Willis, echoing language used by her predecessor Bill English, said emergency housing represented a fiscal and moral failure.
“[It] represented not only a fiscal failure because the Crown was paying by the night for substandard accommodation … but also a moral failure because we knew that among those households were families with children whose children were being raised in very vulnerable situations,“ Willis said.
Willis said that investments in the 2024 Budget as well as changes to criteria for receiving emergency housing support made early last year had resulted in more people shifting out of emergency housing than expected.
Willis in particular pointed to the “Priority One fast track”, which means families with dependent children in emergency housing for longer than 12 weeks move to the top of the social housing wait list and will get more permanent social housing accommodation sooner.
In the 2024 Budget, the changes were expected to save $350 million over four years, but updated figures included in the 2025 Budget have lifted those savings by another $1b, putting the total savings of the policy at about $1.35b, Willis said.
“It means in this Budget we have $1b that we wouldn’t have otherwise had that is available to be invested in health services, in education services – in some cases in services that will directly benefit those families,” Willis said.
The changes have not been entirely popular: Labour’s housing spokesman Kieran McAnulty said tightening some eligibility criteria for emergency housing could not be claimed as a win if people pushed out of emergency housing ended up back in substandard accommodation.
To “stem the flow of people needing housing, it has changed the rules to make it harder to get into emergency housing”, McAnulty said last year.
Willis said that of the households who were leaving emergency housing, 29% were leaving to go into social housing, 26% were going into transitional housing, and 27% were going into a government-supported private rental or some other arrangement.
The focus of criticisms of the Government’s efforts had focused on the remaining 18% of people who have left emergency housing for whom MSD has very little data.
MSD says these people had not provided an address for where they were going — and because they were not going into government-supported housing they were not required to.
Some of these people may have moved in with family or friends — but others might be living on the street or in cars.
Prior to last year the Government spent about $340m a year on emergency housing support. Savings of the scale Willis is talking about suggest Treasury is convinced the number of people in emergency housing will be very low for some time.
Although this particular initiative sits outside the Social Investment Agency, the idea of investing small amounts of money in the short term to realise fiscal and social savings later on is part of the social investment approach championed by Willis.
“We will have announcements in this Budget that are about specifically the work the Social Investment Agency will be progressing – but we also need to take a social investment lens to a lot of the areas of activity that the Government is engaged in.
“Social investment is about rather than servicing misery and feeling we’re doing a good job because we’re throwing money at a set of problems, can we be confident that we are making investments that are genuinely changing people’s lives for the better and improving the trajectory and the outcomes that they have,” Willis said, adding that this approach had been applied in the health and education portfolios.
Willis said the Budget would include “a couple of initiatives” that involve spending money up front in order to “realise savings down the line”.
One of the challenges for Treasury, the politically neutral arbiter of all things Budget, is costing these policies and making sure the savings politicians think they will get actually transpire. It is not enough for politicians to believe these investments will realise savings – they have to convince Treasury too.
Willis said “in a limited range of circumstances”, Treasury was convinced the savings would eventuate and therefore allowed the Government to book them.
“There is a very high bar,” Willis said.
“You need to have some really strong evidence based on historic performance or case studies that demonstrate Treasury can have a high degree of confidence that those savings will result.”
No more rule-in/rule-out
After being caught out last week not ruling out changes to KiwiSaver subsidies in the Budget, Willis decided she will no longer be playing the “rule-in, rule-out game”.
Asked whether the Government will be making any changes to the student loan scheme, which currently sees borrowers who stay in the country after study enjoy interest-free loans, Willis said she would not play the rule-in/rule-out game with further Budget secrets.
A regulatory focus
Willis also confirmed the Budget will include “non-fiscal” measures. In other words, it won’t just be about spending.
Budget Day will bring the announcement of regulatory changes and new regulations.
“We will be introducing legislation which we think will be positive for New Zealand’s growth trajectory that relates to non-fiscal measures,” Willis said.
She would not be drawn on what this might look like, but gave an example of something the Government had already done.
“To give you an example of non-fiscal measures, our fast-track legislation I think, is one of the most concrete reforms we are making that will genuinely support economic activity over the short and medium term.
“It will allow projects to proceed that otherwise would have been caught up in court – projects that in some cases the immediate impact is literally hundreds of people employed in construction,” Willis said.
Treasury tends to be quite conservative when it comes to incorporating the growth impacts of pro-growth policies into its forecasts. Willis said this had not changed.
“Some of the initiatives we think will give us upside growth potential isn’t currently reflected in the forecasts,” she said.
However, Willis confirmed “there is at least one initiative” that has the “Treasury so convinced by the impact it will have that they are able to factor that into their growth forecasts”.
Asked for detail on what this might be, Willis replied with the stock answer finance ministers give to probing questions in Budget month.
“Well, you’ll see”.
Thomas Coughlan is the NZ Herald political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in the Press Gallery since 2018.
