Hon Amy Adams
Minister for Social Housing
Minister Responsible for Housing New Zealand

16 May 2017
Speech

Launch of Crown Building Project
Thank you Ashley Church and can I thank the Property Institute for hosting this event. I would also like to acknowledge:

• Adrienne Young-Cooper, Board Chair of Housing NZ

• Andrew McKenzie, Chief Executive of HNZ

• Chris Aiken, Chief Executive of HLC

I would like to thank you all for being here today and for your on-going interest in the important subject of housing in Auckland.

Today I want to talk to you about how the Government is going to make the most of the land we own to meet the social housing needs in Auckland.

You will all be aware that on behalf of the New Zealanders who need social housing, and on behalf of those who pay for it, this Government has made it a priority to make social housing work better.

The changes we are implementing across our reform programme are focused on making social housing more modern, more responsive, more efficient, and better suited to the needs of tenants.

It almost goes without saying why secure housing is so important, yet I do want to touch on it briefly because a desire to help people lead more productive and ultimately more independent lives is at the heart of the Government’s social investment approach.

We know, for example, that a child is more likely to have better outcomes in life if they are brought up in a safe and warm home, near their own school. In fact, every social indicator, including education, health and justice, improves when someone has a stable place to call home, whether they own it or whether someone else owns it.

We also know that for the most vulnerable New Zealanders, finding suitable housing is just one of the problems they grapple with. Their lives are sometimes chaotic, and their problems complex. Helping them lead safer and more stable lives is better for them, better for their families, better for their neighbours and, in fact, better for all of us.

Make no mistake that despite the unfortunate examples you might read about in the newspaper, New Zealanders are every day providing extensive housing support to less well-off households. This year, for example, there will be 310,000 households that will receive Government housing support one way or another.

That help comes at a significant cost – $2.3 billion this year alone. So we have a responsibility to ensure that when we’re spending so much taxpayers’ money, we’re doing it in the best way, for the best outcome.

It was this government that created the social housing portfolio because it’s this government that wants a senior Minister around the Cabinet table dedicated to social housing and helping the homeless.

Last year we committed $354 million for Emergency Housing to provide 2150 dedicated emergency and transitional housing places. This is the first time permanent funding has been committed by any government. Last week I announced that 870 of these places had been secured, with another 750 to be in place by winter.

When these are in place, up to 10,000 homeless New Zealanders a year will have somewhere safe to stay while longer-term housing is secured.

Also, for the first time, the internationally-proven Housing First initiative is being rolled out here in Auckland. It’s about working with up to 500 of the most chronically-homeless people to get them into housing and to sort out the issues that prevent them leading more independent lives.

We also set up emergency grants so families have a safe place to stay in times of urgent need until we can find them more suitable housing. We’ve helped 7000 families find a place through these grants. A motel isn’t ideal, but in cases or urgent need, it’s better than the street.

These are practical new solutions to a problem that has existed in New Zealand for many years.

So those examples are about people in the most desperate situations. Most people are not in that category but there is little doubt that Auckland, in particular, is facing challenges building sufficient new housing quickly enough.

I know that all of you in this room understand the issues.

The rise in house prices in this city has added pressure right through the housing spectrum from emergency houses to homeowners.

There are certainly signs that the market is cooling with REINZ data showing that the market has been flat to falling over the past nine or so months. However, prices are still high for both houses and rents and for those struggling to rent, or to buy their own home, I appreciate that it can be a very difficult situation.

Most of all, the pressure in the housing market affects those at the bottom.

They are the ones most likely to miss out in the private sector so they turn to social and emergency housing which, in New Zealand, is predominantly provided by the State.

So, over the past few years we’ve seen an increase in the number of people needing social and emergency housing and the number needing accommodation support.

The safety net is under pressure.

It’s no comfort to know that Auckland and New Zealand are not alone in this situation. Across the developed world, particularly in big cities, the same problems occur.

Paradoxically, some of the problem is created by New Zealand’s strong economy.

The first and biggest factor are historically low interest rates since the Global Financial Crisis, which have pushed up asset prices, including housing, right around the world.

Growing incomes, more jobs and a rising population on the back of our economic success are all factors in the Auckland housing market.

Because the reasons for Auckland’s situation are complex, some of the solutions, particularly to do with zoning and planning, are complex too. For example, In 2012 as the then Environment Minister, I started off the process for the streamlined delivery of the new Unitary Plan to get Auckland working together to unite the seven district plans inherited from the former councils to get on with the job of freeing up adequate land for residential development.

A process that was expected to otherwise take around a decade to complete was fast-tracked and Auckland’s new Unitary Plan now allows for a potential extra 400,000 homes to be built.

Getting sustained growth in housing across Auckland has been a priority right across Government. Finance Minister Steven Joyce has been focused on ensuring Auckland has the infrastructure it needs, as outlined in his pre-Budget speech a fortnight ago where he noted the $11 billion of new capital spending that would be set out in this Budget. Part of this is our $1 billion Housing Infrastructure Fund which will help councils with their housing related infrastructure needs.

Nick Smith has been working hard in the planning space to create Special Housing Areas, reform the RMA and set up the National Policy Standard on Urban Development and in the construction space in the removal of tariffs and improving the standards approvals for new building products amongst other things.

And ministers like Simon Bridges and Nikki Kaye have been ensuring communities have the right transport, communication and education infrastructure to support growth.

We’re seeing all these initiatives continue to underpin the increasing supply of housing, with building consents jumping from 3000 a year to 10,000, and prices now flattening off.

Ultimately, we all know that one of the best ways to address housing pressure is building more houses and building them faster.

Overwhelmingly new housing supply comes from the private sector as it is the private sector that are the owners of more than 95% of residential land in Auckland, and the Government’s wider reforms focus on supporting this.

My part of this is to focus on how the Government maximises the use of the less than five per cent of available residential land that we own to assist with social and market supply. And that’s what I am going to talk about today.

But I first want to say a little about housing quality too, particularly for social housing.

In addition to growing the number of social houses, we also need to renew our old and wrongly configured stock.
This is a long standing issue. Much of our housing stock is old and tired. The average age of a State house in Auckland is 40 years and about one-third of them were built before the 1960s.

The makeup of our tenants is changing, too. Around 75 per cent of those needing a social house today are older, and need a one or two bedroom home. But our stock is predominantly three and four bedroom houses.

So as we replace and renew, our focus is on creating a better mix of configurations that are also safer, warmer and lower maintenance homes, and of course more of them.

To do this, we need to use our land better to maximise opportunities and better meet the needs of tenants. Instead of a single houses on large sections, we’re building a variety of homes including stand-alone houses, duplexes, multi-level, terraced housing and apartments.

Housing New Zealand as our biggest residential land owner, currently has around 28,000 social houses in Auckland.

Looked at another way, the Government already owns almost one in every 15 houses in Auckland, and one in five rentals.

While those are substantial holdings, the need for further social housing in Auckland is clear, as is the need to help ensure there are affordable options for our tenants who are ready to transition back into independent housing.

That’s why today I am pleased to be announcing our plans to build 34,000 new houses on Crown land in Auckland over the next ten years.

Under the umbrella of our Crown Building Project, the Government will take down 8300 old, rundown houses in Auckland and replace them with 34,000 brand new purpose-built homes.

Within this we will deliver 13,500 new social houses and 20,600 affordable and market homes.

Some of the Crown Building Project work is already underway as part of our active housing programme in Auckland and will be familiar to you.

Housing New Zealand alone has over 50 housing developments going on in the city right now.

New houses are going up in places like:

· Northcote, where 300 existing homes will be redeveloped into about 1200

· In Hobsonville Point, where Hobsonville Land Company is building one house every day and about to clock up our 1000th home

· And in Tamaki, where 3000 new houses will be built to encourage regeneration of the area.

Our Crown Land Programme is expected to deliver 2700 new homes, and MSD’s Social Housing Reform Programmes will supply 580 newly built houses.

We are building new homes for emergency and transitional housing, too – such as the one the Prime Minister and I opened in Luke Street, Otahuhu recently.

In addition to all these programmes, I am announcing today that as part of the Crown Building Project, Housing New Zealand’s Auckland Housing Programme will build 24,000 new houses over the next ten years.

This takes us to 34,000 newly built houses on Crown land over the next decade.

This is a significant undertaking for Housing NZ, the Government, for taxpayers, and for our Social Housing reforms and has been two years in the planning, design and rezoning processes to ensure the land use is optimized. It has been carefully designed to be financially viable and create liveable communities. Ministers received the detailed Business Case for the project and signed it off in April this year.

This will be the biggest building programme that Housing New Zealand has undertaken since the 1950s and its impact for the future will be just as significant. It’s a redevelopment and construction programme so large, we could be building a new city three times the size of Taupo and still have houses left over.

Phase one of the Auckland Housing Programme, which covers the next four years, will cost $2.23 billion and will be funded through Housing NZ’s balance sheet and new borrowing of $1.1 billion that the Government has approved as part of the business case.

Phase two in the latter years will be funded through the market housing development part of the programme and rental returns.

Ministers have also agreed that Housing New Zealand will retain dividends and proceeds from state house transfers, to help fund the building programme.

It won’t surprise you that my focus is unashamedly on social housing needs and the 13,500 new social houses to be delivered under the Crown Building Project will future proof delivery of social housing in Auckland. However, as I said at the outset, for the social housing continuum to work well, there needs to be a functioning market of affordable private market options particularly in the rental area.

That’s why the Crown Building Project also includes delivery of 20,600 new affordable and market houses to help ensure pathways for tenants to move into independent housing.

Of course given that the Government owns less than 5% of residential land in Auckland it is inevitable that private developers will still be meeting the lion’s share of the private houses needs of Auckland and it’s important we remain conscious of that.

The Crown Building Project is about how we will make the most of the 5 per cent of residential land we’ve got to meet the social housing needs of Auckland.

The scale of this project means that we expect to see Housing New Zealand leading innovation across the residential development sector to create more affordable homes, as well as a wider range of homes suitable for future household needs.

The new houses will be warm and dry, safe and secure. Half of them will be two-bedroom homes, because we know that’s an area of real need. They will be able to be tailored for the elderly and those with disabilities.

These developments will integrate social housing and private housing, as best-practice urban design to create diverse and vibrant neighbourhoods.

And while today I’ve focused on our plans to build more social houses, it’s worth noting that we will also be working with Community Housing Providers across Auckland to secure more diversity of supply through MSD’s announced purchasing intentions.

To conclude, the Crown Building Project, and in particular Housing NZ’s Auckland Housing Programme, will make a significant contribution to lifting housing supply in Auckland with many thousands of new homes to be built.

It is the most ambitions, supply-driven initiative we’ve developed to date, and I’m positive about the impact it will have on the Auckland property market.

To give you another sense of the scale of it, it’s the equivalent of three and a half new houses on every street across Auckland.

These houses will be for our most vulnerable families, for first-home buyers, and for the wider market. As I said at the beginning, while it is those on the lowest incomes who are most affected by the current housing pressure, others are too. This programme will make a significant difference right across the Auckland market.

Our plan to build 34,000 homes in Auckland over the next ten years is properly costed, fully funded, and builders are out there with their nail guns even as I speak.

Thank you.

ends

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