have been bleeding it dry of “dividends” to cover for the tax cuts and loss of revenue from those asset sales, just like they did to Solid Energy for example?

      Because of the above mess has National been keeping Housing NZ afloat by selling its houses off?

      Where are they going to get the money to keep Housing NZ solvent or do they let it go broke?

      How the hell did we get to this point?

      Where is our useless corporate media holding these idiots to account?

  4. Keith 4

    Why do National just give up the bullshit and sort out housing once and for all instead of all the lies and the deception? They just cannot do can they?

    This is a government not only of lies but one that is utterly poll driven as well. And being poll driven means coming up with solutions to poor polling on the hoof.

    The Key National governments way of dealing with problems by pretending to do something to make it look like they are doing something has not worked because this is a deep seated issue that gets worse every day it is ignored.

    So what they have come up with is the same but different. We’ve all had time to watch Keys National at work. Their latest housing policy that does not address speculators, rampant immigration or tax evasion will not achieve anything because it’s only purpose is to take the problem off the front pages.

    They will claim that they now have a long term policy, that we are already doing Labours policy but of course they won’t be doing anything of the sort. This kind of “policy” is very cheap and nasty because there will be no money to do this properly. How do we know, because Bill English finely balanced his governments 2016 budget with all the future rosy forecasts without this ever being costed or mentioned. Furthermore they way they are going we are broke anyway. And again they will fiddle whilst Rome burns.

    This latest housing policy, (one of so many empty attempts from National) is typically vague and grey. It will be one of those “we will spend a gazillion dollars on this problem, but over many years, but only if a, b and c align, and x = y, oh by the way, we had our fingers crossed when we said this so no guarantees”.

    I believe that by the next election anyway that this latest attempt by National will be abandoned like all the rest as house prices and homelessness continue to rise.

    And as for Housing NZ running out of cash, what kind of clowns are running this country and how will National fix their latest own goal, essentially to close it down like Solid Energy?

  5. Tamati Tautuhi 5

    The solution is borrow more money from the US Bankers and the Federal Reserve.

  6. Ad 6

    English keeps getting blindsided by Smith. Smith has got to go. With what he gets away with, what farm animal porn does Smith have on this guy?

    But a Little/Twyford government will face the same challenges. They will be forming multiple companies or ‘Urban Development Authorities’. They will be playing God with the real estate market, using taxpayer money. Far, far better if these entities made their own money, and made a profit, so that the media can’t blowtorch their ass as much.

    • b waghorn 6.1

      I’ve read a couple of times recently that it’s labour’s fault that key won’t sack smith , due to them suggesting he be sacked.

      • Sacha 6.1.1

        how convenient. lack of replacement talent might be his problem, foot-mouth problems notwithstanding

  7. DH 7

    I can agree National are ruining this country especially in regards to housing but I think the criticism here is misdirected and too easily deflected by the Nasty Nats.

    From what I’ve seen HNZ does not have a cashflow problem. It’s cashflow is perfectly fine, the revenue from rents more than covers expenses and will continue to do so into the foreseeable future.

    HNZ is short on capital funds, it can’t adequately fund future capital expenses like building more houses. It can raise more funding in two basic ways;

    1/ The shareholder(s) can inject more capital
    2/ It can borrow money

    In simple terms cashflow pays the bills, capital buys the assets. HNZ has some $17 billion of equity so it can easily borrow more money at good rates. The dividend argument is a red herring because retained earnings are not enough to cover HNZs future capital expenses.

    If you want to really start making inroads into National’s economic performance it’s not a bad idea to try thinking like a beancounter (not easy). I’d expect English to authorise more HNZ borrowing although that could depend somewhat on how the borrowing will affect his precious books.

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