A carve-up of the housing portfolio in the new Cabinet has alerted the country to a radical reform the Government has in mind for state housing. If all goes to plan, the state will no longer own all, or possibly any, of the houses given to tenants at income-related rents. They will be owned and run by charities, voluntary organisations, iwi and other groups that meet standards to be set. It will be called "social housing".

Finance Minister Bill English, the principal proponent of the idea, has had the state corporation, Housing NZ, added to his portfolio. He means to see that it can compete with the voluntary sector for housing subsidies paid through the Ministry of Social Development. Paula Bennett, previously Social Development Minister, will be answerable for the subsidies and standards of accommodation as Minister of Social Housing. Issues of private housing, such as availability, affordability and regulation, remain with Housing Minister Nick Smith.

It is a bold step and one that ought to have been flagged in the election campaign. The Government obviously had this reform in mind many months before the election when the Social Development Ministry was given control of Housing NZ's income-related rent subsidies. The plan can fairly be called a privatisation of state housing and it would have been a hot issue. That was no reason to keep it quiet. John Key went to the previous election with a programme of partial asset sales and it did him no harm. Why did he say nothing about this one?

A keen debate would have forced the Government to at least clarify aspects of the plan which are now causing public concern, such as what happens to the proceeds of sales of state houses on million-dollar sections? Mr English rightly wants to sell those properties as soon as possible.


The capital could be used to build more houses on cheaper sites but they would not be state houses, they will probably be given to the organisations that may compete with Housing NZ for the subsidised tenants. Present providers of "community" housing for special needs will need to increase their stock substantially if they are to begin to compete with Housing NZ.

The corporation owns about 70,000 houses, totalling $17 billion in value. That must be a mouth-watering asset for a Finance Minister watching his projected Budget surplus diminish. Mr English needs to assure his critics the cash raised from the state's premium real estate will be used to entice more rental houses to be built where they are needed, regardless of who runs them.

The reform will mean tenants of private landlords will also qualify for the state's income-related rent subsidies, which should mean private rental accommodation is also subject to the standards required of Housing NZ and its not-for-profit competitors. Mr English compares the plan to the way subsidised residential care for the elderly is working. The Government owns no rest homes, it subsidises their residents and that has encouraged private investors to provide an ample supply of accommodation.

The housing reforms may be less controversial than they sound. State houses may have a sentimental place in the Labour Party's heritage but not many of the public look fondly on them. Even Labour raised hardly a murmur last year when legislation did away with lifetime tenancy.

All MPs have probably caught a whiff of the housing reform Mr English has been cooking. It is a pity the public was not given the plan before the election but it looks a change for the better.

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