Hard News by Russell Brown


Crowded houses

In the course of a searching interview with Guyon Espiner this morning, Social Housing minister Paula Bennett sought to emphasise how much the  goverment is spending on housing support: two billion annually in subsidies for social housing and accommodation supplements for people in private rental, she said.

She then said that $760 million of that was composed of the effective discount given to state house tenants paying income-related rents. So the government is actually spending something over $1.2 billion in subsidies to largely private landlords.

That, as I noted in a 2014 post on the government's emerging housing policy, is the plan. Although a similar policy in the 1990s had seen seen the cost of the accommodation benefit balloon far beyond official estimates, the government was set on a steady exit from public housing and a renewed emphasis on private provision subsidised by the taxpayer.

I concluded that post thus:

In the absence of an accompanying state building programme – again, the government aims to do the opposite – it seems extremely optimistic to suppose that third parties will step up and build at the necessary scale. And that the expansion of subsidies to landlords won’t simply drive up house prices even further.

I presume – well, hope – the government has expert advice to the contrary. But wishing won’t make it so. And it is useful to remember two things about the 1990s. The first is that the government’s fond predictions of fiscal sustainability were blown out of the water almost immediately. The second is that the second half of the 1990s saw the emergence of appalling public health problems that we deal with to this day.

There may be something I’m missing here – I’m no expert. But it seems that policy predicated on no more than an ideological desire to get the state out of social housing provision could well go terribly, terribly wrong.

But the cost of the accommodation supplement hasn't gone as high as some predictions – including this one in 2011 on Interest.co.nz, which held out the prospect of a $2 billion cost by 2016. In the current climate, with double-digit annual increases in private rents, that seems counter-intuitive.

Is it because, as Mike Wesley-Smith noted in this compelling report on Auckland's "hidden homeless" for The Nation, the supplement is still calculated on market rental valuations set in 2010? And thus, having played its part in rental inflation, the supplement isn't even keeping pace with that inflation? Any observations or corrections are welcome.

I don't think it's overstating the case to say that what's happening in Auckland's poorest suburbs represents a crisis. It's one which will have long-term implications, especially in public health. And it's one that government simply doesn't appear able to deal with.

Between the Prime Minister's fanciful assurance earlier this week that anyone who happened to be homeless could just go to Work and Income and get sorted out and Bennett's boasting that the government was providing 3000 new beds – which she was then forced to admit were not new beds at all (the government has promised $41 million over four years to keep emergency accommodation operating; basically keeping the ambulance at the bottom of the cliff from being scrapped and sold for parts) – it's hard to have any confidence at all in what's going on.

What made it worse was that in her interview Paula Bennett did find someone to blame: existing state house tenants.

"We've had decades of people thinking it's a home for life," she said.

So people who aren't rushing to leave their fixed rents in favour of a private rental market that's getting out of control are the villains? That was a low thing for the Minister for Social Housing to say.

In conclusion, a word for the journalists. The Nation's coverage over the weekend, Morning Report's report this week and John Campbell's report for Checkpoint this week (embedded below) have all underlined how important the fourth estate's role in holding power to account is. And while that work certainly isn't exclusive to public media, it seems worth remarking that all those three have been made possible by public broadcast funding that has been frozen since this government's first budget in 2008.

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