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Street: Major investment in affordable homes

Hon Maryan Street
Minister for Housing

22 May, 2008 Speech

Providing a major investment in affordable homes

Speech by Housing Minister Maryan Street at the relaunch of Community Housing Aotearoa Incorporated at the Museum Hotel, Wellington

It’s a pleasure to be here with you tonight at this event marking the rebranding of Community Housing Aotearoa Incorporated.

As you will know, it has been a big day for the Labour-led government, which unveiled its ninth Budget today. I thought I would begin by giving you a brief summary of the key funding initiatives involving Housing New Zealand.

Budget 2008 includes significant investment in a wide range of affordable housing measures, as part of a comprehensive plan of action designed to ensure New Zealanders’ housing needs and expectations can be met in the future.

It includes:
• A $38.7 million investment in the Hobsonville development which will ultimately see up to 500 new affordable homes and up to 500 state houses built
• A shared equity pilot scheme for up to 700 first home buyers over the next two years
• A large cash injection into the state house insulation programme to double the current pace and ensure all uninsulated homes are insulated within five years
• A major $220 million investment into Wellington City Council’s ageing social housing stock for an upgrade which will improve the quality of life for about 4000 people
• New investment to continue the Rural Housing and Papakainga programmes, which provide loans for people to modernise their homes and to others who are building, buying or relocating a house on multiple-owned Maori land.

As this audience is aware, affordable housing is an extremely hot topic at the moment and it is becoming increasingly difficult to achieve the Kiwi dream of owning your own home, even in the erratic housing market at present.

Home ownership rates have fallen from 74 per cent to 67 per cent between 1991 and 2006. If current trends continue, this rate will fall to about 62 per cent by 2016, a scenario unpalatable to me and a great many other New Zealanders.

There is no quick fix to our affordability problem. Nevertheless, research has established that there is a broad range of steps we can take collectively to tackle the issue. Some of these will have an immediate impact, and are already doing so. Others will take time to have an influence.

The new Housing funding in today’s Budget reflects a combination of short and
longer term steps in our plan to improve housing affordability.

A suite of other initiatives to address the affordable housing issue is underway or under investigation, with a number of decisions likely to be made later this year.

Building and Construction Minister Shane Jones is focused on increasing flexibility and reducing cost for affordable home builders. He is considering initiatives to reduce compliance costs for simple starter homes, and low-risk areas of building work that could be exempt from requiring a building consent.

Government agencies are reviewing public land holdings for potential new housing developments, investigating whether new land development mechanisms or agencies might be required to facilitiate housing development and how to expand the role of the not-for-profit sector in the provision of affordable housing.

Progress will, in part, depend on the successful development of more partnerships both within and outside of government. Housing is a social need and a social responsibility.

NGOs are in a better position to be more responsive to changing, localised need, which is why the development of the not-for profit sector is important as we move forward.

I would like to recognise the work CHAI does and what it has achieved since its inception three years ago.

It was great to read that the recent evaluation of CHAI found:
• there is a well-established network among member organisations
• strong leadership
• it was actively involved in advocacy work via submissions on legislation
• and that its governing council was providing direction

The evaluation has provided a good opportunity to review the memorandum of understanding with Housing New Zealand to ensure that the relationship between both parties reflects current circumstances and is of benefit to both organisations.

Work underway on a common definition of what constitutes the community housing sector will be most useful, as will developing a database of providers to ensure all parts of the sector are being represented.

Because it is Budget Day, I will take a few more minutes to speak about just two of the housing initiatives in the Budget.

The state house insulation fast-track will see 21,000 state houses insulated within five years. Almost 12 homes a day will be insulated, doubling the pace of Housing New Zealand’s existing Energy Efficiency Retrofit campaign which began in 2001.
There is mounting evidence linking poor housing conditions with negative health and social outcomes. Over half of people in state homes are under the age of 20, and 10 per cent are over the age of 60.
Rising fuel and energy costs are set to put further pressure on low income households to keep warm and it is important that the government set an example for other landlords to follow. Insulated homes use about 20 per cent less energy than uninsulated ones.
Doubling the pace of our retrofitting programme will save these families money as well as help to prevent them getting sick.
The Shared Equity pilot addresses a different housing need. It will be available to households in the five most expensive housing regions: Auckland, Wellington, Nelson, Christchurch and Queenstown. Households earning no more than $85,000, who are able to front up with a five per cent deposit will be eligible.

Housing New Zealand’s equity share in a home will vary according to the region, with the greatest equity shares available in the most expensive region. The maximum stake Housing New Zealand will take is 30 per cent, and the minimum stake is 5 per cent.

Shared Equity is a new model of homeownership and it is still unclear how much demand there will be for it.

It has generally been very well-received. However I have been left a little perplexed by the odd criticism of the price caps imposed on the houses people will be able to buy under the scheme.

These somewhat affluent critics seem to forget that a first home is typically a lower-priced home precisely because that’s all a household can afford. That’s how our parents started on the property ladder and house price rises mean it’s tougher for many now than it was in their day!

It would be irresponsible for the government to help households to purchase homes they would struggle, or in the long run be unable, to finance.

Responsible stewardship is of course important to this Labour-led government. Because we have been responsible managers of our economy, Finance Minister Michael Cullen was able to announce relief for workers today despite a global economic slowdown.

That relief will ease the pressure of rising fuel and food prices, The government will deliver a three-year programme of personal tax cuts to all workers starting on 1 October this year.

Budget 2008 delivers a three year programme of tax cuts costing $10.6 billion, and boosts to Working for Families Family Tax Credits to take account of inflation costing a further $1.1 billion over four years, both starting from 1 October.

The programme will see a couple on the current average household income of $72,000 (split two thirds/one third) with two children aged 11 and 8 better off by $2223 a year ($43 a week) from 1 October rising to $4397 a year ($85 a week) from 1 April 2011.

The tax cuts are designed to be as fair as possible to all workers, with the greatest impact on average take home pay being felt for workers on low incomes.

At full implementation, the programme will cut personal tax by roughly one quarter at the current level of the full-time minimum wage ($1130 per year), one sixth at the current level of the full-time average wage ($1670 per year) and one eighth at $80,000 a year ($2870 per year).

This is an important Budget which enhances public investment in education, health care, housing, social agencies and other important services as well as providing relief for workers. It invests in the government’s plan for a strong sustainable future for New Zealand and I am pleased to have been able to share just a few of the details with you tonight.

The relaunch of CHAI marks a further step in addressing housing need. I commend you on your past efforts and look forward to working with you in the future.


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