Address to Community Housing Aotearoa

Good morning. Thank you for inviting me to speak to you today.  It's a pleasure to address your annual conference and to update you on the Government's social housing reform programme.

Before I start, I want to acknowledge your support and commitment to the community housing sector. Community Housing Aotearoa plays a key role in the social and affordable housing sector. Your advocacy on behalf of the sector has clearly defined the challenges you face and has helped to shape the Government’s vision for social and affordable housing in New Zealand. If you didn’t provide houses for people, we would need to. 

As you know, in December I announced the Government’s response to the report of the Housing Shareholders Advisory Group and signalled a direction of change.

The report of the Housing Shareholders Advisory Group provided the Government with a practitioner’s view on which to consider changes to social and affordable housing. It has given us a rich and detailed analysis of the challenges facing the sector, and it has helped define the way forward.

It may seem that all has gone quiet in this space since I made that announcement in December but let me reassure you that behind the scenes the policy makers and a number from the sector are working hard to put our aspirations for housing into practise.

Let me outline the Government’s vision for social and affordable housing in New Zealand.

Case for change

Affordable and sound quality housing is a basic human need and this Government is committed to supporting New Zealanders in their time of need.

Year on year successive Governments have continued to invest more and more money into social housing.  The largest chunk of this has gone to the Crown’s own housing provider Housing New Zealand which now owns more than $15 billion worth of asset.

Yet despite record levels of investment the current system fails to meet the needs of a growing number of New Zealand households and, at the same time, it is becoming increasingly unaffordable for the Government.

Currently many people in great need cannot access a state house. Meanwhile a number of people currently in state homes have improved their financial positions and could easily support themselves either in the private market with the accommodation supplement or with the assistance of third party providers of affordable housing. This situation is wrong.

The case for change is clear.  It is simply not possible for the Government to build or fund state homes for everyone in need.

So what are we doing about it?

Vision for social housing

We need to increase and improve the availability of social housing. We need a diversity of housing providers and we need them at scale.

We also need a state housing portfolio that is better configured to meet peoples’ needs and makes better use of our available assets and capital.

We need to find effective ways to move state tenants who are better able to provide for themselves towards greater housing independence.

Government cannot do this alone. 

What we can do is use crown resources more effectively and work in partnership with the community housing and private sector to achieve the radical increase in housing stock and outcomes we need for the people of New Zealand. 

What does this mean for the third sector

We need more providers of at-scale housing in the market. For those who choose to, we want them to move from 10 houses to 30 – from 100 houses to 300. This is where we need your support.

Our aim is to develop a mature social housing market that has a number of at-scale, largely self sustaining providers, who are able to draw on a range of capability and sources of finance. We acknowledge that will include us, certainly at the initial stages. I have to give a lot of thought on how that might work in the current economic climate.  A partnership approach is required.

A greater involvement of existing third party providers of social housing to promote choice and contestability and grow the total pool of social housing available is needed.

Choice for people. Contestability for efficiency. Growth to help more of those in need.

We understand that this approach will require third sector housing access to a much wider pool of capital, including cash land or housing stock. This will enable third party providers to leverage even more funding and assets from a broad range of non-government sources, including commercial, local government, iwi and philanthropic sources.

This growth of the third sector should also provide access to a much wider pool of specialist skills and services. This will help to effectively tailor housing solutions to local and individual circumstances.

We know this type of seed funding works. In Tamaki - through the Housing Innovation Fund - we are working in partnership with the Community of Refuge Trust to build ten one-bedroom affordable rental homes. 

Community of Refuge Trust will build eight new homes and it will buy two existing properties for people who experience mental illness. By working in partnership with the Government, Community of Refuge Trust is able to leverage its available resources and increase the supply of affordable rental housing in an area of high demand.

The Housing Innovation Fund provides grants to social housing providers who can match Government funding with their own money.

Currently 16 further projects, including four Maori Demonstration Partnership funded projects, are being developed into funding proposals.

This type of collaboration between Government and community organisations gives us access to a much wider pool of capital and specialist skills, which in turn means we can provide more houses for New Zealanders in their time of need.

However, the HIF demonstrates how it can work, we now want to move to more sophisticated partnerships with longer timeframes and relationships.

What does this mean for Housing New Zealand

To allow greater involvement of third party providers we also need to make some changes to the way we currently deliver state housing.

Housing New Zealand’s vision remains clear – helping New Zealanders in their time of housing need. I’m sure everyone in this room supports this.

That is why I’ve asked Housing New Zealand to re-focus its efforts on putting the right people, in the right houses, in the right location, with the right level of benefit, for the duration of their need. It also needs to use it’s $15 billion of assets better.

Housing New Zealand has already made some progress in this area. The recent sale of 24 old, but high value state properties worth more than $700,000 each, has earned Housing New Zealand more than $19 million.

The $19 million earned from the sales is being re-invested in state housing in the areas that need it most. The sale of these properties has enabled us to increase our state house portfolio which means we can house more people in their time of need, without additional cost to the taxpayer.

This is just one example of how Housing New Zealand is taking positive steps to get the right houses, in the right place for New Zealanders in their time of need.

But, as I said, we also need to take steps to ensure we put the right people in the right house.

Many tenants have had an expectation that a state house is for life. This view is now not shared by Housing New Zealand, or the Government.

When people’s circumstances improve, we need to take steps to move these people towards greater independence.

And when I say greater independence, I mean facilitating movement of tenants to an alternative state house or another social housing provider, or the private sector, or even ownership where appropriate.

From 1 July 2011, Housing New Zealand will introduce reviewable tenancies for all new state housing tenants.  Reviewable tenancies will enable Housing New Zealand to better assess tenants needs and will determine the ongoing suitability of their current accommodation.

This is a significant shift and we recognise that in some circumstances a state house is the right place for people and these people won’t be forced to move. Any move toward reviewable tenancies will be done in a measured and sensitive manner, taking account of vulnerable tenants such as the elderly and those with disabilities.

But for those that can move towards greater independence we need to create viable alternatives to state housing and this is where we need your help.

Scale and pace of change

These changes we are proposing are complex and affect peoples’ lives – they won’t happen overnight. It requires a long-term commitment by Government and new and existing third party providers.

We recognise that you will need our support to develop and grow your capability and finances to build a sustainable portfolio of affordable and sound quality housing that provides secure tenure appropriate to peoples needs.

We - and by we I mean the Government - need to ensure any measures we introduce are robust, durable and well-designed. We need to find the best way to achieve our goals without causing unnecessary disruption to vulnerable households.

Further work is required to set the rules and wider system settings, capability and incentives. This is one area where CHA can be very helpful.

Obviously the current economic climate means there are also some financial restrictions to pace. However  the PM has asked us to be inventive and I intend to be inventive.

We’ve made some good progress but there is still a lot of work to be done.

We know that there are many community organisations doing good work in our communities that are well connected and supported.

We need to unlock the potential in the community housing sector. To achieve this it is vitality important that we fully understand what the barriers and challenges are to your growth – and what incentives you need to scale up.

We are committed to working with you to understand the size and scope of housing you are able to supply, and to identify what you need to grow.

Conclusion

In summary demand for social housing is forecast to grow significantly in future. We need to start getting more out of the resources we have today so we are better prepared to meet the challenges of tomorrow.

The changes we are proposing won’t happen overnight. It requires a long-term commitment by Government and new and existing third party providers.

We want third party providers to develop and grow their capability and finances to build a sustainable portfolio of affordable and sound quality housing that provides secure tenure appropriate to peoples needs.

Government needs to put the right mechanisms in place to support a more diverse social housing market.

There is a lot of energy and commitment in this room and I would like to once again thank you for your support and contribution to delivering better housing outcomes for the people of New Zealand.

We have some big challenges ahead and I look forward to further engagement with Community Housing Aotearoa.

Thank you.