In May, the Government announced it would be building 6400 new state homes over four years.
In a February briefing, Treasury analysts wrote that borrowing directly through the crown would save $11 million per year. This was based on a plan to borrow $1.75b instead of $2.9b. A later analysis estimated an additional $3m-$6m in annual interest costs for every $1b borrowed by Housing New Zealand.
So it is cheaper to borrow money through the Government, rather than have Housing NZ do it directly. So why wouldn’t you. I mean why cost taxpayers more money by having a higher interest rate?
In essence, overseas credit rating agencies would not see this debt as separate from Crown debt given the agency delivered such a core service, and thus would just factor it into their decisions about New Zealand anyway.
Because of this it risked the credibility of the Government’s Budget Responsibility Rules – as it was essentially a loophole through them.
So basically Labour are unable to keep to their own rules they promised. So they found a loophole, which means taxpayers pay more in interest.