Govt wants private sector to help fund state housing

Photo / Paul Estcourt

The Government wants public-private partnerships to fund thousands of new state and community houses after a visit to Sydney by Housing Minister Phil Heatley.

In an address to Community Housing Aotearoa conference this week, Heatley said no government had put enough into the housing sector and he wanted to change that. "I'm talking about increasing the supply of housing across New Zealand in the thousands over five to 10 years, and we're talking many millions of dollars," Heatley said.

David McLean, chief executive of Westpac Institutional Bank, told the conference how the bank was involved in Australia's first state-housing PPP on a site in western Sydney, which Heatley said he was impressed with when he visited last October.

McLean said the bank took representatives from both sides of the House to Bonnyrigg near Parramatta to see the $1 billion urban renewal of NSW Department of Housing places. Models like this could work in New Zealand, McLean said, citing the need for more social housing, Auckland's rapidly expanding population and the leaky homes crisis.

Heatley and McLean both want the private sector involved in funding expansion of the country's $15 billion state housing assets, although Andrew King, vice-president of the Property Investors' Federation, has doubts about the model and says it could increase expenses if more people clip the ticket.

Helen Gatonyi, manager of the Tenants Protection Association in Christchurch, also has misgivings about the Government/Westpac alliance, questioned the state's commitment to social housing and cited Masterton state houses transferred to a licensing trust, which were sold.

"The worst-case scenario with these PPPs is that somewhere down the track, houses are sold," she said.

Heatley told the conference PPPs could develop the asset base. "We need to increase and improve the availability of social housing. We need a diversity of housing providers and we need them at scale. We also need a state housing portfolio that is better configured to meet peoples' needs and makes better use of our available assets and capital ... Government cannot do this alone," he said.

"What we can do is use Crown resources more effectively and work in partnership with the community housing and private sector to achieve the radical increase in housing stock and outcomes we need."

The country's first housing PPP is at Hobsonville, where a Housing NZ subsidiary, Hobsonville Land Company, is working with ASX-listed AVJennings to develop sites. AVJennings is taking on the development risk, working with house building firms such as Australian-based franchise business GJ Gardner Homes and New Zealand's Universal Homes.

McLean said the time was right for the PPP model here.

"The nature and scale of the problem obliges us to look for new solutions. I firmly believe that PPPs complement other affordable housing initiatives," he said.

Heatley said it was wrong to assume a direct state/Westpac partnership: "We're not necessarily doing a deal with Westpac. There are a number of banks showing an interest."

PPPs could work just as well for social housing, he said, naming councils which own social houses, IHC New Zealand, the Salvation Army and VisionWest Community Housing.

HOW IT WOULD WORK
Housing Minister Phil Heatley outlined two possible schemes

Model One:

* Land comes from state/private sector

* Bank puts up the money

* Developers build houses

* State/social agencies manage them

Model Two:

* Private or state land

* Bank funds project

* Developers build houses

* Private entities manage houses