Campaign for Affordable Housing - Submission
9 August 2004
Building the Future: Towards a New Zealand
Campaign for Affordable Housing ……………………………………………………
Name of organisation: Campaign for Affordable Housing Position held: Co-ordinator Number of members: We are a coalition of community group members; Labour (Auckland Region), Alliance and Green Party activists; whose work is sponsored by the Council of Trade Unions Local Affiliates council through the NZCTU Organising Fund. Reason for submission • Why are you choosing to send a submission on this discussion document (Building the Future: Towards a New Zealand Housing Strategy)?
The discussion document provides groups such as ours with the opportunity to consider housing problems of low-income people in a more public and critical way. It gives “ordinary” people the chance to think about ideas for providing affordable housing that meets the needs of those in our community, and is of particular interest to those of us in South Auckland where we have identified inadequate, unaffordable and substandard housing to be a major cause of poverty, poor health and transience (which impacts negatively on the educational success of our young people.
We have held three meetings as part of our “popular planning” exercise to allow people to have a say. Our submission is supported by 38 community representatives at the last meeting of Nga Manga, a coalition of community groups, Government departments and local body representatives from South Auckland. We have also included personal submissions written by some participants though most of the input was oral. Our submission is informed by the submissions of the Council of Trade Unions and the Child Poverty Action Group (prepared by Alan Johnson). Historical material is from “Building the New Zealand Dream”, by Gael Ferguson, Historical Branch, Department of Internal Affairs, Dunmore Press, 1994.
Housing in New Zealand: where are we now? • What should New Zealand do to plan for future housing need?
We believe that universal access to healthy, safe and affordable housing is a fundamental requirement for achieving a just, peaceful and prosperous society. Security of tenureship is critical in achieving stability for our children and enhancing a sense of community.
In a society as wealthy as Aotearoa/New Zealand, there is no need for any citizen to be living in unhealthy, inadequate housing or to be paying housing costs that plunge them into poverty. A recent study (NZ Herald, July 24/25, p1) showed that more than one-third of Aucklanders in rental accommodation pay more than 40% of their income on housing. International benchmarks identify that households in the bottom 40% of income distribution that spend more than 25% of their income on housing are living beyond their means. This is the reality for thousands of South Auckland families and it is a matter of political choice – not necessity.
We believe the Government has a fundamental obligation to intervene in the housing market to ensure equity and social justice for all. Ferguson says that until 1990, NZ Governments showed a remarkable degree of consensus over the role of housing policy in ensuring the production of sufficient houses to prevent over-crowding, to rid the country of substandard housing, and to keep rents at an affordable level. State intervention was understood to be necessary, especially with regards the elderly and young families, because the market would not provide for their needs.
Housing and social and economic well-being • What areas of government policy and activity, other than housing policy, could be changed to improve housing outcomes? In what way?
The First Labour Government emphasised three policies to improve the condition of low-income households and address social inequities: Rent controls A guaranteed minimum income Provision of good quality State housing
Our attention has been drawn to the impact of landlord subsidies on the private rental housing market, particularly in South Auckland where the return on investment is obscene, given that we are talking about the poorest communities in NZ.
Participants at our meetings have noted that the incomes of low-paid workers and beneficiaries have fallen far behind increases in housing costs and that increasing casualisation of work impacts on families’ ability to meet rent or mortgage payments.
We call on the Government to: Make further improvements in the minimum wage Protect vulnerable workers Support collective bargaining and unionisation of all workers Commit to full employment for all those who seek work Ensure adequate living incomes for all people Support a Universal Child Benefit to assist families with children Implement other taxation and social assistance measures that increase the “take-home” pay of families on low incomes or benefits Support the provision of social housing through public and community sector initiatives
A proposed framework for the New Zealand Housing Strategy The six areas for action have been identified as: • improving housing assistance and affordability • responding to housing markets under stress • innovative home ownership programmes • developing the private rental sector • improving housing quality • building capacity and capability across the housing sector.
• Are the six areas the right ones for a New Zealand Housing Strategy? If not, what should they be?
Participants in our popular planning exercise
identified improvements in the provision of quality
affordable housing as their first priority. We are
interested in the
development of housing that meets the specific needs of groups and families within our community, especially those of different ethnic groups such as Pacific people and others who want to live more communally and therefore require “cluster” housing that recreates a village environment. Such groups of people should be able to participate in the decisions about their housing.
• Which of these do you see as the most important?
We note that the $1 billion being spent annually on the Accommodation Supplement could be used more productively in funding public housing – building rental housing and supporting low-income people and families into home ownership.
We also think the State could do more to build capacity by investing in a “socialized” construction process (as the Railways department did in the 1920s when they built pre-fabricated houses in their own factory using their own timber and built on railways land). We have to look more innovatively at ways to build low-cost housing that is energy efficient and of decent quality. AREA ONE: Improving housing assistance and affordability • How do you think housing assistance and affordability could be improved for low-income and disadvantaged people?
We note that the Strategy document records the Housing NZ as 12,349 households at the end of December 2003 (p21). The Manukau Courier reported recently on a single mother with two sick children who is living with another couple as she awaits a State house. She and the children share a single bedroom. She has been assessed by Housing NZ as having “moderate” needs, which puts her somewhere between 750 and 1500 on the South Auckland list.
Another woman told us she is paying $255 a week for a one-bedroomed flat on the back of her landlord’s place. Her son suffers from Asberger’s Syndrome and has severe behavioural difficulties. He sleeps in the bedroom while she sleeps in the living room. They have waited three years for a State house.
Buying or leasing 3,300 State houses across the entire country over the next four years is simply not enough. There needs to be considerable investment in building new State houses. Leasing houses does nothing to alleviate the shortage of quality housing.
In the past, Governments in NZ have introduced rent controls. In 1916, these formed part of the wartime emergency regulations and met with little resistance because the charging of excessive rents seemed unpatriotic at the time. A war on poverty requires the same measures today. It should be unacceptable that middle-class households are buying up “renters” in the poorest suburbs (often with the best of intentions as security for their retirement income, as one of our participants pointed out), but then letting them out at exorbitant rents.
We note that Esteban Espinoza, a Salvation Army social worker in Manukau City, was quoted in the NZ Herald as saying that some tenants have been left with $130-a-week deficit after paying their rent and living expenses. This is because three-bedroomed houses in Manukau City are rented out at an average of $380 a week. Just to make ends meet, low-income families in this situation are forced to take out loans with interest rates as high as 20% from the many money-lending shops in our area.
We support increasing the number of State rentals to ensure good quality, secure housing, but we see this as being for all people as a universal entitlement, rather than targeting those with extreme needs, as is the case now. The goal of home ownership is not necessarily in the best interests of low-income people, especially given the insecurity of work and high entry cost in Auckland. If we take into account the total interest payments on a mortgage over 20-30 years, plus rates and maintenance costs, the expected capital gain may not compensate (ie renting can be more economic, certainly if rents are income-related as they are with State housing under the present Government’s policy).
We agree with the planned review of the Accommodation Supplement to alleviate housing affordability problems, but we seriously question the effectiveness of measures such as this in improving affordability. The Accommodation Supplement fuels artificially high rents, and provides a disincentive for those renting who are saving for a home deposit as it is asset-tested with abatement at very low levels of savings. Recent moves in the Budget to increase income thresholds for low-income families are a welcome improvement as abatement also provides a powerful disincentive for improving household income at what have been very low income levels.
We also support the expansion of alternative social housing providers, including hapu/iwi, community sector and other not-for-profit groups.
AREA TWO: Responding to housing markets under stress • What kind of activities or policies will have a positive effect in housing markets under stress?
We object to the terminology of this section. It is low-income people who are under stress because they are paying too much for housing, not the “housing market” that is under stress. Participants at our meetings say we are facing a housing crisis in our area. This is directly related to population and economic growth, which has widened the gap between Auckland housing costs and those of the rest of NZ. Meanwhile household incomes are not significantly different.
The CPAG submission includes comparisons between weekly rents and hourly wages paid to low-skilled workers that show how rents have become less affordable over the past three years in Auckland despite high levels of house and apartment building. This is because new housing is not being built for poorer households. Whereas a low-paid worker (a typical NDU or Service Workers Union member) works 20 hours a week to pay the median rent in Christchurch or Wellington, the same worker must work 27 hours a week to pay Auckland rents. (CPAG uses data from the Massey University Real Estate Unit and Statistics NZ.)
We support the range of initiatives described in this section of the Housing Strategy, including planned green fields developments with a mix of housing types – State housing/private ownership; medium-density as well as conventional low-density housing. Local authorities are to be applauded for putting a priority on recreational areas, open spaces, town centres and employment growth as part of new housing developments.
Local authorities can be encouraged to provide social housing with low-interest loans from central Government on the proviso that rents charged by the local authority will be income-related, in line with State house rents.
We are concerned about the lack of emergency housing in Auckland, and call on the Government to better support places like Monte Cecilia that provide such a valuable service to women and their children, who are too often the victims of family violence.
While we applaud the $200 million vaccination programme to attack meningococcal disease, starting in South Auckland, we would like to see that sort of money being spent on addressing the causes of that disease and other diseases associated with poverty and over-crowded housing. This would be the “second leg of the double”. We note that the outbreak of meningococcal disease began here in South Auckland in 1991, the same year benefits were cut in the “Mother of all Budgets”.
We encourage the Government’s Healthy Housing programme, a joint initiative of Housing NZ and local DHBs, as a way of improving the quality of housing and housing options for larger, extended families. However we note that the Labour Government has yet to restore benefit levels to allow people to be able to afford suitable housing for them and their children.
AREA THREE: Innovative home ownership programmes • Should the government be assisting people to buy their own homes? If so, how?
The Housing Strategy notes a 44% decrease in the 25-44 year age group of home buyers over the past decade. It attributes this to the following factors: Casualisation (affecting income security) Changing family arrangements Student debt Increased competition between first home buyers and property investors at the low end of the housing market House prices rising faster than household incomes Lack of assistance for entry into home ownership
All these factors are related to Government policies of the past 20 years, and it is through Government policies that these issues can be addressed, eg… Legislated protection for vulnerable workers Full employment strategies Wiping student debt Capital gains taxes for rental properties State assistance with deposits Low-interest loans for first home buyers
The Government’s home ownership scheme for low-income families was hugely disappointing. We do not know anyone who was successful in getting help through this. Indeed the Strategy document says the Kiwibank pilot scheme, which aimed at people who are unable to access mortgage finance from existing banks, attracted 9000 enquiries. But these hopeful would-be buyers soon found that normal lending criteria applied (eg a sound credit rating, not too much existing debt) and only 1300 of them actually put in an application. Of these only 279 were approved and according to a media statement by Social Development Minister Steve Maharey (February 29 2004, quoted by CPAG), only 129 actually settled. The limit of $100,000 (since extended to $150,000) is woefully inadequate in Auckland where the lowest house prices are in excess of $170,000, putting them out of reach of most low-income people at current interest rates.
Areas in which the scheme can be improved include: Shared equity (so young people’s parents, church or other community organisations can help guarantee the loan) Sweat equity (recognising the labour input of home owners, especially in renovating existing houses) Low-interest loans Relaxed lending criteria Suspensory loans covering a portion of the cost, say 10%, with write-off if people stay in the house 5 years Low-start mortgages with reduced payments for the first 3 years or so
Further research needs to focus on the impact of Government policy shifts from the late 1970s under a free-market ideology that led to a progressive reduction in public resources being directed into the provision of State housing and lending. Ferguson says that the new housing policies that emerged focused much more constrained resources on the extreme end of housing needs and ignored the plight of the majority of low-income workers and beneficiaries who are stuck in the private rental market, unable to save a deposit for their own home, unable to make ends meet, yet with no realistic possibility of a State house.
AREA FOUR: Developing the private rental sector • What are the strengths and weaknesses of New Zealand’s private rental sector? How could it be improved?
We do not support further development of the private rental market. As the CPAG submission points out, “someone can only become a tenant if someone becomes a landlord” (p3). The neo-liberal policies of the 1980s and 1990s redistributed wealth so that the increasingly affluent middle-class began to buy up the houses of the poorest New Zealanders as investments. As one of our participants pointed out, this was fuelled by fear that there would be no social security in their old age.
More than two-thirds of property owners own only one rental property (p43 of the Housing Strategy) and these investors are able to offset losses against taxes, as well as benefiting from untaxed capital gains. At the same time, $380 a week from a property that cost $170,000 in the poorer areas of South Auckland is a substantial return on investment. We think such rents are exploitive of the poor and should be capped.
We support the review of the Residential Tenancies Act 1986, especially extending the powers of the Tenancy tribunal to award exemplary damages against landlords who let substandard housing. We also agree that landlords, rather than tenants, should pay letting fees to agents. The cost of moving into new rental accommodation is absolutely prohibitive for low-income people with requirements for letting fees, bonds and rent paid up-front.
We do not think the Housing Strategy pays sufficient attention to discrimination, which is a major barrier to housing for people with brown skin, with young children, with disabilities, for single mothers, and others who do not fit the stereotype of the perfect tenant. The increasing reliance on the private rental sector is a huge concern in this respect as such prejudice is very difficult to prove. These issues can be addressed in the public sector by employing staff from the groups that are commonly discriminated against, and through training, but it is very difficult to regulate the private sector to ensure equitable treatment.
AREA FIVE: Improving housing quality • How effective is the current system for promoting and regulating housing quality? How could it be improved?
One reason why the State got involved in housing in the mid-19th Century was to improve that standard of housing as a response to public health issues (smallpox and later influenza outbreaks, for example). There is clearly an important role for the State in addressing poor quality housing. Of concern is the study released last year showing that NZ houses are among the coldest in the world. Poor insulation and high electricity costs contribute to this. In Auckland, dampness and mould are major contributors to our high asthma rate and may also contribute to cot death. Improving energy efficiency of houses not only improves health outcomes, but also contributes in a major way to affordability, especially for those on fixed incomes, such as the elderly and beneficiaries, or low-income workers.
Those who are most affected by substandard housing are people on low incomes who own their own houses but are so heavily mortgaged they cannot afford maintenance. The case of the Otahuhu family featured on the Holmes Show illustrates the lack of protection and assistance available when things go wrong. In this example, raw sewerage was flowing under the house because of alterations that affected the plumbing. This was not picked up in a LIM report. The local authority would not take responsibility and it was left up to charity to fix the problem.
Other examples include those caught with “leaky buildings” or those with faulty Dux Quest plumbing installed about 15 years ago and now breaking down. There is a need for both financial and practical assistance, as well as protection, for people who cannot afford to fix such catastrophic problems with their houses. AREA SIX: Building capacity and capability across the housing sector • What are the main issues relating to the capacity and capability of the housing sector? How could they be solved?
State house production has historically played an important role in the domestic economy, stimulating consumption and providing employment. We think the State should be more actively involved in “socialized” housing construction (employing its own builders and related specialists). Such a State housing operation would train its own apprentices.
We note that Housing NZ is requiring maintenance contractors to come up with a plan for taking on local residents as apprentices, which is a good start. The Modern Apprenticeship Scheme is also a positive initiative of the present Government. However, despite the increase in the number of building apprentices, the fact that it has only reached just over 800 shows the impact of the abandonment of apprenticeships under the National government in 1991 and the difficult task of addressing skills shortages through Modern Apprenticeships and other training schemes in recent years.
The breakdown of the apprenticeship scheme and failures in training during the 1990s no doubt contributed to the problems with weather-tightness experienced during Auckland’s building boom. There is a lack of expertise being passed down from generation to generation.
We think participation by tenants in decision-making and management of their housing is really important, and we support expansion of the role of housing advocates.
We have been told that the majority of Tenancy Tribunal cases are taken by landlords against tenants, and we want to see the law strengthened in favour of tenants recognising the power imbalance.
Meeting diverse housing needs • Have you any comment on the particular housing needs of each group identified in these sections?
Needs of children: We support initiatives to keep children safe in and around their homes, such as fencing of State houses (which we note is happening in our area), and guards on stove tops, etc.
Needs of Maori and Pacific peoples: We support the provision of more appropriate housing for larger and extended families, for more communal forms of housing, and for building on collectively-owned land in partnership with iwi, churches and community organisations.
Needs of low-income women who head households: We support more access to State housing as affordability is a huge issue, especially where children are involved. There is also a need for more emergency housing for women and their children who are escaping from family violence.
Needs of the elderly: There needs to be more support to enable older people to stay in their own home. It is important to address the issue of rates increases (largely due to the removal of business differentials). Those on fixed incomes have limited ability to adjust to rates shocks. Local authorities should be encouraged to maintain and extend pensioner housing by central Government offering low-interest loans. We do not support public/private partnerships in the provision of housing for the elderly though we think there is a place for partnerships of Government with community-based, not-for-profit organisations specializing in housing provision.
Needs of disabled people: It is important to provide suitable, accessible rental housing close to support services as transportation is often an issue. Other issues • Please comment on any relevant issues not covered in the submission form (or the discussion document) that you feel are important.
Attached is a submission from one of the participants in our “public planning” process. Although we tried to encourage people to record their concerns in writing, most were reluctant to do so. We plan to survey union members about housing costs through those unions covering low-paid workers, such as the NDU. We have also talked about interviewing people to give them the chance to tell their stories orally.
We have used this submission process as a way of building a coalition of community groups, political party activists and unions with a common interest in addressing issues relating to poverty and low incomes. Out of this, housing was identified as the major local issue.
We plan to continue with our campaign to convince Government of the need to allocate sufficient resources to ensure that all New Zealanders are adequately housed. The $1 billion currently subsidizing private landlords through the Accommodation Supplement would be a good start!
Thank you for considering the issues in this discussion document and the proposals for a New Zealand Housing Strategy. We look forward to receiving your response. 3 June 2004
TO THE GOVERNMENT OF THE DAY
As a member of the Manurewa community, I support this campaign for affordable housing.
I was raised in a state house as a child – a well structured, affordable place. This is no longer an available option for a lot of working people, including new migrants and refugees.
Housing is an essential requirement for all people.
It should be within people’s budgets.
It should be a healthy place to live.
The Government should be a stakeholder in the process, supplying good, cheap and adequate housing to the poor.
Housing is linked to our children’s health, to our children’s education, to our “quality” of life.
Sweet words, fine plans, spin doctoring are not going to be swallowed any longer.
We as a group want practical, just and worthwhile changes.
5 Swallow Dr Manurewa AUCKLAND