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Ladies and Gentlemen,

Thank you for the opportunity to join you today.

It’s a pleasure to be in Nelson to discuss housing issues because your city has a proud commitment to social housing.

Housing New Zealand has a significant presence here, and, like many other areas in New Zealand, Nelson is facing challenges to address the provision of affordable housing. I gather there is a wide range of social agencies and charitable groups in the community, many of which are very actively interested in social housing.

In recognition of all this, I'd like to take this opportunity to lay out for you today my view of the Housing portfolio as its Minister, where I think we have come from and where we are heading in the future.

As some of you may be aware, I come from West Auckland, specifically Te Atatu, where social housing demand is a significant issue.

Te Atatu is a diverse constituency with a high number of new migrant and refugee families. Sadly, it was an electorate that suffered more than most under the destructive housing policies of the 1990s. I saw the human cost of those policies first hand in my office, and I'll never forget them.

Because of this experience, I, like many of my colleagues, view social housing as much more than bricks and mortar. I view it as an expression of society's values. The lengths that we go to ensure the needy have basic housing says much about who we are as a people. It is a community action, the effects of which reach across numerous social issues.

As you will be well aware, when Labour came to office, we completely overhauled National's housing policy. We sought to create a fairer system that met demand, a more Kiwi system that recognised that those in state houses were not chattels or statistics but people - families with kids who needed stability and security like everybody else.

The practice of giving social housing only to those who could afford it, rather than those who needed it, was abandoned. Income related rents were introduced. Significant funding streams and work programmes were established to try and fill the huge gap in the Housing Corporation's assets from the sale of 13,000 houses in the 1990s.

Since that time, more than 6,000 state houses have been added to our stock, and the high needs waiting list for housing in places like Auckland has subsequently declined.

About 99 per cent of new tenancies are now going to those on income related rents who earn on average about $267 a week of assessable income. The most needy are being housed first, and the gap between service and demand is growing closer all the time.

I am not going to stand here and suggest all the problems of the past are solved because that would be patently untrue. My own electorate still has one of the highest waiting lists for state houses in the country. But I do think the state of crisis that surrounded the Housing portfolio when the Labour-led government came to power has abated. Things are significantly better than they were, and over time will gradually improve further.

The easing of pressure on basic issues in the portfolio enabled my predecessor Steve Maharey to lift the government's horizons and begin to explore wider housing and building issues in New Zealand, and their inter-relationship and impact upon social housing provision.

He made a terrific start, and it is work that I want to take further in my tenure as minister.

Discussion of what this work might contain is best done within the context of Steve's Housing Strategy.

As you are doubtless aware, the strategy gathers together government activity relating not only to housing assistance, residential tenancies and building regulation, but also the relationship of housing to health, regional and labour market development, and environmental and planning policy.

It lays out seven areas of action:

· Sustainable Housing Supply
· Assistance and Affordability
· Home Ownership
· Private Rental Sector
· Housing Quality
· Sector Capability
· Meeting Diverse Needs

I want to run through several of these areas of work, partly to give you an update on progress and party because I want to highlight some areas where I intend to place an emphasis.

Firstly, Home Ownership.

The Housing Strategy identified a role for government in ensuring all people have secure housing. The Labour-led government believes that ensuring access to homeownership needs to be a part of that work, particularly when the country is facing a declining rate of home ownership.

A great deal of research in a number of countries has established a clear link between home ownership and improved health and education achievements for people.

If a person owns a house, they have a greater sense of control and independence, tend to participate more in society, and tend accumulate more wealth over time.

This thinking lay behind the introduction of the Mortgage Insurance Scheme (now marketed as the Welcome Home Loan), which offers people who wouldn't traditionally meet the market requirements for mortgage lending, the opportunity of first home ownership.

A similar ethos also lies behind the introduction of deposit assistance as part of the KiwiSaver work-based savings scheme.

The Welcome Home Loan has been running for some time. At 31 April of this year, 122 families in the Christchurch/Nelson/Marlborough area had achieved home ownership through the scheme.

However, while the Welcome Home Loan has worked for some people, overall its take up has been less than expected, and we’ve had to establish more realistic targets.

This is due to a number of factors. A rapid increase in house prices is one, requiring people to take on larger loans than they can afford to purchase a house. There have also been emerging pressures on income since the scheme was launched, and we have found applicants often have high consumer debt and credit card commitments which compromise their borrowing power.

Similar issues have emerged in other home ownership products like the Low Deposit Rural Lending Scheme as well.

Over the coming year, I am going to be looking at these products a little more closely and exploring what the best mix is to assist low to moderate income families, particularly in light of the Working For Families package.

Officials and I will be exploring other innovative homeownership programmes with a view to widening the scope of those we are assisting back out to our original targets.

In this work, we will examine home equity schemes similar to those introduced in the United Kingdom and Australia.

Under a home equity scheme, the government essentially stumps up a share of the deposit on a home, which is repaid when the home is eventually sold. The idea is the home buyer keeps the increased equity that might have been generated in a rising market, and uses that equity to move on to purchase other houses without the state's assistance.

Work on the applicability of this scheme here in New Zealand is at an embryonic stage, but there are obvious benefits to linking lower income people to a wealth-creating instrument like the property market.

Clearly these kinds of schemes need to be offered against a background of more education for people on home ownership, its risks and responsibilities.

A series of free workshops about all the things first homebuyers need to know is being offered in a range of locations around the country and will be rolled out to more centres nationwide over the next few months.

Which brings me to the second area in the Housing Strategy that I want to comment on – Sustainable Housing Supply.

The work in this area is primarily investigating the constraints that inhibit making housing more affordable, and thus our home ownership products more effective.

Many of you will be aware of, and possibly involved in, a study into housing stress in the Nelson Marlborough Tasman region, which is due for completion in June 2006. The study is researching and identifying the causes of and solutions to housing affordability problems in relation to the labour market, economic and demographic developments.

Meetings were held in mid-May with the reference groups in Nelson and Blenheim to look at the key findings and to consider relevant and localised solutions. I would like to thank those involved in this project – this is a significant piece of work for this area and would not be possible without the support and hard work of many people here tonight.

One other piece of work that was completed in February is an analysis of the sources of house price change in regional New Zealand since the 1980s. This highlights the extent to which inflating land prices – a 286% increase in real terms -- have fed the increase in house prices -- 105% -- over the period.

Another project is analysing the contribution of developments in the housing finance and credit sectors of the banking industry to house price inflation. Furthermore, two case studies of the connections between regional development and labour and housing markets are underway in the Nelson-Tasman- Marlborough and Tauranga-Bay of Plenty regions.

We are also looking at the affordability of newly built housing. Other work is identifying any statutory constraints in the Resource Management Act and the possible trial by some local authorities of innovative approaches to affordable housing.

The picture I am trying to paint for you here is a broad exploration of the factors that impact upon housing supply, bearing in mind that the fewer houses there are to meet demand, the higher private sector rentals are, and the more demand there is for state houses.

However, I don't want you to get the impression that with this additional work going on, the core functions of Housing New Zealand to supply and modernise state houses under the Assistance section of the Housing Strategy is being neglected.

The reality is quite the opposite. We added 1000 new homes last year, and we will acquire more new homes this year and next year in line with high need demand. Over the next three years we plan to add another 2000 homes to the state housing portfolio.

On Budget day I also announced a $16.4 million increase in funding for the Housing Innovation Fund. The development of third sector social housing provision is an area I am particularly interested in pursuing as Minister.

The more I think about the future of social housing in New Zealand, the more I think third sector involvement is crucial. If the state gradually becomes the soul provider of social housing we will in the future end up with a truly monolithic portfolio of properties to manage and from that will spring political calls for the portfolio to be broken up and sold off. At that point we will back in to the same cycle we went through in the 1990s.

It is far better, I believe, to gradually build up greater capacity for local government and non-government agencies to play a larger role in social housing along side the efforts of the state.

Earlier today, I opened four new units built by the Nelson Tasman Housing Trust, made possible due to the Housing Innovation Fund. In total the Trust has secured around $1.25 million in Housing Innovation Fund assistance for these first four houses, and an additional two family homes. This will greatly benefit the Nelson Tasman community, and is a great example of what can be achieved by and for a local community by the Fund.

Other groups and councils around the country are raring to go on similar projects, and I am keen to help them proceed, partly because by sharing resources and land we will be able to achieve more than we will be able to do on our own.

This is important at a time when there is a squeeze on government resources in the short term. We need to work in the most efficient way possible. I, for one, am actively encouraging Housing New Zealand to ensure we are doing the most we can with the taxpayer's dollar in the portfolio.

A final area of focus, I want to draw your attention to is a review of the effectiveness of the Accommodation Supplement on housing.

The value of the Accommodation Supplement has been significantly increased under Labour, but it is time to look at the policy debate about whether it remains the best mechanism for ensuring access for low-income people to the private sector rental market.

Initially, we are looking at how the Accommodation Supplement is performing. We hope to have that completed by later this year. After that we’ll look at what changes, if any, are needed. There will be public consultation on the review, with that currently expected to be undertaken around August/September this year.

In summary then, the Housing portfolio remains a priority of the Labour-led government, as it has throughout the past two terms. Over $2bn has been pumped into the portfolio since 1999, and that is bearing fruit.

Yes, we must continue to work away on core problems but I believe there is the scope now to confront wider issues. We will never solve our problems in Housing unless we get to the root of what has caused them, and the Housing Strategy provides a means to achieve that.

Let's embrace it. Let's work together; let's remember that there are real people with real families in our houses, and let's look after them.

Thank you.

 

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