By SIMON COLLINS
Fresh fruit will be back on the menu for the Heke-Ruka family of Manurewa next week.
Raewyn Heke, Huia Ruka and their six children are among 130,000 people in 59,462 Housing NZ homes whose rents will drop on December 1 from market rates to 25 per cent of their incomes.
For the Heke-Ruka family, this means a rent cut from $225 a week to $94.
They will lose their accommodation supplement of $90, but will still be $41 a week better off.
Their net income after paying the rent will rise from $278 to $319 a week.
"We'll be able to get fresh fruit and vegetables," Raewyn Heke says. On a low income, "your food is real basic."
"You buy your sack of spuds, 10 loaves of bread, 1 kilo of milk powder, so it lasts.
"With the rent going down, you could buy better food. It's not so stressful."
Despite the accommodation supplement, research by the Rev Charles Waldegrave and Victoria University shows that housing has been the biggest cause of poverty in New Zealand since Housing NZ rents were raised to market rates from 1992.
Overall poverty increased only marginally, from 18.5 per cent of New Zealanders in 1993 to 19.3 per cent in 1998; "poverty" being defined as 60 per cent of the median household after-tax income, adjusted for family size. So a couple with one child and a net income of under $394 a week in 1998 was "poor."
After adjusting for housing costs, Mr Waldegrave found that 72 per cent of Housing NZ tenants were poor in 1998, compared with 32 per cent of those renting in the private sector; 17 per cent of homeowners with mortgages; and 4 per cent of mortgage-free homeowners.
Half of these poor families could not afford to provide a meal for their children at least once in the previous three months, and 56 per cent could not afford to visit a doctor when they needed to in the previous year.
Overcrowding of low-income families has been blamed for an epidemic of meningococcal disease.
The manager of the Monte Cecilia emergency house in Mt Roskill, Elaine Lolesio, says she knows of one family in a Housing NZ home who were buying dog bones to feed their children.
"Children were not going to the doctor. There were a lot of sick children."
The Tasi family, of Wiri, with five children aged 2 to 15, are crammed into a two-bedroom Housing NZ home to keep the rent manageable - $180 at the peak, and $150 since the recent decline in Auckland rents. On Friday their rent will drop to $77.
"My wife and our daughters sleep in one of the rooms," says Tasi sen. "My three boys are in the other room, so the old man of the family sleeps in here [on the lounge floor]."
The Tasi family have no phone and no car, and at times Tasi sen has gone without dinner so the children can eat.
His family will be just $22 a week better off from Friday, after losing their accommodation supplement. But they can now apply to Housing NZ for a larger home, because their income-related rent will stay the same in any Housing NZ property.
Another Wiri family, Moke and Etilene Tau and their four children, aged 8 to 17, will gain a net $37 a week when their rent drops from $215 to $89. But they run a car and say most of the windfall will go out again in petrol costs.
Housing Minister Mark Gosche says the changes will make the average Housing NZ tenant $36.45 a week better off.
Put another way, that will place $100 million a year into the pockets of some of the poorest New Zealanders. Almost half of that ($47 million) will be in Auckland, where market rents are highest.
As well, about 50,000 tenants are getting partial refunds on their bonds, averaging $95 each, to reflect the lower rents.
On the other hand, 2500 Housing NZ tenants who now get special benefits to cover their excess housing or health costs are liable to lose most or all of their special benefits when their rents drop.
After years of being told to operate as a "successful business" charging market rents, Housing NZ has had to set up a whole new system to allocate state houses on the basis of detailed criteria, including income and the quality of their existing housing.
A State Housing Appeals Authority is being created, with four to eight members in each of eight centres.
State houses will be restricted to people with "realisable assets" of under $17,000 (excluding household effects and a car) and with net incomes of less than one-and-a-half times the net rate of superannuation - $338.32 a week for single people and $520.50 for families.
Rents will be fixed at 25 per cent of tenants' incomes only for those earning less than the actual net super rates - $225.55 a week for singles and $347 for families.
When any tenant starts earning above those thresholds, the rental subsidy will be cut sharply by 50c for every extra $1 earned until the rent reaches full market rates. This is twice the clawback rate of the accommodation supplement, which is 25c in the dollar, and appears to be designed to minimise the cost of low rents to taxpayers.
Auckland University economist Susan St John says this means many families will be caught in a vicious "poverty trap" which could actually make them worse off if they get a job.
As soon as their gross income rises above $27,000 a year, every extra $1 earned will cost them 38.9c in reduced rental subsidy (50c adjusted for tax), 30c in reduced family support and 22.3c in tax and accident compensation levies - a total of 91.2c.
That is without counting other penalties, such as losing entitlement to the community services card, losing childcare subsidies, possible child support payments and student loan repayments.
"We have created such a terrible climate of despair - a feeling that there is no point in trying to help yourself, the way the poverty traps are working," she says.
Susan St John says it would be better to give tenants a fixed rent for a period, with a review after that - "to give people a chance to get ahead."
"After all, they are in a state house because they are in need."
Auckland People's Centre manager Alan Johnston says the Housing NZ rent cuts do nothing for the 79 per cent of those in poverty in 1998 who were not in state houses. He urges the Government to get back into financing low-income people into their own homes to build social stability and a sense of "community ownership."
Mr Gosche hopes to announce a home ownership initiative in the New Year which is likely to help low-income people raise the deposit needed for a mortgage.
Meanwhile, Raewyn Heke and Huia Ruka's situation has already changed since Housing NZ fixed their rent at $94. Both partners have been working as volunteers at the Salvation Army, and Ms Heke has now been offered a fulltime job there.
The job will pay $13.79 an hour, or around $26,890 a year. If Mr Ruka were to get a job too, the family would be caught in the system's new poverty trap.
But for now, Raewyn Heke is ecstatic, for her friends as well as herself.
"We see lots of people at the Sallies, all on benefits.
"Everyone has to go weekly for a food parcel. I think it's a good idea that the rent is going down."
Clawbacks temper rent relief
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