Speech to Palmerston North Housing Forum 2021
Tena koutou te hau kainga Rangitāne tena koutou
Nga mate huhua o te waa, haere haere haere atu ra
Hoki mai kia tatou te kanohi ora e tau nei,
Tena koutou tena koutou tena tatou katoa.
Tēnā koutou i runga i te kaupapa o te Rā.
No reira, tēnā koutou, tēnā koutou, tēnā tatou katoa
Thank you for the invitation to be here today. It is an honour to be invited to the first Palmerston North Housing Summit.
I would like to acknowledge Wiremu Kingi Te Awe Awe, Rangitāne, and Mayor Grant Smith for the welcome. Tangi Utikere, my colleague and your local MP, Ian McKelvie MP & Nicola Willis MP.
First of all, I thought I’d tell you a little about my own background and interest in housing.
The history of New Zealand housing has by turns been a proud one, and one that in more recent times, one that is incredibly challenging for many people, which is why we are here today.
I think we all appreciate it won’t be a short journey to change that course of history.
This history is something that I have been personally interested in for many years – the doctor part of my name comes from a PHD in NZ history – more specifically a study of Māori urbanisation during and after WWII, and the housing policies that facilitated one of the swiftest rural urban shifts in history.
That study not only looked at the houses and the policies but also led me to talk to many young men who came from around here to Christchurch to learn their trade in the 1950s and 1960s and are still there today.
What I learned from my research was that governments need to be deliberate in their housing policies – following the war PM Fraser and his Labour government saw a problem in a massive housing shortage but they also saw an opportunity to train a generation with skilled trades and to rapidly build the houses that were so badly needed.
As an historian, you would not be surprised to hear me say that there is much we can learn from the past; about what to do and what not to do. I also learned that housing is more than buildings, it’s about skills, jobs, place and wellbeing. But ultimately it is about people and their hopes, dreams and security. But ultimately it's all about people.
Let’s start with your place.
Your city, like other cities and town in New Zealand are growing, and the pace of building new housing, has not been keeping up.
This puts pressure on lower-income households in terms of opportunities to get into home ownership, affordable rentals and state housing.
This is why Palmerston North is one of the Government’s nine priority areas highlighted in the 2021 Public Housing Plan, where the need for public housing has grown the fastest and a step change in delivery is required.
I’ll talk more about the Government’s role in Public Housing soon as well as the significant housing package we announced last week.
But first I’ll just touch on the first changes we made when we came into Government to stem the housing crisis.
We banned foreign speculators from buying homes
We introduced and passed legislation to increase housing in urban centres through the National Policy Statement on Urban Development – something councils are now working into their own planning rules.
And we’re repealing and replacing the Resource Management Act to simplify planning.
We brought in an Urban Development Act to put the interests of Maori, councils, developers and communities at the heart of developments, as well as the ability for councils to raise private sector funding for infrastructure.
We also embarked on the biggest public housing programme in two decades, including through our Large Scale Projects which are delivering a mix of public, affordable and mixed housing.
Our Homelessness Action Plan put us in good stead to house over one thousand people who were sleeping rough or in crowded situations when we were facing down COVID-19 with a nationwide lockdown. I know that there is a lot of flack about people being housed in motels - and I want to stress that I do not see motels as anything but a temporary and necessary means to putting a roof over someone’s head and into a bed, when they might otherwise be sleeping on the streets. Believe me no one would like to see us dial back on our motel bills more than me - however I am yet to hear from the critics the alternatives for those taking shelter there - we have doubled the number of transitional and emergency places we have since coming to office - there is more to do while we catch up on lack of supply but in the interim I am not prepared for those individuals and families to return to homelessness.
On top of this Our Government has delivered nearly 5 and a half thousand public and transitional housing places (5,475 public housing new builds) since 2017.
And we are on target to deliver over 18,000 new public housing places by 2024.
We brought in the much-criticised, but actually very innovative KiwiBuild model of underwrites, which have delivered nearly 800 homes, with another 800 currently under construction. Yes, we over reached with what we thought we could get done with KiwiBuild, and consequently we reset out targets. While it’s easy to sneer at KiwiBuild, we tried something that hadn’t been done here before and learned some lessons. The fact is there are thousands of Kiwis who have been helped into new, affordable homes, and the KiwiBuild model is helping get additional affordable market housing built.
We have kaupapa Māori and whānau-centred approaches to enable delivery for Māori by Māori under Te MAIHI o te Whare Māori – the Māori and Iwi Housing Innovation Framework for Action
And we have introduced the Progressive Home Ownership scheme that is enabling people who would otherwise never have a chance at home ownership, get on the housing ladder. A couple of weeks ago I attended the opening of a new 25 apartment building in Queenstown.
A core belief of this Government is that everyone deserves a warm, dry secure home, whether they own or rent.
This Government has not only rebuilt the state’s mandate to deliver housing, we have reconstructed its ability to plan, invest and make it possible for housing to be built at scale.
Central to this ability is making sure we have enduring relationships grounded in partnerships and complementarity with the community housing sector. Baked into the DNA of our Labour government is a belief that the state should and does have a role in the delivery of housing - for us housing is a fundamental thread in the social security safety net - without it, as we have seen, we are left with holes in the net. This is not to say there is not a role of others - i am enjoying my work with the sector to ensure we have the settings right to ensure that we are adding to housing stock in places of greatest need. Long-term contracts to unlock capital, changes to the rent maxima settings to allow building in more places, along with up front funding are for me what an enduring partnership will be built on. Last term in government, we spent time working with Maori and Iwi to build capacity in the Maori community housing sector - this term I want to work to build similar capacity in the Pacifika sector.
All of this work programme has taught us what is possible when we match up the right land in the right place with good plans, and invest in the critical, but costly infrastructure that brings roads to our homes, and water to our taps. We have achieved an enormous amount as we’ve played catch up with addressing a housing market that has simply not built enough affordable or state houses.
It’s taken many years to get us into this housing crisis and it will take more time to get out of it.
There is ‘no silver bullet’ or quick fix.
But the measures we have already introduced will bring about enduring, structural change to the way we plan and build new housing.
Together, with our new package of measures, they will make a difference over time.
Throughout last year – and as late as September – the economic rumblings surrounding COVID-19 were that house prices were expected to fall. Economists were predicting slumps of up to 15%.
That we came through COVID so successfully, through our country’s fantastic efforts to keep one another safe, delivered a much different outcome than anticipated for housing.
We simply had to act to shift the dial from speculative investment toward giving first home owners a real chance.
And we had to ensure we are providing the right incentives for investment in the building of new housing supply, so we are not forever in a cycle of competing for limited stock.
The levers we announced last week include:
- Extension of the bright-line test to 10 years, with an exemption for new builds.
- Removal of the interest deductibility loophole for investors, which also have an exemption for new builds
- A $3.8 billion Housing Acceleration Fund to increase housing supply in the short to medium term.
- Government support for Kainga Ora to borrow $2 billion extra to scale up land acquisition to boost housing supply.
- Extra support for first home buyers through changes to access to First Home Grants and Loans, so New Zealanders have a bit more help with breaking through into home ownership.
- The Apprenticeship Boost initiative, which has been extended so we keep growing the workforce to build new homes.
Firstly, on the demand side measures to tilt the balance toward first home owners and away from speculative demand for housing:
In the last quarter of 2020, 40% of house sales were to people who owned multiple properties and the amount borrowed by investors increased by 116% between June and November.
We effectively have investors – including Mum and Dad investors – competing with their kids to buy up housing in the suburbs. This is unsustainable.
We need new housing for both buyers and renters. New builds deliver prospects for both investors and those in need of new housing.
There is also significant scope for investors to put their money into secure, purpose-built, affordable rentals, known as Build-to Rent opportunities, which will increase options for renters.
I have been talking with developers and the community housing sector on how we can move this kind of vehicle further along.
As we have investigated where the greatest housing needs are and what needs to be done to meet those needs, we’ve found out just how broken the system is for getting new housing, especially affordable housing, built.
There is a clear market failure in getting new housing off the ground and a significant missing link is ready-to-build land with infrastructure in place.
Councils and developers have told us this repeatedly. We have listened and responded.
We need councils and developers – as well as communities, and Community Housing Providers to work with us to make the best possible use of not only the levers we announced last week, but all the tools we have implemented in our first term too, such as the National Policy Statement on Urban Development.
We cannot do it alone.
The Housing Acceleration Fund will jump-start housing developments connective land with infrastructure. This fund will help green light developments that face infrastructure bottlenecks that might not otherwise progress.
This is the first time since the 1970’s that the Government is investing in stitching these two components together in such a way, outside of our own Public Housing Programme, which is the biggest in two decades.
Cabinet have made in-principle decisions about the fund but now we have announced it we can working with councils, iwi, the community sector and industry to finalise the criteria - i will be taking this to cabinet by the end of June and we expect to make our first investments in the second half of this year. We expect to see homes for people enabled by this fund within the next 12-18 months.
The housing crisis did not start this year, or in 2017. The housing crisis is borne of decades of inaction to ensure affordable housing was being built and the state taking an active role in increasing public housing stock.
We will have more announcements to make in the coming months, particularly in terms of Maori housing.
We all need to pitch in and do what we can, where and when we can.
I note that many politicians and commentators endlessly talk about the problem definition of the housing crisis.
For me there is no semantic quibbling - there is a housing crisis.
Let’s not spend our time debating what it is - but rather what the solutions are.
We have the legislative tools set in place to turn this around.
We have secured funding to lay the critical groundwork necessary for developments.
And we’re ensuring that first home buyers have a much better chance of securing a step to the first rung on the ladder of home ownership.
It’s up to all of us to keep doing the mahi to fix the housing crisis, which is to get more housing built and more places for people to call home.