The previous Government did not have much faith in the ability of Housing NZ to build and manage the state's rental housing. Former Prime Minister Sir Bill English was particularly scathing about its ability when, as Finance Minister, he tried to entice private sector charities and community groups to provide "social housing" in competition with the corporation for public funds. He offered to sell some of the state's portfolio to the potential competitors and provide some finance to get them started.
The Labour Party has come to power with a different philosophy. It has provided Housing NZ with an additional $2.9 billion to build new houses and has taken away the upfront funding for the few private organisations that were interested in the previous scheme. Housing Minister Phil Twyford says he would like community groups to build about a third of the 6400 new houses the Government wants to see by June 2022 but he has replaced the starting assistance with the promise of an operating subsidy once a project was built.
This is for rental housing, not to be confused with the KiwiBuild scheme that aims to build low-cost houses for sale to first home seekers who can afford them. Rental housing will remain the urgent need for the "homeless", a category which officially includes people in overcrowded, temporary or substandard accommodation as well as those living in the streets. Twyford made much of the "40,000 homeless" before the election and he will need all the additional rental properties he can muster to make a dent in that figure before the next election.
But if he really wants private charities to provide a third of the new units he is going the wrong way about it, according to the chief executive of the Monte Cecilia Housing Trust's chief executive, Bernie Smith, and the Salvation Army's senior policy analyst, Alan Johnson, yesterday. The promised "operating supplement" might be generous, Johnson acknowledged, but without some funding upfront from the Government, they would need to raise a 35 per cent deposit to secure project loans from a bank.
One project manager for a non-profit agency told our reporter it had several developments in jeopardy because they could not get bank finance. Social hosing is obviously high risk. It is providing accommodation for people who may have severe problems and great difficulty finding a landlord who will let to them. Charities that cater to some of their other needs were not keen to become landlords after English floated his scheme. But they sound keener now.
Monte Cecilia's chief executive is concerned the Labour Government is more interested in the quantity of new rental housing than its quality. "Some of us are really concerned about the density they are creating for Housing NZ properties," he said. "They might be nice while they are new but five years down the track I think they are just going to be ghettos."
Private owners of social housing would be more likely to keep the properties in good condition. The Government should be helping them get started.