Next steps in social housingPrime Minister
Ladies and Gentlemen.
New Zealand is in good shape and getting better.
We are making great strides towards building a stronger, more prosperous country – a country where we can have a great lifestyle and earn a good income that compares well with the rest of the world.
That progress is due to the hard work and positive attitude of New Zealanders.
It’s also because of the stability, cohesion and confidence that’s come from six years of strong and stable government.
New Zealand is doing well compared to other countries.
The economy is growing, employment is increasing and wages are rising.
Consumers are benefiting from low inflation and a long period of stable, low interest rates.
We are growing new industries like ICT and high tech manufacturing, and strengthening existing ones like our food industry, tourism and international education.
The Government is working towards a surplus and repaying debt.
We’re making good progress in areas like welfare, education and law and order, to help improve the lives of New Zealanders and their families.
New Zealanders endorsed our approach four months ago by re-electing the Government with an even stronger mandate.
I thank them for the confidence they’ve shown in us.
The election result allows New Zealand to experience a different third term government than has been the case in the past.
We have a mandate and a strong platform to achieve further steady reform that delivers better results for New Zealanders.
And there is much to do.
I can tell you that there will be no slackening in pace.
We have three busy years ahead of us.
We must also manage the many global risks and challenges that could throw New Zealand off track.
That was reinforced for me at the World Economic Forum in Davos, which I’ve just attended.
Europe's debt issues are far from resolved, growth is slowing in China and global prices for many commodities remain weak.
These, and other factors, make it all the more important to continue improving our economy, boosting our competitiveness and encouraging new investment, so we build a stronger and more resilient New Zealand.
The Government’s focus this term will be on our four priorities:
- responsibly managing the Government’s finances
- building a more productive and competitive economy
- delivering better public services
- and continuing to support the rebuilding of Christchurch.
I want to talk to you today about housing, which is an important part of all these four priorities.
After the election, I appointed three Ministers to housing-related portfolios.
Paula Bennett is the Minister for Social Housing, in charge of supporting New Zealanders with the highest housing needs.
Bill English is the Minister responsible for Housing New Zealand, which owns or leases 68,000 properties.
And Nick Smith is the Minister for Building and Housing.
So you can see that housing policy is important to this Government.
One of the biggest and most longstanding issues is the supply of new housing, particularly in Auckland.
Previous governments have put this in the too-hard basket.
We’re actually doing something about it.
We’re taking steps that will result in more houses being built, and more affordable homes in the market.
We’ve passed new legislation and signed housing accords with six councils, including Auckland, to fast-track new housing and release more land for residential development.
Last week, Nick Smith outlined significant changes to the Resource Management Act to improve the supply and affordability of housing.
Already you can see signs that our approach is working.
Residential construction increased 21 per cent last year and more than 24,000 building consents were issued – the highest number since 2008.
This growth in construction is set to continue as special housing areas accelerate land availability and consenting.
That will help to ease the pressure on house prices.
But we should also recognise that housing affordability includes more than just prices.
Incomes have been rising faster than inflation and people are feeling confident about the future.
Interest rates are low, which makes servicing a mortgage easier.
These factors are actually supporting the growth in house prices in some areas. People are assessing their own ability to pay and are bidding on that basis, as they’ve always done.
It’s often hard, though, to save for your first house.
That’s where the Government’s new HomeStart programme for first home buyers comes in.
It begins in April this year and we estimate it will help 90,000 people into their first home over the next five years.
On top of that, we’re improving the quality of New Zealand’s housing stock.
Nearly 300,000 homes around the country are warmer, drier and healthier thanks to our Warm Up insulation and heating programme, and the insulation of Housing New Zealand properties.
For people on low incomes, the Government subsidises housing costs from a total budget of $1.9 billion this year.
Around $1.2 billion of that is for the accommodation supplement, which helps people with the costs of private rentals and sometimes mortgage payments.
The other $700 million is for the income-related rent subsidy, which supports low-income people with the greatest housing needs, in what’s known as social housing.
People in social housing are those whose circumstances and finances make private renting or home ownership difficult.
They could be a sole parent, for example, an older person, or someone with mental health issues.
Often, they are receiving other assistance, like a benefit or disability support.
This issue – social housing – is what I want to talk to you about today.
Until last year, to get the most intensive housing assistance from the Government, which is an income-related rent, you had to live in a Housing New Zealand property – a state house, as they are commonly called.
But that’s not the case anymore.
Now, the Government will also support people with high housing needs if they are living in a property run by an approved community housing provider, and if they’ve been referred there by the Ministry of Social Development.
The financial support they get is exactly the same as it is for people in Housing New Zealand properties. They pay an income-related rent – usually 25 per cent of their income – with the Government paying the difference between that and the property’s market rent.
This change took effect last April.
It’s why we talk about “social housing” rather than “state housing”, because you no longer have to live in a state house to get a high level of government housing support.
It’s an important change.
Community housing providers already own around 5,000 houses and some are long established.
There’s a lot of potential there.
Locally-based providers can be closer and more responsive to their community.
Providers that focus on particular types of tenants can integrate housing with the other services they provide, like mental health, disability or budgeting support.
Non-government housing providers can also bring in new approaches and access new sources of funding.
I’ll give you a nice example.
The Dominion Post had a story last month about Paula Bennett opening new housing units in Wellington for people with disabilities.
There’s a lovely photo of Paula and one of the tenants – Daniel – sharing a joke.
He’s obviously delighted to be moving into one of eight brand new and specially designed units that are owned by Accessible Properties, a community housing provider.
It bought the units with help from the Government’s Social Housing Fund, which we established in 2011.
Its tenancy managers specialise in working with people with disabilities.
Some of the tenants are getting the income-related rent subsidy.
And quite apart from the social housing side of the development, there are also 10 other new units on the site that are available for sale into the general market.
As the article says, this is the changing face of social housing in New Zealand.
It’s not change for the sake of it. It’s change to improve the circumstances of those who need the most help.
And it’s part of our wider approach to delivering better services to New Zealanders who need them.
Currently, only a small number of social housing tenants are in properties run by an approved community housing provider.
We want that number to grow over the next few years.
We want a better range of social housing options for people in need.
At the same time, we want Housing New Zealand to be doing the best job it can.
It will continue to be by far the biggest provider of social housing in New Zealand.
But the experience of countries like Australia and the United Kingdom is that having non-government organisations involved in social housing, alongside the government, is a better way of doing things.
That’s just one part of the Government’s overall package of social housing reforms, which has five objectives.
The first objective is to ensure that people who need housing support from the Government can get it.
We are going to ensure that more people get into social housing over the next three years, whether that is run by Housing New Zealand or a community provider.
The social housing budget provides for around 62,000 income-related rent subsidies a year.
We are committed to increasing that to around 65,000 subsidies by 2017/18, which will cost an extra $40 million a year.
In particular, there will be an increase in social housing in Auckland and increase in Christchurch.
In Auckland, as part of this growth in social housing, an initial 300 income-related rent subsidies will shortly be offered to community housing providers.
We’re also concerned about people sleeping rough or in substandard accommodation.
Paula Bennett has given MSD a big programme of work to reduce pressure on organisations working with homeless people and to reduce the number of people waiting on the social housing register.
This includes a $500,000 cash injection for the emergency housing sector, a wider review of funding and the introduction of an emergency housing database in Auckland.
MSD will work more intensively with people on the social housing register who have less urgent needs, to help them into private rentals where possible.
And by increasing the number of social housing places, getting a better alignment of houses with demand, and freeing up houses occupied by market renters, we’ll help more vulnerable New Zealanders into better housing.
Our second objective is to help social housing tenants to independence, as appropriate.
We want to help people to move out of social housing and into private rentals or home ownership, if and when their circumstances improve.
Currently, around 3,300 tenants are living in Housing New Zealand properties but are earning too much to get an income-related rent subsidy. These market renters could in many cases go into private accommodation.
The Government has decided that an additional 3,000 tenancy reviews will begin over this year and the next, focusing on market renters and those who are close to paying market rents.
This will take the total number of reviews to almost 5,000 over this two-year period.
People will be encouraged and supported to move into other housing if they are in a position to take that step.
That frees up a place for someone else with greater needs.
I can assure people that every review will take into account people’s individual circumstances and the availability of alternative accommodation. We understand the importance of certainty for tenants, particularly those with serious and long-term needs.
The third objective in this reform programme is to ensure that properties used for social housing are the right size and configuration, and in the right areas.
Around a third of Housing New Zealand properties are in the wrong place, or are the wrong type to meet existing and future demand.
Thirty per cent of people waiting for social housing require a one bedroom place, for example, but these make up only nine per cent of Housing New Zealand properties.
More houses are required in the bigger cities – Auckland in particular – and fewer in some other parts of the country.
And many state houses are showing their age.
Housing New Zealand is already working on its portfolio of properties – disposing of houses that are no longer required, or in the wrong place, and building new ones where they are needed.
We want to accelerate that process, to get the location and size of Housing New Zealand properties lined up with the people who need them.
The Government has decided to commission a strategic review of Housing New Zealand in the first half of this year.
Its asset management plans will be part of this review so we can ensure its properties are right for tenants, given Housing New Zealand’s ongoing role as the biggest social landlord in the country.
We’ll give more details when the strategic review is completed.
Our fourth objective is to help increase the supply of affordable housing for people to buy, especially in Auckland.
How we manage social housing can help with that.
Housing New Zealand is the biggest residential landowner in the country and could free up more land for housing development.
Housing New Zealand owns neighbouring sections, for example, where a few existing properties could be replaced with a lot more new homes, with some or all of them remaining as social housing.
On a larger scale, there are opportunities to redevelop and revitalise whole state housing suburbs. These redevelopments could result in a mix of Housing New Zealand properties, other social housing, affordable housing and higher cost homes.
Large and small redevelopments are already happening.
In Auckland, for example, the Tamaki Redevelopment Company – a partnership between the Government and Auckland Council – is rejuvenating the suburb. It’s delivering new social housing alongside affordable housing and other homes as a major urban renewal project.
Again, we want to accelerate these processes, so small and large redevelopments of Housing New Zealand land and properties are undertaken with more urgency.
The Government is still considering how and where that might happen.
A large redevelopment could involve existing properties being transferred out of Housing New Zealand ownership and into a special urban development entity.
But I want to emphasise again that the total number of social housing places across Auckland will increase as a result of what we are doing.
And existing tenants will be supported through any changes.
Our fifth and final objective is to encourage and develop more diverse ownership of social housing.
To some extent we can do that by involving community housing providers in redevelopments of Crown land.
However, the overwhelming dominance of Housing New Zealand leaves little room at the moment for non-government organisations to play a significant role.
But we can change that if community housing providers take ownership or management of some existing Housing New Zealand properties, with tenants remaining in them.
The Government is prepared to do that if we’re satisfied we can get better services for tenants and fair and reasonable value for taxpayers.
We’ll look at doing that in areas where demand is stable and where housing providers are keen to expand.
These areas will be determined after engagement and consultation, including with community housing providers and iwi, to ensure we understand everyone’s rights and interests.
We’ll then look to sell between 1,000 and 2,000 Housing New Zealand properties over the following year for use as social housing run by approved community housing providers.
In doing so, we’ll use open and competitive processes.
Community housing providers may want to buy properties on their own, or they may go into partnership with other organisations who lend them money, contribute equity, or provide other services.
Properties will have to stay in social housing unless the government agrees otherwise, and existing tenants will continue to be housed for the duration of their need.
Selling properties in this way doesn’t reduce the number of social housing places. It just means more of the tenancies will be managed by a non-government housing provider rather than Housing New Zealand.
We’re very conscious that the sale of properties has to work for taxpayers.
We’re looking to get a fair and reasonable price for these properties, bearing in mind they’re being sold as ongoing social houses with high-need tenants.
We’re not selling them as private homes or rentals.
So we might not get the book value of the properties. But that’s only because, under accounting rules, the value of houses in the Government’s books is based on a theoretical sale in the open market. And that’s not what we’re doing.
All going well, we might initiate more sales over the next three years, but that has yet to be decided.
Cabinet will review progress in November, and any further steps will be announced after that.
Property sales and large redevelopments will reduce the size of Housing New Zealand’s portfolio.
But it will continue to be by far the biggest provider of social housing in New Zealand, and we will ensure that in 2017 it provides at least 60,000 properties.
It may have more than that, depending on how quickly transactions and redevelopments proceed.
Initially, we will free up capital from these sales, which we’ll use for housing and other capital projects needed across government.
But we’ll be spending more each year on income-related rent subsidies.
In summary, the package I’ve outlined today will help more people and families get social housing, ensure more of that housing is supplied by community housing providers, improve services for social housing tenants and release more land for new houses.
Of course, our opponents will say that the Government should own and run everything in social housing.
But that system didn’t work as well as it could for tenants, or for taxpayers.
If we’re to succeed in solving some of New Zealand’s longstanding social challenges, the Government needs to be open to working with community groups, non-government agencies and the private sector.
We don’t have a monopoly on good ideas, resources and expertise.
So we’re taking a different approach to provide quality social housing for New Zealanders who need it.
It’s just one of the many areas where the Government will be working hard for New Zealanders over the next three years.
Our economic programme is laying the foundations for a stronger economy, sustainable jobs and higher incomes.
And we’re making real progress in delivering better public services for New Zealanders.
That takes constant hard work, oversight and judgement.
It takes a team working together and all heading in the same direction.
And it takes a government that is united, focused and energised.
That’s what I can promise New Zealand.