Hive News Monday: English eyes extra 30,000 homes on Housing NZ land as Homelessness Inquiry reports back

Bill English. Copyright Lynn Grieveson / Hive News

As suggested by Housing NZ CEO Andrew McKenzie (and reported in our September 23 Hive News ), Bill English has confirmed the Government will announce plans before the election to ramp up the building of medium-density housing on Housing NZ land in Auckland for on-sale to private buyers.

English told Audrey Young the Government could build up to 30,000 new houses on Housing New Zealand land for private buyers, and has even suggested the funding for this plan could be a priority over tax cuts.

Speaking on the eve of the release of a report from an inquiry by Labour, Green and Maori Party MPs into homelessness, English said the Government was on the verge of significant announcements about intervening in the private housing market in Auckland by building tens of thousands of new houses for on-sale to private buyers.

"The Government will be a provider for the next 10 years of significant numbers of medium-density, medium-priced housing into the Auckland market," English told Young in an interview.

"Over the next six months, you'll also see a growing understanding of the size of the Government building programme and that will have an effect on the market," he said, pointing out the Auckland Unitary Plan created room for up to 69,000 houses on Housing NZ land that currently has 30,000 houses.

"And we are going to do it," he said.

The building programme would renew existing Housing NZ state homes, "but it will generate an extra 30,000 houses."

English's comments are in tune with comments made by McKenzie that around 30,000 new homes could be built on Housing NZ land in Auckland.

McKenzie told the Master Builders' Constructive industry forum in Christchurch on September 22 Housing New Zealand land in Auckland could be used to add 30,000 homes to the housing supply as the Unitary Plan allowed more intensification.

"We've also been asked to look at availability and supply. We own a huge amount of land that tends to be under-utilised, so what can we get out of intensification? The Minister has already talked about the fact that there's now capacity for effectively another 30,000 homes on the land that we own in Auckland alone," he said then.

"So there is a role that we have around improving and increasing the level of supply, and obviously affordability is a really important element to that," he said, pointing out household incomes in Auckland of around NZ$82,000 per year meant there were currently few homes that were affordable.

"If you do the maths and work out how much you can put into housing you get a very small number you can afford, even with today's interest rates to service on a mortgage," he said.

"We've said we're going to be part of the thinking and the action that the Government takes around affordable housing."

English's comments are also in tune with the Government's September 22 announcement that Housing NZ's Hobsonville Land Company would redevelop land in Northcote.

There are 300 Housing NZ homes already there, but English and Smith said the NZ$750 million project would turn those 300 homes into 1,200 homes, including 400 Housing NZ homes and a further 600-800 homes to be sold as a mix of affordable and market housing. The first homes would be completed in June 2017 and the entire redevelopment was expected to be completed by 2021.

Housing building and debt reduction instead of tax cuts?

Elsewhere, English told RNZ after visiting Washington last week for IMF meetings that he wanted to stick to the Government's plan of reducing debt and that economies globally could not rely anymore on central banks to generate growth.

"It confirms the importance of New Zealand sticking to the plan to get debt down," English told RNZ.

"Even if I'm a bit more optimistic about the risks in the global economy, there are still some quite significant risks there and if they eventuated we'd want to be in the position in the next 3, 5 or 7 years to be able to borrow more again if that was what was required, so we have to get debt down while the going is good," he said.

Asked if the Government was therefore still committed to plans for tax cuts before next year's election, he said: "We haven't made decisions about that."

"Before Christmas there'll be a new round of forecasts that will tell us whether there's much room in the Government Budget for tax cuts," he said.

"We do know that there are considerable expenses coming up, some related to growth like helping fund more housing and public transport in Auckland, and some related to our intractable social problems like more money needed for more prison beds. So those are the things we have to do and we'll see what other room there is."

Economy 'doesn't need stimulation'

Meanwhile, English told Fairfax's Sam Sachdeva after the IMF meetings, where Governments were advised to be monetary policy mates and use fiscal policy to help increasingly impotent central banks, that New Zealand was in a unique situation because of its strong growth rate.

"We are to some extent headed down that road anyway, not so much to stimulate the economy because it doesn't really need stimulation, but to fund the infrastructure we need for growth," he was quoted as saying.

"We're moving away from the old-fashioned money-shovelling model, where if you've got surpluses you just shovel it out there, or if you want to stimulate the economy, you just shovel the money out - we've got a strong focus on the effectiveness of the investment."

The Reserve Bank is still forecasting another 35 basis points of OCR cuts over the next year or so.

Inquiry recommends homelessness fixes

The Labour, Green and Maori Parties this morning published their final report from their Inquiry into Homelessness, detailing an increase in homelessness among the working poor and proposing a range of Government initiatives.

"Homelessness is no longer dominated by the stereotypical rough sleeper with mental health issues and is now more often a working family with young children," Phil Twyford, Marama Davidson and Marama Fox said in the report.

"Maori and Pasifika communities have disproportionately suffered, along with new migrants who also face substantially higher rates of homelessness," they said.

Over 500 people made submissions to the inquiry, including that it was costing NZ$250 million a year or NZ$65,000 per person just to house the 4,200 who did not have shelter.

Twyford, Fox and Davidson proposed rolling out Housing First as the primary response to severe homelessness. Housing First is a different approach to the usual transitional approach from shelters through assisted accommodation to independent housing. Instead, homeless people are put directly into their own apartments and homes.

The Inquiry said the Government had provided NZ$3 million towards Housing First and NZ$8.8 million per year for emergency housing, "but this should be expanded to a full adoption that actually funds people into homes."

"The Canadian trials suggest this could cost up to NZ$16,000 per person, which would mean a seven fold increase to house the entire homeless population, but with costs of around NZ$65,000 this could mean annual savings to the Government of NZ$270 million per year," they said.

The Inquiry also proposed increasing the state housing stock, building more affordable houses, reducing house building costs, tackling housing speculation and reviewing the Accommodation Supplement.

The inquiry cited research showing an extra 15,000 to 25,900 state houses were required and recommended adopting a legislative target for Housing NZ Corp of building a net extra 1,000 houses per year. It also proposed permanently removing the Housing NZ dividend and allowing community housing providers to receive income related rent subsidies for existing tenants.

MSD eyes new emergency housing

Meanwhile, Paula Bennett published a list on Sunday of the various Government measures to address homelessness, including NZ$2.5 million in grants for Housing Support Products that assist people moving out of state houses into private rentals.

Also, more quietly, MSD published an invitation to partner for emergency housing providers on GETS.

"Through an Invitation to Partner (ITP) process the Ministry of Social Development (MSD) is seeking to establish a panel of emergency housing providers to deliver additional emergency housing accommodation and accompanying service," MSD said.

"The additional emergency housing accommodation may be either properties that the emergency housing provider supplies or Crown-owned properties that are made available to the emergency housing provider," it said.

The ITP included a fast-track option closing on December 31.

"MSD anticipate contract opportunities becoming available in the short term, so it would be advantageous to register early as MSD intends to start making contract opportunities available as soon as there are emergency housing providers on the panel," it said.

In other economic and financial news...

The US Bureau of Labor Statistics reported 156,000 new jobs were created in September, which was slightly below market expectations for a 176,000 increase. Average hourly earnings were up 2.6% from a year ago, which was in line with expectations. Markets still see a 64% chance of a second Federal Reserve rate hike since the GFC in December. The New Zealand dollar has fallen to 71.8 USc from 73.5 USc in the last three weeks on fresh talk of higher US interest rates.

Coming up...

ANZ publishes its monthly inflation gauge for September at 1 pm today.

John Key is scheduled to hold his weekly post-cabinet news conference at 4 pm today.

Tweets of the day:

Seth McFarlane:

In the year two-thousand sixteen, we have a VP candidate who denies evolution. Just in case you thought Trump was hogging all the stupid.

Have a great week ahead and look out below for my weekend column on the migration debate.

cheers

Bernard

10 October 2016