Kāinga Ora (KO) chief executive Andrew McKenzie has resigned and will receive a payout of about $365,000 as compensation for notice and redundancy.
Simon Moutter, who chairs the Government's social housing agency, said McKenzie would leave at the end of October, after doing an "excellent job" over the past eight years.
The Government has made several changes at its social housing agency and signalled more would be on the way, in response to a recent highly critical review chaired by Sir Bill English.
It concluded the agency was underperforming and not financially viable.
Five of the seven board members are also going.
Moutter, who became chair a month ago, said it was clear the funding allocated in Budget 2024 and the narrowing of the scope of the organisation as outlined in the review had an impact on the scope and accountability of McKenzie's job.
The chief executive had made "an enormous difference", for example, delivering 4000 new houses this year, however, it was his right to decide eight years was long enough in the role, especially considering how it was about to change.
In response to Prime Minister Christopher Luxon saying Kāinga Ora had been "chronically underperforming", Moutter said he had no wish to disagree with Luxon.
However, "It is an incredible achievement to have built that many new homes in this market over the last year and many thousands in the years prior".
He defended the chief executive's payout - it was being treated as a redundancy because of the narrowing of McKenzie's responsibilities and he was entitled to the funds under the terms of his contract.
"He's getting nothing more than what his employment agreement allows for," Moutter said.
The future for Kāinga Ora had been signalled, he said.
"The Government has been very clear. They want it to go back to predominantly to its core role as a landlord."
At the end of June 2024, it was due to deliver 3500 new homes.
"The future is for no net housing growth... So that's an enormous change in the scope of the organisation and the scale of the activity that we're involved in every day."
It would affect not only the construction sector but also Kāinga Ora staff, some of whom were working in urban development planning.
In his early days in the role, Moutter had already seen some good things but also some that needed "some work", he said.
"My job is to deliver a new plan for the organisation in November this year and I'm putting together a new board to help me with that... we'll solve the issues that have been called out particularly the financial sustainability of the business that is threatened by the growing amount of debt."
McKenzie will help Moutter and the board with the formation of the new plan that the Government is expecting in November before he leaves the job.
Government has no part in payout - Luxon
Prime Minister Christopher Luxon told Morning Report McKenzie's future was a decision for him.
"Our relationship is with the board, not the management," he said.
Asked about the payout McKenzie will receive, Luxon said: "The Government doesn't get involved in that.
"What I'm interested in as Prime Minister is making sure Kāinga Ora is a better organisation.
"We're very clear about what our expectations of KO are."
Kāinga Ora would be building houses in the future, as would community housing providers, Luxon said.
While some people working for Kainga Ora were doing an amazing job, overall, they needed to be clearer on their strategy and have better financial management, he said.
Homelessness will rise - advocate
Child Poverty Action Group's housing spokesperson, Alan Johnson, said it was no surprise about the lack of new housing from KO.
He predicted homelessness would start to increase due to the Government "sitting on its hands".
Although 3500 new social housing units were built last year, the waiting list stayed steady at 25,000.
It would be "magical thinking" if the Government believed community housing providers would fill the gaps, Johnson said.
The Government was allocating $200 million for 1500 new units over the next three years.
"The reality is that won't be enough... what we probably will see is the entry of private capital to fund those houses at some future cost to taxpayers so what we are seeing is the slow privatisation of the provision of state housing," Johnson said.
He agreed some of Kāinga Ora's staffing and financial management needed to be reviewed, however, the scale of the country's social housing needs meant "bold" action was required.
RNZ
