RNZ, Wellington, May 18, 2018
Treasury is wrong in halving its forecast of the early impact of the Kiwibuild programme, Housing Minister Phil Twyford has said.
Treasury expects the government’s building programme to add $2.5 billion to the economy over five years, with its real contribution coming later than previously forecast.
Mr Twyford said that a higher forecast from the Ministry of Building, Innovation and Employment was much more in tune with the construction industry.
“Treasury have made a number of highly questionable assumptions. It is almost a hypothetical or academic exercise trying to model the effect on overall residential investment. I think they’re simply wrong and it’s unfortunate,” he said.
Judith Collins scoffs
National Housing Spokesperson Judith Collins said that Treasury’s forecast meant that Kiwibuild would contribute “half as much to the building of new houses as Mr Twyford has spent years claiming. He has arrogantly said that all those experts are wrong and he is right. In the last few weeks alone, Mr Twyford has been forced to admit that he would not build the number of houses that he promised, he would not build them for the total cost that he claimed and he would not be able to sell them for the price he promised.
“To make matters worse, confidence in the residential construction sector is waning because the government is making it harder to find skilled tradespeople to build the houses as well as to get the credit to pay for the houses,” she said.
Treasury also forecast Budget surpluses to rise gradually, from an improved $3.7 billion in the year ended 30 June, 2018, to $7.3 billion in 2022.
It has forecast net debt to fall to 19.1% of Gross Domestic Product (GDP) by 2022.
It expected growth would rise from 2.8% in the June 2018 year to peak at 3.6% in late 2019 before easing back to 2.5% by 2022 due to rising interest rates and slowing jobs growth.
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Construction starts on the Kiwibuild Project
(RNZ Picture by Sophia Duckor-Jones)