15 mins to read

Govt could sell thousands of state houses — Bennett

Denies move breaks National's no-more-asset-sales election pledge | Iwi right of first refusal.

Sun, 02 Nov 2014

Social Housing Minister Paula Bennett says National could sell off “thousands” of state houses but Housing NZ will still be the “dominant force” in providing social housing in NZ.

Speaking on TV3's The Nation,  she conceded the sale of state houses is an asset sale despite National’s ‘no more asset sales’ promise.

It would allow the government to spend perhaps $1 billion providing more houses.

“You can name it if you like, but I don’t think it is that kind of big asset sale," she said.

“The commitment I will make is there will be more places available for people in need for social housing… It’s by no means about destroying the state-housing sector”.

Iwi right of first refusal
Iwi, as part of their settlements, will in some cases have first right of refusal on the thousands of state houses that will be put on the block, Ms Bennett said. They could also sold to first home buyers and private developers.

It's true that private owners could buy state houses and build their own homes, the minister said, but government may require a percentage of new social housing.

National is “not scared to spend more money” to help vulnerable New Zealanders and ensure more social housing available, Ms Bennett said.

National may sell state houses to community providers at a discount, but Ms Bennett saiid that’s not the only option.

Watch the interview here

RAW DATA: The Nation transcript: Patrick Gower interviews Social Housing Minister Paula Bennett

Patrick Gower: Emboldened by its election victory, the Government's wasted no time pressing ahead with plans to sell off some of our 68,000 state houses. But will getting community groups to play a greater role help those needy families currently stuck in garages and caravan parks? Or is it, as one housing provider told us this week, about destroying the state-housing sector? Paula Bennett has taken the new social housing portfolio, and when Paddy spoke to her earlier, he asked if a third of state houses are the wrong size or in the wrong place, does that logically mean a third of them, as many as 22,000, should be sold?

Paula Bennett: Logically, maybe. I mean, I wouldn’t put a number on it, so people are putting numbers on it themselves. But what I would say, that it wouldn’t happen quickly. We’ve got a lot of work to do for that to happen, and it’s certainly not about us reducing supply for those that need it. It just means that we may not always be the ones that are actually fronting, and it might be that it’s going to community providers.

Yeah, sure, but you’re not going to put a number on it, but it could be up to a third, couldn’t it? It could be thousands of houses.

It could be thousands, but I would still say that Housing New Zealand would be the dominant force in actually providing social housing in New Zealand, certainly in the foreseeable future. Even if we were to sell a few thousand so that we could either, a) build more or go into partnership with community housing providers and private developers. Our intention is for people who need housing support to have more stock available. We just may not own it.

Yeah, you might not own it, and you’re talking about selling thousands of houses here. And, yes, community housing will be part of it, but private buyers will be able to get into as well, won’t they? Private people will be able to buy these houses.

Yeah, but then let’s look at where it’s at. So you could take an area – Tamaki’s a great sort of example at the moment. So we’re building 11 new houses where there were two, yeah. Now imagine if we go into another area where there might be 20 state houses. We then partnership or even sell to a developer, who then partners with a community housing provider and builds 70. You know, so there we’ve got more houses available, it’s a win-win for everyone, and it may not be that the state’s owning those and we’ve given up 20 houses, but there’s more available for those that need them.

Right, some of those 20 houses. Or if you do sell off to a developer, they will be able to build their own private homes as well. They won’t be tied to building community housing, will they?

That’s true, but we may give a percentage that we expect to be either social housing or affordable housing, and we’ve done it in some of the special housing areas, the SHAs.

So you may or you will?

Well, we’re still working our way in. We’re not even a month in the job yet, so we’re going through that kind of detail, and it’s yet to go to Cabinet. But there’s certainly a precedent there for us insisting that a percentage is social housing. The commitment I will make is there will be more places available for people in need for social housing.

And we’ll come to that, but first, in terms of the sell-off, will first-home buyers be able to buy them through, say, Trade Me or Bayleys or whatever?

We have an obligation to go to iwi first in many cases, so, you know, there is a requirement for us to go out there and consult with them. So you will see us making a big consultation process over the next few months, where we’re equally talking to community housing providers and others about what might happen.

So iwi are going to get first shot at a lot of these houses?

Not at all of them, but there will be circumstances where, as part of their settlements, they could have a first right of refusal, but then in others there won’t be. So we’re just going to go out and talk.

Are you talking here in Auckland? Where in New Zealand are you looking?

We’re still working our way through some of those details and we’re making announcements in due course, but we do have an obligation to talk to iwi, we want to talk to community housing providers, and we want to make sure that we’re also giving some of those first-home buyers opportunity.

So Maori will be first in the queue for some of these state houses in the sell-off?

In some cases.

Yeah, and some will go to first-home buyers?

I’m sure that they might, but—

And some will go to developers as well.

We’re yet to get to that level of detail, but I think you could say yes.

And it could be in the thousands?

It could be, but I would be very surprised if it’s that many in the short term.

Because what this looks like is an asset sale, isn’t it?

Well, it’s not, actually. It’s about being smart in what we’re doing. So you just look at us having the wrong houses, in the wrong place, of the wrong size.

Yeah, but at the same time, you can look at it the other way, and you can look at thousands of houses worth maybe over a billion dollars being sold off. That’s an asset sale.

Yeah, but so that we can then perhaps spend that billion dollars on people that need it in a much better way. We have problems—

You just said, ‘Yes, it is an asset sale.’

Well, there’s assets that are going potentially to iwi and community housing providers, so—

And to private people and—

You can name it if you like, but I don’t think it is that kind of big asset sale. I think what it is—

It’s important. It is important.

Well, it’s about us shifting investment, is what it is.

It’s important, because you’ve just said it is an asset sale, and the Prime Minister said, ‘No more asset sales’.

Well, I said, ‘Yes, but,’ yeah? Because ultimately what I’m saying is that we had signalled well in advance that we don’t think that the Government should be the only provider of social housing in New Zealand, and we don’t.

Yeah, and to use your own phrase, ‘yes, but’ the Prime Minister said, ‘No more asset sales’.


And this is an asset sale by your own admission.

Well, at the end of the day, we have social houses that are in the wrong place, and we will be purchasing more. So we’ve always said that at a lower level there will be some movement. This is not a big asset sale, and we’ve stuck with what the Prime Minister said. But if you go into the kind of detail, he said there will always be some common sense stuff that’s happening at the margins of farms and others, and in this case a few state houses. So we are not going out there and doing anything en masse that is going to be of major concern to New Zealanders. Our focus is on people. We can do better by them by actually shifting some of those assets as well, purchasing more in areas and of the size that they need it, and also partnering with community housing providers. That’s what our commitment is.

Let’s look at how works, because what makes it a reality that the market will do a better job than Housing New Zealand and the state at the moment?

Well, we have some really quite good examples of it, and I think that in some cases we can see that the state will, but we can just see how it makes sense. They move quicker than we do. We can work in partnership with them. If we free up some of that land and supply, they can come in, they can build some that they need to, partner with community housing providers. It is more them that does a better job sometimes than we do, because they wrap much better support around what are often very vulnerable New Zealanders.

Sure, and we’ve talked to some community housing providers, and they’ve said, ‘Yes, in practice, this is a good idea, but how do we get into this. It’s too much for us to do. There’s too much development required. We don’t have the capacity to do this overnight’. In fact, one of them said to us, ‘We are worried that this is about destroying the state-housing sector’.

So it’s by no means about destroying the state-housing sector. In fact, it’s the complete opposite. I well accept that they’re not up to capacity, and that’s part of us starting somewhere and making a difference. So the income-related rents makes a big difference. That follows the individual and can go to a provider, but we have to start somewhere. So some of it is some of those state houses going to those community housing providers. It means they have an asset. They can then partner with either developers or with banks and borrow more money that they can build more. And it is unusual, Patrick, across the world for the state to have such a monopoly and be the only player in the social-housing market.

Okay, but let’s take that point that you made about state-housing stock going to the community providers. How does it get there? Can they get that at a discount level so that they can get into the game, or will they provide it at market rate?

Well, I can’t go into that level of detail today. It has been less than a month, and we have yet to go through the process of going through Cabinet with that kind of detail.

But are you—?

But there are all sorts of options, is what I would say.

And are you prepared to sell the housing stock at a discounted rate to a community provider so that they can get into the game and so that they can get started? Is that an option for the Government?

I’m saying there’s many options, and I’m not prepared to make a public statement on exactly what they will be today, because we will be working our way through and as a Cabinet make a collective decision on what that will be.

But the Government is prepared to sell these at a discounted rate to housing providers to get them started?

I can’t make that obligation today. We’re working our way through options, and we’ve got a process to go through yet.

Because the housing providers say they would need it to be discounted for them to get going.

Yeah, I can appreciate that, but there’s lots of different options that might be available, and that is not the only one, and it’s not just about us shifting assets either. There’s a lot of other ideas and things we need to do to get this moving to the level it needs to be so that we can provide the kind of assistance that some vulnerable New Zealanders need.

But how is it not just shifting assets? Because it looks like the house is owned by the state at the moment; the house goes to a community provider. That doesn’t build a new house, does it?

No, it doesn’t, and so that’s what I’m saying. That’s not the only piece of work going on, so it is all about providing more— having more supply, particularly in the Auckland market. So to do that, we need to free up land. We need special housing areas. We need affordable houses being built so that others can buy them. We need to see a track for people, that they’re not long term in state houses when, actually, they only need them for short-term. We need to be making sure that we— well, it is a whole mechanism here. It’s not just one thing that is going to move this. You know, if we are serious about looking after those that need it most, we’re going to be having to shift a whole lot of components to make that work.

Why can’t Housing New Zealand do that? Why do you have to sell it off?

Well, we aren’t just selling it off. To be fair, they will always be a major player in the social-housing market, and they are— I’ve got to say, I’ve just been out this morning visiting with them. I think they’re outstanding and they’re doing a great job. So it is not about undermining the work that they are doing, but we can do other things. So the example I gave you, we still have some homes that are on big sections. Whereas, if you took those two homes off, you could build 11 in that space. That’s 11 vulnerable people.

And who’s going to build them? A private developer?

Potentially, yes.

And the private developer makes the money off that.

No, not necessarily. They may make some, but, equally, the state can be advantaged from it because of the land and the community provider. But more importantly, the people will be better off because there will be more houses available that better suit them.

But everybody in the community-housing sector says those people, those developers want to make a profit, and of course they do, don’t they?

Yeah, and they can. So I’m not anti them making a bit of money if they’re the ones who are investing and actually doing all the work, but it need not be that certainly the vulnerable people or the taxpayer loses, because we own some pretty valuable tracts of land. And if we’re smart about it, make sure that we put conditions that are in the best interests of New Zealanders, which we will do, make a commitment that there will be more social housing supply, particularly in Auckland, over time, then we can make sure that, actually, it’s at the advantage of those New Zealanders.

Okay, so how much and over what time period?

I can’t give you that today.

But that’s the most important part of it.

It is.

Because you’ve got a thousand people living in a caravan park using the accommodation supplement.

Yeah, and it would have been easier for me not to come on today and avoid you so that I wasn’t put in this position, but the reality is we are less than a month, we have a process to go through and for good reason, so that it’s tested. We’re getting the best advice, and we’re making sure that everything lines up.

Minister, you will agree that people can’t live on an accommodation supplement, can they?

Well, no, I don’t necessarily agree, because many, many do, so the accommodation supplement—

But it’s not a house; it’s a caravan for many people. It’s a caravan for hundreds of people in your own neck of the woods.

Yeah, but for thousands, it’s not, so, actually, the accommodation supplement is a really, really important tool in subsidising housing for New Zealanders. So we spend $1.1 billion on it. It goes to, from memory, more than 240,000 people, and it is a valuable tool in us having that market available. And that’s where income-related rents come in. If you think we subsidise housing by about $2 billion a year just in that sort of weekly assistance, we can do better with that. And we’re not scared to spend a bit more.

Now, one of the most important points is, okay, you sell some of this housing stock. What happens to the money from that? Does that go back into the housing sector?

What I do say is, and we’re still working our way through – it’s got to go through Cabinet, and it’s got to go through its process – is that there will be more social housing available—

Yeah, but what—?

We just may not be providing it. And we’re not scared to spend more money.

Yes, I know, and I agree with that, but what will happen with the money you make from selling up to thousands of state housing? What will happen with that money?

Well, we see ourselves reinvesting and using it better to help vulnerable New Zealanders.

So you guarantee it will go back into housing? Or where will it go? Will it go back into housing or into the consolidated fund?

Yeah, well, we’re going to work our way through those, and you can get us back on and either the Minister of Finance or myself will answer that. But I’m not quite going to put numbers on it at this stage until we’ve worked our way through a process. We know how many, what space, what period of time and what that actually means.

And now moving on to a bigger political question – what do you make of all this talk of you being the next leader of the National Party?

I think I love what I do, and I just—

Everyone says that.

Yeah, they do. And so no matter what I say to you right now, I’m going to be in a tight spot. I’m just going to tell you, though, I don’t have leadership ambitions. I’m really, really pleased in the role that I’m playing at the moment.

That’s what Judith Collins said. You know, you’re looking like the next Crusher here.

No, I’m just loving what I’m doing, and I can’t answer you any other way, and I don’t want to. So you can take from it what you like.

Thank you very much for your time, Minister. Thanks for coming on.

Thank you.      


© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Govt could sell thousands of state houses — Bennett