New Zealand

Details

  • Service: Advisory, Corporate Finance, Infrastructure Financing
  • Type: Business and industry issue
  • Date: 12/08/2010

Contact

Adrian Wimmers
Head of Infrastructure
and Projects Group
+64 4 816 4681
awimmers@kpmg.co.nz

Accommodating contestability in social housing 

Public private partnerships could lead to an improvement in housing stock, a more customer focused approach and an improvement in tenant satisfaction.  The Government could retain control of price and quality, and provide better value for money.

Social housing
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The UK provides a useful framework for encouraging alternative provision of social housing. The creation of regulated not-for-profit organisations and the transfer of existing stock to them is a method which has proved successful.

 

PPPs have provided a further evolution of this model to transfer risk to the private sector and to encourage efficiency and incentivise performance, while still allowing Government to retain control of price and quality.

 

Both of these methods which have been successful in the UK share two common and related themes

 

First, there is a need to provide some Government funding to make the deals financially viable for the private or third sectors, and to stimulate investment.

 

Whilst funding being provided in the form of income related rent subsidies directly to tenants may provide the tenants with greater choice about their housing solutions, it may not provide the necessary stimulus to encourage new entrants to social housing provision.

 

The UK models all provide some subsidy directly to suppliers, either through capital grants to Housing Associations or through availability payments to PPP partners.

 

Where these subsidies are provided, they should leave all potential providers on a level playing field.


Secondly, if the Government wants real change in the efficiency and delivery of social housing then it must take proactive steps to encourage private or third sector investment.

 

The alternative provider market is interested, but is looking for the right signals from government.


If the New Zealand Government gets this right then the international evidence suggests that this could lead to an improvement in housing stock, a more customer focused approach and an improvement in tenant satisfaction.

 

The Government would retain control of price and quality and provide better value for money.