Speech to the Christchurch Housing Forum

Introduction

Good morning.  Thank you for inviting me to speak to you today.  It's a pleasure to address your group and to give you an idea of the Government's perspective on what's happening in New Zealand's housing space.

But before I get to the core of why I am here today, some thanks are in order.  And those thanks, really, are to all of you.

Whether you're protecting tenants' rights, or running organisations to help people with housing needs, our Cabinet team would have much more serious housing sector issues to deal with if we didn't have you as community group participants.

We all know there is still a lot of work to be done in our respective fields.  However, forums like this to share information and ideas are important, and I congratulate you on what you have achieved in the local housing sector, both collectively and individually.

I'm here today to outline to you how the Government is approaching its role in providing housing solutions for those most in need, both through initiatives across HNZC and through legislative changes overseen by the Department of Building and Housing.

The housing market is often used as the litmus test for economic growth and prosperity in New Zealand, but when we talk about the ‘market' we mean much more than the business of buying and selling.

There are those involved in the 'housing market' without the 'means to buy' or the 'assets to sell.'  It is these families in need who are of most concern to me.

Since my appointment as Minister of Housing it has become apparent to me the current model for the provision of social housing, as it has evolved since the 1940's, will clearly not meet the housing demand for those most in need for the next seventy years.

Housing New Zealand Corporation's achievements

First though, it's important we acknowledge those actions we are currently doing comparatively well. 

Around 25 families are housed by the Corporation every day.  Research suggests around a quarter of the tenants housed were previously homeless to some degree.

In 2009/10 this Government spent $528 million on the income-related rents subsidy (IRRS).  The subsidy helps over 60,000 families and it was up from $510 million the previous year. Add this to the accommodation supplement (AS) of more than $1.1 billion and operational expenses of $476 million and the Government now annually spends more than $2 billion on housing.  A significant sum that we are determined is spent as well as it can be on those most in need.

*If you look at Slide 1 (click on the link at bottom of the page) you will see that in 2009 the waiting list as a percentage of available housing stock was comparatively low in New Zealand when you consider the situation in other places.

There could be any number of reasons for this difference, cultural, social or economic. But what the figures show is when you take the different populations into account there are fewer people lining up for a state house in New Zealand than elsewhere.

Although that's good news it in no way should alleviate our concern for those who are still languishing on our waiting list.

The Corporation's focus on community group housing also remains strong. More than 300 community groups rent a Housing New Zealand Corporation property, 250 of these are successful housing providers. Community group housing will continue to be an important part of the work the Government does to improve the living situation of many New Zealanders.

Such successes, though, provide no grounds for complacency. Your daily experience will tell you the waiting lists here are still far too long. And behind each and every individual statistic is a real person or family in need of help.

Housing New Zealand Corporation's changing challenge

The vision of the Corporation is simple - 'helping New Zealanders in their time of housing need'.  That's something I'm sure everyone in this room supports and is committed to.

And there should certainly be no question about the commitment of successive governments.

*As Slide 2 (click on the link at the bottom of the page) shows, there has been year-on-year growth in Crown spending on social housing. Yet, despite this increased expenditure, the Corporation waiting list has remained relatively static.

We have to ask why this is and what we can do about it.  

Let's be clear, the National-led Government is committed to New Zealanders being supported in their time of need.  Those requiring 'priority housing' must get access to it. We are committed to state housing, we are committed to income-related rents.

The National-led Government have continued to grow the state housing stock - a net increase of 840 state houses in the last two financial years - but the social housing budget is not a bottomless pit.

When you think of the challenge ahead of us such 'help' and 'opportunity' for our tenants can't stop at a state house. We simply have to carry the momentum through and provide opportunities along a ‘pathway' to housing independence. 

After all, every tenant that can, and chooses to, move into housing independence, frees up a state home for the next family on the waiting list.

Our policy of tenants buying their state home best encapsulates this point as the proceeds are reinvested into replacement houses for those on the waiting list.

I have become very focused on this 'pathway' concept and have a broad brush goal. We ultimately need a housing portfolio that is of a decent standard, which provides homes of the right size, in locations where they are most needed, housing those most in need of assistance.

As I see it these are the four straightforward challenges:

1. Decent housing,

2. Of the right size for individuals or families,

3. In areas where it is needed most, and

4. For those most in need.

Decent social housing

Much of the housing stock our Government inherited is disintegrating. As a new Minister, the Housing New Zealand Corporation advised me their maintenance under spend over successive years had built up to $2 billion worth.

Evidence of old, cold and mouldy homes being responsible for poor tenant health is visible to us all. This is particularly unacceptable when a government is the landlord.

Only last week my colleague Hon Tariana Turia drew the association between overcrowded and poorly maintained housing and the incidence of rheumatic fever in New Zealand.

Over the last 18 months we put an additional $104 million into upgrading the state housing stock as part of the Government's fiscal stimulus package.  Thousands of tenants got warmer homes and thousands of New Zealanders were employed doing the work.

As a bare minimum we made sure that the 20,000 state houses upgraded were insulated top and bottom. For many, walls were also shifted, bathrooms and kitchens upgraded and the place got its first decent paint job for a decade. This year Housing New Zealand Corporation is funding another 8,000 upgrades.

This is in addition to the $347 million the Government has committed to install insulatation and clean heating in 180,000 private homes over four years. Nearly 60,000 homes in New Zealand have already benefited from this scheme.

Yes, this is huge progress, but in terms of upgrading or replacing the aging state housing stock we still have a huge job ahead of us.

Social housing of the right size

Statistics New Zealand say households containing just one or two people will account for nearly all of the growth in the total number of households over the next 25 years. Put simply, they are signalling a need for 540,000 new houses, most of them having to be small housing units.

This demand for half a million additional houses to satisfy the general population is bound to impact on social housing provision. Yet the Government's localised state housing stock is frequently of the wrong size or in the wrong place to meet need.

*As Slide 3 (click on the link at the bottom of the page) of the Housing New Zealand Corporation 'housing supply' versus forecast of 'high needs demand' shows, there is a huge oversupply of three bedroom homes. We actually need both smaller units and very large houses.

In fact, not only is house size a problem, so is how we are using houses.  A recent report to me highlighted that 2,711 state houses are currently underutilised by two or three bedrooms. Yet 2,739 are overcrowded.  2,700 houses with spare bedrooms, 2,700 houses with crowded bedrooms.

This mismatch is happening across the country and has been this way for some time.

State houses in areas where they are needed most

I am also informed the increasing demand for social housing is often in areas where the houses aren't.

* Slide 4 (click on the link at the bottom of the page) shows us regions where the growth in demand for general housing will be over the next 20 years. There is no reason not to believe that social housing needs will be in exactly the same areas.

The challenge for the social housing sector, including Housing New Zealand Corporation is to concentrate growth in the high demand areas while not ignoring those regions that have a static but still very real need.

State houses for those most in need

It is also important to note that approximately 5,000 of our tenants pay a market rent as their income is, presumably, high enough to rent privately in the same street - not always I acknowledge, but generally speaking.

In fact, we know of over 50 state house tenancies that are likely to have a ‘before tax' household income of more than $80,000 if their weekly income disclosure is extrapolated out to an annual amount. One state household seems to be earning more than $125,000 pa before tax.

Since the 5,000 state households on a market rent currently don't actually have to declare their income, or ownership of other properties, many hundreds more households could be earning this amount or even more than this amount.

This matters when you consider the situation of the 10,430 people on the waiting list. Particularly the 4,280 families with 'significant housing need' and 380 families with 'severe housing need' that we would actually prefer to be helping.

It's worth restating the National-led government is committed to income-related rents, not a return to more tenants on market rents. In fact, our approach is quite the contrary - we want Housing New Zealand Corporation to concentrate on housing those on low incomes who are most in need, that means housing more families on income-related rents and less on market rents.

Our challenge though is balance. We recognise the importance of giving our current higher income tenants the stability and certainty they need as they often have families, kids in the local school and are part of a local community.

How we balance the needs of the people on the waiting list against not being unduly disruptive to those people currently living in state houses is a complex challenge and there is no quick fix. 

It doesn't help that those on income-related rent in state houses get twice as much, on average, as those on accommodation supplement in private rentals. 

The Government wants to ensure we carefully consider this issue and any response will be a measured one.

However, we are determined to not perpetuate the problem of having those most in need sitting on the waiting list while relatively higher income people go into state houses. So we have set up the options and advice service.

The service is at the front door of Housing New Zealand Corporation offices. It's about being smart by joining people up with other government agencies, community housing organisations and the private rental sector to provide them with a broader range of choices than just 'state housing'.

We want to put other options in front of the people that don't have the same need as those in desperate circumstances that Housing New Zealand Corporation simply must house.

The reality is that Housing New Zealand Corporation can't house everyone that comes through it's doors, so the intent here is to help as many as possible, as quickly as possible, by as many means as possible. 

* Slide 5 (click on the link at the bottom of the page) shows what people are choosing to do after receiving Housing New Zealand Corporation advice on housing options. Of the thousands that came through the front door, 55 per cent decided they really didn't need a state house, giving desperate families on the waiting list a better chance, sooner.

The options and advice service has been not without teething problems but is now astonishingly successful. In fact, it's damning that it's never been offered before when you consider that 274 people who would have otherwise gone on to the waiting list have now either bought their own home or are planning to buy one.

Emergency Housing & Community Group Housing

Here's another thing we do very well. 

At any one point in time vacancy rates in state houses that are ‘ready to let' are on average across the country only 1 per cent - that's a 99 per cent occupancy rate. This is quite stunning.

Also, across the country those with severe housing need are housed within 10 days on average. That is a very respectable statistic given the demand for the Corporation's service.

So, daily we win many battles in the provision of better social housing. However, without strategic change and better forward planning, that provides for the incoming demographics, we risk losing the war.

Put simply, we need your help. We need community housing organisations to grow stronger. We can't meet the range of needs alone, especially if Housing New Zealand Corporation is to focus on those most in need.

Today only 2 per cent of social housing is provided by community groups and we would like to see a greater role for them.

The Corporation has gone some way in developing sector relationships and is continuing its work on emergency and community group housing.

Issues around the funding and delivery of crisis, transitional and long-term housing and support services are being explored by the Corporation, Department of Corrections and Ministry of Health, among others.

This will lead to better housing and support services for people fleeing from violence at home, people with disabilities and at-risk youth.  The intent is that these people avoid unsuitable private accommodation, and homelessness.

We are also taking a closer look at ways to improve housing and support services for newly released youth and adult offenders leaving state custody.

We want to avoid letting anyone fall through the cracks.

As I said at the beginning of my speech, we will continue to help community groups house those with such complex needs by providing them with Housing New Zealand Corporation properties known as community group houses.

In fact more and more government-funded groups are looking to the Corporation for their community group houses to house people with complex needs such as, for example, those with mental health issues.  There are 72 properties like this in Christchurch.

There are 84 properties for those with intellectual or physical disabilities, six for women seeking refuge and a place for at-risk Christchurch youth.

There are many more situations where we are not doing it alone. For example, when the Corporation is approached by individuals or families in emergency circumstances, it works with them - along with other agencies - to find solutions.

Regional neighbourhood units and the national contact centre have a list of available temporary accommodation, so that people can be helped as quickly as possible.

Different providers around the country, such as boarding houses, are now vetted by Housing New Zealand Corporation to ensure those in need are only referred to places where they will have those needs properly met.

Residential Tenancies Act 2010

This is why it was so important to us to pass the Residential Tenancies Amendment Bill last month.

A key focus of the new Act is to ensure tenants have access to stable, good quality accommodation and access to advice, information and dispute resolution services.

Naturally, changes have implications for this wider tenancy market - not just Housing New Zealand Corporation tenants and boarding house tenants.  But there are parts of the new Act that will be especially interesting to your group.

In particular, you'll be pleased to know this legislation will protect boarding house tenants.  Ensuring, for example, they are subject to a decent notice period to vacate like that given to other private sector tenants. If you were in a boarding house you used to get 24 hours notice, now you get 28 days.

There are 14,000 boarding houses in New Zealand that we know of.  Those living in and providing this type of accommodation can now expect most of the same rights - and to live up to some of the same responsibilities - as other tenants and landlords.

The Housing Innovation Fund

Partnerships through the Housing Innovation Fund also provide an opportunity to work with Community Housing organisations.

This may be in crisis housing or in providing opportunities for those moving along the housing pathway.  In the last few years HIF funding has provided an additional 85 housing units in Christchurch and Nelson.

The fund now only contributes to more houses, (bricks and mortar) and not renovations, ‘capacity building' or administration costs. We want the demand for new houses met, and this is just one way of doing it.

Conclusion

As I have indicated there is a lot of energy and commitment in the social housing sector and I would like once again to thank you for your support and contribution to the achievements we have made to date.

But when I raise my eyes and look to the future of social housing in New Zealand I am concerned. Currently, we are not positioned as well as we need to be to meet future demands. Especially if we want decent houses of the right size, in the right area, housing those most in need.

When I discussed this issue with my colleague Bill English, as the other shareholding Minister in HNZC, we decided to seek expert advice on the problem.  We jointly commissioned the Housing Shareholders' Advisory Group (HSAG) to investigate the current state of social housing in New Zealand and report back recommendations for improvement.

The group was chaired by Dr Alan Jackson and was made up of a number of people with social housing expertise including Major Campbell Roberts, a director of the Salvation Army and Diane Robertson, head of the Auckland City Mission, who may be known to you.

We wanted them to suggest ways for the Government to better provide state housing, to more of those most in need. In fact they went further than that, challenging us to initiate ways to bring more houses into the total social housing pool.

Their report is due to be released to you and the general public tomorrow.  We want the broadest group possible from the housing sector to comment and consider the challenges and suggestions, they put forward.

I look forward to engagement with this forum, as well as the groups and individuals represented in its membership.

Clearly there is a great need for focus on these tough issues and collaboration in dealing with them.  Government remains committed to helping those New Zealanders most in need of housing, those without the immediate means of accessing that which is a very basic human right - decent shelter.

Likewise, we remain committed to educating and supporting all New Zealanders as they work to provide for themselves.

And again I say we are committed to working with your organisations as we can't meet all the needs, alone.

Thank you.