Whanganui state houses had been sold for prices like $64,000 at a time when the median house price was $150,000, Mr Dempsey said. At the same time, rents have increased. "They were static for a long time. In the last two years they have gone up from an average of $180 to $240. That's a big increase."
Labour Party members were approached for help, and knew of people living in substandard situations. "They have a roof over their heads, but barely. By your and my standards, those people are virtually homeless. They're not in adequate, secure accommodation."
Whanganui's ageing population was bound to make things worse. "If it continues like this there's going to be a real crisis of people looking for reasonable rental properties when they're retired."
Labour's housing spokesperson Phil Twyford said in February that Housing NZ appeared to be in disarray. There were deficiencies in its property maintenance and it wasn't building the required number of new houses.
Children were living in cold, damp and mouldy state houses. There was a high turnover in the Housing NZ board and in top management positions. That had to ring alarm bells, he said.
Housing NZ is expected to pay a dividend to Government. In the 2014-15 year, a spokesman said the dividend was $118 million.
The Government was aiming to run Housing NZ down and privatise its work, Mr Dempsey said. "We're not criticising staff in Housing NZ in Whanganui, but we do feel that the Government policy and drive to privatise has meant that the vulnerable in society are finding it difficult to get the help and support they need."