Heatley looks set to make Labour’s housing policy workable

Phil Heatley outlined on Q+A some quite radical changes to Housing NZ, but they are changes that would help those most in need – and in fact are long overdue changes necessary to make the model of state housing reinstituted by Labour workable.

Some on the left will try and whip up hysterical opposition to them, but people should be aware the group that recommended them includes the Auckland City Mission Diane Robertson and Major Campbell Roberts from the Salvation Army. And also to her credit Sue Bradford, who was a panelist, seemed quite supportive. So I suggest people resist knee-jerk reactions.

National introduced market rentals in the 1990s. This was highly controversial and unpopular, ans was reversed by Labour who campaigned on a change back. I don’t want to defend the market rentals but explain why they were done.

The idea behind market rentals was that an income based accommodation supplement was a fairer way to assist low income people into housing. It could take into account your exact level of income, the average rental price in your area etc and most of all applied to every New Zealander on a low income.

The idea was that if two families lived next door to each other on identical incomes and identical family sizes and in identical houses, they would both get the same level of support. Up until then the person in the state house got huge assistance, and the person in private accommodation got very little. Unless the number of state houses was so large as to cover every low income New Zealander, then some families unfairly were getting much better assistance than others. And in fact (as this report shows) it was not always the family with the greatest need who was in the state house.

However the market rentals policy was hugely unpopular, for a number of reasons. One reason was the Government failed to sell it well. People thought it was about increasing rental payments from poor families, and there was almost no focus on the fact that the Government would be helping many more low income families than previously.

It also had the problem in that it created a large number of people (around 300,000) who were modest “winners” and a smaller number of people (around 70,000) who were quite large “losers”, and those who are disadvantaged by a policy change will fight against it, while those advantaged by it not so much.

To be fair there were also some unforeseen consequences also, such as private sector landlords pushing prices up, due to state houses doing the same. That was genuinely undesirable, and possible one reason National has not returned to that policy even though it is clearly less discriminatory.

So we’re left with Labour’s policy which is that if you live in a state house, you get a much higher subsidy from the taxpayer – the SHAG calculates it as worth $8,000 a year compared to $4,000 a year from the Accommodation Supplement. There are a limited number of state houses, and one can not change the number of houses in stock dramatically or quickly. So you want those state houses to go those most in need. But I have always said to do that you need to evict people from their state houses if a more needy family is on the waiting list, and you also need to move tenants from larger to smaller homes as their kids leave home.

The SHAG has recommended pretty much exactly that, but in a gentle way. Their recommendations are what you need to make Labour’s policy better for low income families. It means the greatest assistance goes to those with the greatest need.

SHAG’s report is here. Here are extracts from Q+A:

PHIL HEATLEY – Housing Minister.
Well, that’s certainly a recommendation in the report is that any new tenants coming on from now on would be under the understanding that they may just have the house for three years, five years or 10 years, and then we review that tenancy. So the tenancy wouldn’t necessarily end in that time, but we’d review the tenancy and see if their circumstances have changed.

This seems very sensible. Exiting tenants entered under a policy where their expectation is they can remain in the house for life so long as they are good tenants. I like the idea in future that you set at the beginning an expectation of review at a certain date. If their circumstances have improved and there are much needier families on the waiting list, then logically one would allocate to the family with the greater need.

MR HEATLEY So what would happen is& Well, a good example actually is someone’s in a state house – you know, they’ve had it for 10 years. When they first moved in, they had three kids, they were married, it was a four-bedroom. Now they’re alone or there’s just two of them. They just need one bedroom.

This is one of the real problems. The kids have left and now tenants are in a house with lots of spare rooms, while a family on the waiting list with three kids can’t get a house.

Some people will say the answer is just to build more state houses, but there is no way the state housing stock will increase from 70,000 to over 300,000 (the numbers on the accom supplement).

GUYON OK, the other big mismatch you’ve got is the type of houses that you’ve actually got. You’ve got far too many two- and three-bedroom houses. You’ve got a lot of people rattling around in houses that are too big for them. I think that you said there were 2700 houses with spare bedrooms, and about a similar number with crowded bedrooms. Are you going to have to engage in a large-scale selling and buying programme, in terms of selling houses you don’t need and buying ones that are fit for purpose?

MR HEATLEY That’s correct. In fact, we’ve got two types of mismatch, as you describe. The first one is that we’ve too many three-bedroom houses – in fact, 10,000 too many – and we haven’t got enough one-bedroom houses for very small families – obviously people living on their own – and certainly not enough four- or five-bedroom houses. So what we’re going to do is send a very clear signal that we want to realign all that, so we’re going to need to dispose of all our three-bedroom houses and buy smaller and larger ones.

No doubt some will call this privatisation! This does show the difficulties with the current policy – it is very hard to match the demand with supply.

GUYON Will the numbers stay essentially the same at roughly 70,000? Or will you increase it or decrease it?

MR HEATLEY What we’ve said quite clearly, and we certainly said to the people that drew up the report for us, is that we’re committed to state housing, we’re committed to Housing New Zealand&

GUYON On what numbers?

MR HEATLEY  &we’re committed to income-related rents.

GUYON Yeah, we’ll talk about that in a second. What numbers?

MR HEATLEY In terms of numbers of state houses, what we’ve said is we want to house more people in social housing. We want it to be a combination of state housing and combination of houses provided by others in the community-housing sector. So we are going to move away from counting the number of state houses we own or manage. …

GUYON That’s fascinating. So at the moment, there’s a ministerial directive that says you have to own just over 70,000 state houses by the middle of next year.

MR HEATLEY Um, no, the ministerial directive that’s happened over a number of decades under National and Labour, and it’s continued as they’ve gone in and out of government, is to increase the number of state houses.

GUYON OK, but roughly it’s 70,000.

MR HEATLEY That’s correct. And we’re saying&

GUYON So you’re abandoning that target? You’re abandoning any target or minimum number of houses that you need to own?

MR HEATLEY Yes, what we’re doing&

GUYON That’s a massive change.

MR HEATLEY It is, but what we’re saying now is that we want to increase the number of people housed, and we want to increase the amount of social housing in New Zealand, but we can’t do it alone. The government’s in no position to keep buying state houses the way we have been, so we’re going to slow down and probably stop and go to the community-housing sector, who have put up their hand, and they say this in their report, and say, ‘Look, we want to get into housing the most vulnerable.’ In fact, many housing organisations are specialist in their area – disabled, mentally ill, elderly.  ‘And we actually need capital, cash or houses for you as the government to inject into us to grow.’ And we’re prepared to look at that.

This is quite an important exchange. Shifting the focus from whether HSNZ has 70,000 or 70,500 or 71,000 state houses to a focus on how many people are in social housing, which includes the Salvation Army, some local authorities etc.

MR HEATLEY Well, no. What the panel says& And, you know, we had someone on the panel from Auckland City Mission, someone from the Salvation Army, someone from the New Zealand Housing Foundation. They’ve come back and they’ve said, ‘No, what we would like you to do is transfer a whole lot of housing stock or cash or land into our community-housing organisations, which are not-for-profit organisations&’

GUYON On that sort of level? 20%?

MR HEATLEY They’re suggesting moving very fast. If the ministers make a decision, we’re going to have to consider our tenants, not upsetting people’s lives. But the important thing I’d like to pick up on is this is not privatisation. This would mean a state house was transferred to a not-for-profit community-housing organisation who would have to retain the house. They couldn’t sell it, otherwise it would have to come back to us. And they would have to house the most vulnerable. They couldn’t just get, you know, anyone in that house.

As I said at the beginning, the members of SHAG who recommended this include reps from City Mission, Salvation Army etc. I think they have done an excellent job at analysing the problems with the current policy and proposing some changes which will provide better assistance to those most in need.