Opening Community Housing Aotearoa’s 2015 Conference
E nga mana, e nga reo, e te iwi o te motu, tena koutou, tena koutou, tena koutou katoa.
Ladies and Gentlemen.
It’s a pleasure to be here this morning and to open Community Housing Aotearoa’s 2015 Conference.
I want to take a moment to acknowledge the work your organisation does on behalf of not only the community housing sector, but the thousands of New Zealanders who you serve and are in many ways your family.
I don’t think there has ever been a more exciting time to be involved in housing in New Zealand.
For the first time you have three Ministers working to increase the supply and quality right through the housing continuum, from emergency and social housing to affordable.
I think the very fact that we’re talking about housing as a continuum says something, and is a reflection of the kind of aspirational Government this is.
So while that wider work to increase supply right across the continuum is crucial, today I am going to focus on social housing.
We’re putting tenants and families at the centre of what we do.
Because fundamentally, we believe it is the State’s role to enable New Zealanders to get ahead and lead positive, independent lives.
But for many vulnerable New Zealanders, it is incredibly tough to see they can lead more prosperous lives, which is why all of us, as leaders in our community, must remain relentlessly ambitious for them.
This Government has made some big gains in the metrics that are a very real measure of the direction our society is heading.
• Over the last three years, the number of children in welfare dependent homes has reduced by 55,000 – that’s equivalent to the population of Rotorua.
• Reoffending has dropped by around 10 percent in the last three years.
• And we have the lowest number of teen parents on the benefit since 1988 – a time when I was one of them.
There remains though, a group of New Zealanders entrenched in pretty tough circumstances that – at best – some or all of our social services reach, and at worst, slip completely through the cracks.
You know who these people are, and so do we.
A lot of you work with them on a daily basis.
Unfortunately, Governments of all stripes have been behind the 8 ball on this one for quite literally decades.
Because of both entrenched institutional silos and technological deficiencies on the part of Government agencies, we have not been fit for purpose in knowing who our customers are, what social services they need most, and when.
Ladies and Gentlemen, we have made great strides catching up in the last seven years.
Initiatives like Welfare and Education Reforms, Whanau Ora, Children’s Teams, and Healthy Families initiatives are making a real difference.
Through the use of data-analytics and by working across Government, we now know more than ever before where and whom we need to invest in to get the best outcomes.
The numbers are stark.
There are around 51,000 under six-year-olds across New Zealand who have two or more of the following characteristics:
• Been supported by a benefit for most of their childhood;
• Has a parent with a custodial sentence;
• Mum has no formal qualifications;
• And has a CYF notification.
We also know what these kids’ outcomes are likely to be:
• three quarters will not achieve NCEA level 2 or equivalent,
• four in ten will have been on a benefit for more than 2 years before they are 21, and
• a quarter will have been in prison by the time they are 35.
On average, these children will cost taxpayers over $320,000 each by the time they’re 35, and for some of them, we’re looking at $1 million each.
And that’s just the financial implications.
What we can’t measure is the social cost to them and is borne by both those families and our communities that collectively carry the burden of seeing this in our own back yards.
Some of you will have heard me say this before, but a former prominent politician once said that she did more for the wellbeing of the country as Housing Minister than she did as Health Minister.
That was Helen Clark, and although I never thought I’d say this, but I think she’s right.
If we get the home right, then all that other work we’re doing with those 51,000 kids and their families becomes infinitely easier.
So we’re changing the way we deliver social services so we get more support to these families and see a better, and measurable, outcome for the $23 billion in social services we spend each year.
We no longer simply look at people as case files to spend on, but as individuals and families to invest in.
This approach, which we call ‘social investment’, underpins our work to improve social housing in New Zealand.
And ladies and gentlemen our vision for social housing is clear.
We want to house more people who need social housing, while they need it, in houses that suit their needs.
We’re willing to shed some of the preconceived notions, because a person living in a house doesn’t care who owns it, just that they have a roof over their head and a warm place to live.
We’re willing to be more flexible and spend more upfront where we know it’s going to have a positive impact.
It means being brave, and making changes to a system that has largely been in place close to its current form since the 1930s.
The Government’s Social Housing Reform Programme, announced by the Prime Minister in January, essentially has three key components that do just that, and I’d like to touch on those today.
Housing More People
Firstly, we’re spending more on social housing, because our number one priority is to ensure those currently waiting for housing get a roof over their head.
Over the past year, the Government’s expenditure on the Income Related Rent Subsidy increased by $75 million to $778 million in 2015/16.
That’s almost double what the Government spent 10 years ago.
Simply increasing the places available isn’t enough to ensure we house more people in need though.
It’s vital expenditure is targeted where there is greater demand for social housing and is purchasing housing that actually suits the needs of today’s tenants and their families.
Quite simply, we need more houses, of a better quality, of the right configuration, in the right places.
Smarter, Responsive, Dynamic Social Housing.
Secondly, we’re being much smarter in the way the Government acts as the primary purchaser of social housing.
We’re putting much more of a customer focus on what we do, whether it’s for the people who need to be housed, are currently housed, or are providing the housing.
In the past, the system for housing people was incredibly static.
You showed up, asked for a house, and if there was one free you might get the keys.
It was essentially a lottery, with a windfall of a house for a lucky few.
We didn’t really bother to dig in and find out why someone needed social housing, if there were better alternatives, and once they were there, whether they still needed it.
Housing Support Products
Take a mother with three kids under the age of 12 whose partner abandons her, takes all the money, and leaves her in rent arrears.
Her kids are in school close by, they’re settled there and moving somewhere else would actually just create a whole new set of social problems.
So she turns to the State for help, because she’s just hanging in there and doesn’t know where to start.
You will have experienced cases like this, I’m sure.
Now for the first time she comes up against this massive machine that is Government – and let’s not forget how daunting the size of the bureaucracy can appear to everyday New Zealanders.
So 20 years ago, she would have been put in a state house if one was available, and if it wasn’t in her area, well tough luck.
The “benevolence of the state” in action.
Well that makes no sense, and we’ve made changes so this sort of thing doesn’t need to happen.
Now, we would actually look at her situation and talk with her about whether she might be able to afford a private rental, and what her roadblocks are to remaining independent.
Through Housing Support Products, we will cover things like letting fees, bond, and moving costs.
So far, we’ve paid out over $600,000 and helped 330 people into housing that better suits their needs.
This keeps a social housing property free for someone who has much more pressing need and requires more intensive assistance.
Reviewable tenancies mean we’re no longer putting people in social housing and leaving them there.
It’s another significant way we are enabling people to take charge of their own lives and move along that housing continuum into housing independence.
Since July last year, over 2,500 people have or are currently engaged in the tenancy review process.
Of these, 257 tenants have moved into private rental accommodation.
And 26 tenants have purchased their own home.
Most of these people had never even considered home ownership was within their means.
All we had to do was ask!
I think it’s an outstanding result and I’m thrilled each week when I see that number grow.
Yes, tenancy reviews can be unsettling, and it absolutely requires sensitivity and care.
But we don’t think it’s good enough that people who do not need to be in social housing are taking up properties when there are literally thousands desperate for those homes.
I’d also like to talk briefly about our expectation that there are clear reciprocal obligations for those interacting with the social housing system.
I’ve talked before about how in the last year, 414 times we’ve offered someone a property, it was turned down, including for reasons we don’t think are good and sufficient, like birds chirping in the trees next door, wanting a bigger back yard for a trampoline, and not liking the colour a door was painted.
This includes people currently housed who wish to transfer to a different property.
Not only does it create extra work for both Government and your organisations, but worse, it means another family in desperate need has to wait even longer for a property to come available.
Let me be clear – there absolutely are good reasons people can decline a property, like not wanting to live close to an abusive ex-partner.
Our social housing system has been passive for so long, that there needs to be a rebalancing in how clients interact with providers and what is acceptable behaviour.
Cabinet is currently looking at decisions to change this.
While the Government is committed to its obligation to house vulnerable New Zealanders, actions have consequences.
We’re sending a clear signal that it is not OK for your and our time to be wasted, and for other families to be made to wait for a home.
Fostering Community Ownership
Thirdly, and most importantly to all of you, we’re committed to helping providers like you grow.
Ladies and Gentlemen, it’s a development I am particularly excited about.
As we have previously stated, Housing New Zealand will remain by far the largest provider of social housing in New Zealand for the foreseeable future.
But we know from talking with you and getting out into towns and cities across the country that communities are eager for a bigger stake in providing housing for their most vulnerable.
This is a Government that is absolutely right there with you.
What we’re talking about is the most fundamental change in social housing arguably since it was formally established in the 1930s.
But don’t you think it’s time to deliver housing differently?
Everything else about New Zealand has changed in the last 85 years.
Between the number of people waiting for a house, or housed but able to move into independence, to the stark reality that our portfolio barely meets the needs of today’s tenants, it is clear that change is long overdue.
I’m excited because this isn’t just about your growth for the sake of it.
It brings the potential for some really innovative thinking in the way you provide both housing and support services around the tenants.
Over the past year, I’ve opened some amazing Community Housing Provider developments, including one in Johnsonville for disabled people which was designed with their particular tenants’ very challenging needs in mind, and well linked up to the intensive ongoing social services they need.
Trust me, I’d love to be cutting ribbons every week, and not because it’s a great photo op for a politician!
I genuinely want to see more social housing being provided by organisations like those represented here today.
But I am concerned there remains an expectation that large scale capital grants is are only way to kick-start further growth in the sector.
It is quite simply not a sustainable way to grow.
The Government wants to be working with organisations that are sustainable in the long term.
One-off capital grants up front aren’t the way to achieve that.
Instead, you are going to need to be commercial to be sustainable.
That will mean looking at ways to build your balance sheet and your financial capability – or forming a consortium to get it.
This could be working with iwi, other Community Housing Providers, larger financiers, or companies with large-scale asset management expertise.
The Government has signaled that we expect providers of all sizes to be seriously looking at all options to build a sustainable business. That’s what will be needed if we are to achieve the goal of more community ownership of social housing.
Just this week, three Tauranga iwi authorities announced they are forming a consortium with Masterton Trust House to bid for the transfer of social housing in the Tauranga area.
I understand the complexity and scale of this change can seem daunting, and that working with others in this way is novel.
But Government itself has had to take a good look at itself and ask whether our systems are fit for purpose to serve you and your tenants.
And in a lot of ways, we weren’t, because our systems were designed for a time when Housing New Zealand was a monopoly provider.
So how have we changed?
We’ve opened up the Income Related Rent Subsidy to non-Government organisations.
We’ve made the Ministry of Social Development’s purchasing intentions public, signalling clearly to providers where demand is expected to grow, remain static, and decrease, giving you the clearest picture yet about where there are opportunities to focus investment and community support.
This information is freely available at socialhousing.govt.nz, and if you haven’t had a look at it, I encourage you to do so.
We’ve also introduced long-term contracts so providers can have that certainty of a guaranteed income stream over 10, 15 even 25 years.
Long-term contracts can provide stable and sustainable growth for a Community Housing Provider.
The opportunity here is immense.
We are offering you a double A rated, Government-guaranteed investment product.
If we took something like this to the open market, investors would climb over broken glass to grab long-term rental contracts.
In return for the reliability of ongoing Government investment, banks and financiers can see new opportunities for investment in a sector that previously didn’t exist.
This helps you grow your own assets over time.
I like to think of it this way…It’s similar to how thousands of New Zealanders take out mortgages on their own homes.
In those cases, the bank provides significant upfront funding to help buy a home that would otherwise be out of reach.
At the end of the day the mortgage is paid off and kiwi Mums and Dads own their home.
In your sector, the Government provides a long-term income stream via the Income Related Rent Subsidy to give banks and financiers confidence to invest in the social housing your organisations will provide for people who need it.
Financial institutions constantly tell me how favourably they see this long-term Government-backed income stream, unlocking the possibility of expansion through reduced rate borrowing and leveraging your growing balance sheet.
I understand dealing with this has been a challenge for many of you, but I know you can see the potential.
We’re also progressing with potential sales of existing state houses in Tauranga and Invercargill.
This creates the potential for an immediate increase in capital assets, and is another foundation on which further growth can be realised.
We announced yesterday we’re proceeding to the Expressions of Interest phase, and I want to say we value the consistent feedback we’ve received from you throughout this process.
We’ve also signalled clearly we are looking for community input to identify further opportunities for social housing growth.
Treasury has an open Request for Information to enable potential providers and developers to submit ideas for the supply of new social housing or the transfer of existing social housing.
I’m pleased this has already seen strong interest from the sector.
We’ve received a number of good ideas on where and how transfers might take place beyond Tauranga and Invercargill.
I know from speaking with some of you how positive you are about our announcement that 20 per cent of vacant and underutilised Crown land in Auckland will be set aside for social housing, with a further 20 per cent set aside for affordable housing.
And because a lot of the work is focused in Auckland, we now have decision makers from both MBIE and the Ministry of Social Development on the ground there, ready to work with you on a day-to-day basis.
I’m often asked to put a figure on how big we’d like to see the community housing sector grow.
I’m reluctant to for good reasons, because the last thing you need is an artificial target from one Minister hanging over you.
The answer of course is I’d love for us to be talking about oversupply, especially in high-demand areas so that people have real choice.
Victoria, Australia provides an indication of the direction we should be heading, where its community housing sector went from 0 per cent to 30 per cent over 10 years.
I am under no illusions as to that being an ambitious goal, but quite frankly, New Zealanders expect nothing less from us.
To wrap up,
I know I’ve covered a lot today, but it’s a sign this is a busy Government that has made improving our citizens’ wellbeing a priority.
There’s a number of things I didn’t touch on that I could talk at length about that all are an important part of the housing story.
The Government’s work to grow a more diverse, resilient economy, combined with prudent management of our finances, is creating the climate where businesses are growing, creating more jobs and opportunities for vulnerable New Zealanders to get ahead.
My colleague Nick Smith’s wider work to increase the supply of affordable housing is helping to ease that transition along the housing continuum – especially in high demand areas like Auckland – and our Welcome Home Loan Package is supporting thousands of first home buyers.
I haven’t even talked about our work to sort out Emergency Housing, including the $2.5 million in short-term funding we’ve already announced and the long-term solution I hope to share more about soon.
Let me finish by saying this.
I will never relent from defending your growth as a good thing for this country and our most vulnerable.
As we go through this process together, there’s going to be lots of talking and I’m sure there’ll be plenty of firm differences of opinion.
While we won’t agree on everything, I know we share an unwavering commitment to helping more vulnerable New Zealanders into housing that suits their needs.
As long as we continue to put the tenants first, we will be on the right track.
I’m excited to be on this journey with you, and look forward to many more conversations going forward.