Hon Chris Carter
Minister of Housing

Embargoed 11am, 22 February 2007 Media Statement

Government in $220m deal with WCC over housing

The Labour-Progressive government has agreed to provide the Wellington City Council with $220m over 10 to 15 years to significantly upgrade Wellington's aging social housing, Housing Minister Chris Carter said today.

In return, the council has agreed to reinvest rental income back in to its housing business, fund all other replacement and renewal costs for its housing, improve its tenancy management, and remain in social housing for 30 years at current service levels.

"This unprecedented deal will improve the quality of life of some 4000 people, allow the Wellington City Council to retain and improve its social housing stock, and alleviate the considerable fiscal impact of doing so on Wellington City ratepayers," Mr Carter said.

"It is further proof of the Labour-Progressive government's commitment to ensuring everyone from all walks of life have access to good quality, affordable housing."

Mr Carter said the Wellington City Council administered a critically important portfolio of 2354 social housing units, which were home to about 4000 people, and represented 11.5 percent of all rental housing in Wellington.

"The council's housing is unique in that it is focussed in the city and largely caters for single people and couples. This neatly complements the almost 9,000 state houses for larger families provided by Housing New Zealand around the Wellington region," Mr Carter said.

"The problem Wellington faces is that the council's housing is outdated and aging. Units are small, cold, noisy, poorly configured for modern living, and unable to accommodate basic amenities. These issues have been building for decades and significant investment is needed to address them.

"The government has agreed to lend a hand through its Families Young and Old work stream. However, it was important to us that Wellington City Council also agreed to remain a major social housing provider for up to 30 years, laying to rest an ongoing philosophical debate. I am delighted they have accepted this," Mr Carter said.

"This deal is a partnership and reflects the fact that provision of social housing is both a government and a community responsibility. It illustrates the strong relationship forged between the government, the Wellington City Council, and the wider local government sector."

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Questions and Answers

Is the Wellington City Council to receive a loan or a grant?
The offer is essentially a grant, with some conditions attached. No penalties will be charged provided the council abides by the terms and conditions that will be agreed to.
Will the Crown provide expertise to assist the Council in upgrading the housing portfolio?
Yes. Housing New Zealand Corporation officials are currently in the process of considering how best to free up expertise to assist the council.

When will refurbishment begin?
There will need to be detailed planning before any capital works can commence that could take up to a year. The $220 million will be available to draw down over a 10-20 year period, based on progress against the plan.

What are the next steps?
Now that the council has agreed to the offer, the Minister of Finance and the Minister of Housing will instruct officials to commence the detailed development of a Memorandum of Understanding for agreement by June 2007. The council must now consult with the public.

Will you be providing similar levels of assistance to other councils?
The government is committed to partnerships with communities and local authorities, and has been providing assistance for social housing through the Housing Innovation Fund. About $8.8m is allocated through the fund for local government in 2006/07.
Of the 220 new units, comprising 271 bedrooms provided through Housing Innovation Fund loans last financial year, 151 properties and 163 bedrooms, were local authority properties.
Wellington is a special case because of the strategic importance of its housing, the unique configuration of its properties, and the magnitude of the expenditure required.

Why not buy the stock outright, like you did in Auckland?
Buying and upgrading the stock would have cost three times the amount being provided to Wellington City Council, so this is the most fiscally responsible option. Community driven solutions for social housing, with Crown assistance where appropriate, are the way of the future and this is a good example of that.

ENDS

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