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Q+A: Housing and Urban Development Minister Phil Twyford

Q+A: Housing and Urban Development Minister Phil Twyford interviewed by Jessica Mutch

Housing and Urban Development Minister Phil Twyford is confident the government can build more than 27 houses on average per day.

‘I know expectations are high, but we make no apologies for being ambitious about fixing this problem. We have a social and economic disaster in this housing crisis. It needs an ambitious response.’

When questioned by Q+A’s Jessica Mutch on doubts expressed by the Reserve Bank about Labour’s plans, Minister Twyford said, ‘The Reserve Bank commentary was made on the basis of some Treasury advice that I don’t believe was based on all of the information to hand.’

JESSICA So that Treasury advice was wrong, you think?

PHIL They made certain assumptions without looking at all aspects of our policy. For example, we know that workforce constraints are a big issue.

Minister Phil Twyford also told Q+A he would like to build double the number of state houses promised in opposition.

‘So we said while we were in opposition, that we wanted to deliver a net increase of at least a thousand a year, and we said we wanted to be more ambitious than that. I’ve asked officials to look at how we can double that and build 2000 extra state houses a year, and I’m looking forward to their advice coming back to me on the options on that.’

Minister Twyford also reiterated a commitment to ‘stop the mass sell-off of state housing’ but said, ‘you’d be crazy not to sell the odd one here and there to maintain and upgrade the portfolio.’

Q + A
Episode 37
Phil Twyford
Interviewed by JESSICA MUTCH

JESSICA Joining me now is Phil Twyford, Housing and Urban Development Minister. Thank you for being here.

PHIL Morning, Jess.

JESSICA You are set to build 100,000 houses over the next 10 years. On average, that works out to be 27 per day. How is that doable?

PHIL Jess, I think everyone knows that we inherited a mess. But I’m really confident that we’re up for the job. In our first hundred days, we are taking the first steps towards setting up our KiwiBuild programme, our Housing Commission to lead the development of big urban development projects. We’re banning foreign buyers. We’re about to pass legislation that will make it illegal for landlords to rent out cold, damp homes. We’ve really hit the ground running, and I know expectations are high, but we make no apologies for being ambitious about fixing this problem. We have a social and economic disaster in this housing crisis. It needs an ambitious response.

JESSICA So you can build 27 houses per day on average?

PHIL I think we’ll build more than that, Jess. I think we’re—

JESSICA So, more than 100,000 over the next 10 years?

PHIL We’re going to build 100,000 affordable homes for young Kiwi families to buy; we’re going to ramp up the building of state houses instead of selling them off, as the former National government was doing; and we’re going to do that in the context of large urban development projects with all kinds of different housing types, including open market housing.

JESSICA So, this is what I want to ask you about, because the price of a house you say is affordable $600,000 for a house; $500,000 for an apartment or a townhouse how are you going to get developers involved in this when if you look online, for example, we look at an example in Three Kings where a three-bedroom townhouse is $1.3 million? Why would they be interested in working with the government?

PHIL The problem that we’ve got is a massive market failure at the bottom end of the market, and developers are choosing not to build affordable homes that young families can afford. They’re building at the top end because they’re in the business to make a dollar. We’re going to put the government in the market and choose to build affordable homes at scale, large volumes of them, and on-sell them at cost to first-home buyers. We know we can do it, because some people who are choosing — some companies, some non-profit organisations choosing to build these houses already. The difference is that under Labour’s KiwiBuild policy, we’re going to do it at scale.

JESSICA What about with the developers, though? Are you going to be subsidising them to try and entice them to build these houses for you at a much cheaper rate?

PHIL No, we’re not going to be subsidising them. In fact, we’re about to go out to market and talk to the developers about exactly how the KiwiBuild offer is going to work with them. And what we’re proposing to do is to say to developers, ‘Look, if you’re building a development with 400 townhouses or terraces, you can make a share of those KiwiBuild affordable houses, and we’ll buy them off the plan.’

JESSICA That’s only a portion of those new developments. How are you going to build these $500,000 and $600,000 homes?

PHIL We’re confident that developers will build those homes if we’re offering them the kind of scale and volume that they need. And the critical thing here is that uncertain access to finance means that a lot of these developments are falling over or are on hold at the moment. We will take some of the risk out of it, speed up those developments and actually guarantee a supply of affordable homes.

JESSICA But how are you going to do that? Because let’s say you go to a developer; at the moment, 10% on average. If you say, ‘Look, we want 50% to be affordable homes,’ that brings down the value of the development.

PHIL Yes, but we take some of the risk out of it and speed the project up. That’s good for the developer’s bottom line. We’re also going to be doing this at scale, so when we’re tendering KiwiBuild homes, 10,000 a year, that means some developers and some construction companies can sharpen their pencil and do deals, for instance, on the build costs and building supplies that we’ve simply never seen before in this country.

JESSICA You have your doubters on this, including the Reserve Bank. It says that it’s going to be more likely 5000 houses rather than the 10,000 because private activity will decrease. What do you say to that?

PHIL There are the doubters, and there are the knockers.

JESSICA But this is the Reserve Bank.

PHIL The Reserve Bank commentary was made on the basis of some Treasury advice that I don’t believe was based on all of the information to hand.

JESSICA So that Treasury advice was wrong, you think?

PHIL They made certain assumptions without looking at all aspects of our policy. For example, we know that workforce constraints are a big issue.

JESSICA Sorry, I just want to make sure so you’re saying that the Treasury advice was incorrect?

PHIL Yes, I am.

JESSICA That seems like a very bold move for a new minister.

PHIL We’ve looked at the advice. It was based on incomplete information. I’ve had the Treasury officials in my office. We’ve talked through the elements of the policy, and I’m confident we can move ahead and be on the same page. Their advice was based on the fact that there are constraints. Of course there are. The former government didn’t invest in the workforce. We’re going to. We’re going to throw open the doors of the polytechs; we’re going to massively increase apprenticeships in the construction trades; we’re going to grow the local workforce.

JESSICA You’re cutting immigration, though.

PHIL We’re going to bring in skilled tradespeople from overseas just as the past government did in Canterbury after the earthquakes. We’re going to work with companies that can use off-site manufacturing, building houses in factories that don’t need such a big workforce. We are going to address these constraints. But, look, I make no apologies for being ambitious. This is a crisis; it requires an ambitious response.

JESSICA Alright. Who’s going to get these homes? Will they be means tested? How will it work?

PHIL They won’t be means tested. We think that we’re going to build affordable houses. We’ll ballot them in the first place, because—

JESSICA Does that seem fair, though?

PHIL Well, we want these homes to be available to first-home buyers. We’re going to build thousands of these homes, Jess, but we have to ballot them in the first place. That is the fairest way to do it, and we don’t want to set up a heavy, bureaucratic, means-testing regime to do it.

JESSICA But don’t you want to target those people that actually need it? Isn’t that the point?

PHIL There are lots of people who need it across different income brackets.

JESSICA But don’t you want to make sure that the people in need, of the greatest need, get the first wave, if you like?

PHIL We are going to be doing things that ease the housing crisis for people right across the board. So we’re going to make life better for renters; we’re going to build more state housing; we’re going to massively increase the supply. But, Jess, I’ll say this — it’s not the first KiwiBuild house that’s the most important; it’s the last KiwiBuild house. Because when we build that last one, that will mean that we’ve fixed the crisis, and a whole generation of young Kiwis will have a crack at the Kiwi dream of affordable housing.

JESSICA Have you thought about targeting your police, your teachers, etc, especially in Auckland, where it’s so hard to get houses?

PHIL Yeah, we have this ridiculous situation now where, because the house prices in Auckland are so expensive, the very people that we need to run the city and keep the economy ticking over can't afford to live in the city. But the only really sustainable way to fix that problem is to the tackle the demand and the supply factors that have given Auckland some of the most expensive housing in the world, and that is taxing speculators and massively increasing the supply of housing.

JESSICA So why not give those first houses to police, to teachers to make it easier?

PHIL I think it would be virtually impossible to do that in a way that was fair and efficient. We need to just— You know what? The answer to this problem is to build more houses.

JESSICA And to give it to the people who need it the most.

PHIL Yeah, but we’re not in the business of setting up some heavy bureaucratic system to allocate them on the basis of need. Honestly, Jess, I don't know how you would do that in a way that was logical and fair and efficient.

JESSICA State houses – how many will you build, new houses will you build on top of the KiwiBuild homes?

PHIL So we said while we were in opposition, that we wanted to deliver a net increase of at least a thousand a year, and we said we wanted to be more ambitious than that. I’ve asked officials to look at how we can double that and build 2000 extra state houses a year, and I’m looking forward to their advice coming back to me on the options on that.

JESSICA Because they’re desperately needed, aren’t they? We saw figures that were on the news on our show last night saying that it’s 27% increase of those on the waiting list compared to last year.

PHIL One of the really disturbing things that’s come out in the last couple of weeks is not only the fact that we have a shortfall of 71,000 homes in New Zealand. That’s information the former government did not release in the lead-up to the election. But what’s also disturbing is that when I look on the data on homelessness and emergency housing, it seems to be that there has been a huge suppressed, unmet need for housing — overcrowding. And now as we’ve had this big public debate about it, more services have been provided; a bit more housing’s been provided. There’s more and more demand coming out of the woodwork, and that’s extremely concerning.

JESSICA You said there’s going to be a blanket ban on selling state houses. Is that smart, though, given that you may have million-dollar homes that could provide housing for three or four families in other areas? And Housing New Zealand themselves say that there are four-bedroom homes, that that’s what they need, and there are too many three-bedroom homes at the moment.

PHIL Our commitment is to stop the mass sell-off of state housing—

JESSICA ‘Mass’ — what do you mean by that?

PHIL Well, at the moment—

JESSICA So you will be selling some.

PHIL The National government was, in the last term, negotiating to sell 2500 state houses in Christchurch, and our commitment is to stop that.

JESSICA So how many will you sell?

PHIL Well, I think you might sell the odd one here and there to maintain the portfolio.

JESSICA How many, though?

PHIL I can’t put a number on that, Jess.

JESSICA But it’s not a blanket ban, which is what you were saying.

PHIL No, no, it’s never been a blanket ban. We said we’ll stop the sell-off of state housing, the mass divestment of state housing.

JESSICA But you will sell a few. So it’s mainly selling off, not stopping the sell-off.

PHIL No, you’d be crazy not to sell the odd one here and there to maintain and upgrade the portfolio. National’s policy was the wholesale divestment of thousands of houses to private investors and the private sector. That’s not our policy. We are going to build thousands of extra state houses. Jess, if—

JESSICA I just want to clarify something, though.

PHIL Sure.

JESSICA When you say you’re going to sell the odd state house, how many?

PHIL I can’t put a number on that, but you’ll be silly—

JESSICA Can you give us a ballpark figure?

PHIL No, I can’t.

JESSICA But less than the 2000 that National was—

PHIL We won’t be selling them off in batches of hundreds and thousands, which is what the former government was doing. Look, if the former government had built a couple of thousand extra state houses every year it was in office, we would be 18,000 state houses ahead instead of the 5000 behind that we are now. We simply would not have a problem with homelessness if they’d done that.

JESSICA Let’s have a chat about where these houses are going to be built. Going out is part of your plan, to areas, for example, like Pukekohe, which grows a lot; there’s very rich soil there. Last week on the programme, Whena Owen did a story where she spoke to growers who are really concerned that you’re going to allow building on some of their rich soil. I want to play you a clip and then get your reaction, so let’s have a listen to that now.

PHIL Sure.

MAN 1 All of that there was all crop and good crops three years ago. It’s all residential.

MAN 2 It’s very saddening. So what we should be doing is building all over our inferior soils and keeping our better ones.

MAN 3 Nick Smith, he passed it all off as a Special Housing Area, and now it’s been built on; it’s all been fast-tracked. I just think it’s, yeah, it’s criminal, and it’s a shame.

MAN 1 Food security should be at the foremost of everybody's minds.

WHENA In New Zealand.

MAN 1 In New Zealand.

MAN 3 I’d like to speak to the Minister of Housing, Phil Twyford, and come and show him what’s going on here, and I’d like to see him face-to-face and ask him, you know — is he going to keep taking these valuable soils? Or is he going to see it our way and put the brakes on it?

JESSICA So what’s your answer to that question, to that grower?

PHIL I share that grower’s concern, and I don't want to see special areas —whether it's the growing soils of Pukekohe, whether it’s the Waitakere Ranges, sensitive coastal land — I don’t want to see that swallowed up by housing. I campaigned in opposition against the former government’s crazy plans to build housing on urban parks.

JESSICA So how are you going to stop it?

PHIL Well, already, Auckland Council's Unitary Plan actually protects, I think, almost all of the top growing soils out in Pukekohe. It’s not our intention to change that. In fact, Jess, I want to see a planning system that allows our city to make room for growth but protects areas of special value for future generations.

JESSICA But that’s their concern, you see, because if you put a little area like this around and build houses right up to that, you’ve got irrigation issues; you’ve got spraying issues. How are you going to protect areas like that?

PHIL That’s right. That’s absolutely right, and that’s the job of Auckland Council’s Unitary Plan. The encroachment that we see in Whena Owen’s story largely happened as result of old zoning decisions and Nick Smith’s Special Housing Areas that pushed through housing developments without good planning being done.

JESSICA Just finally, will you go out and have a chat to those growers sometime the next few months?

PHIL I’d be very happy to, because I share their concerns.

JESSICA All right, thank you very much for your time this morning — really appreciate it.

PHIL Thank you.

Transcript provided by Able. www.able.co.nz

Please find the full transcript attached and the link to the interview here.

Q+A, 9-10am Sundays on TVNZ 1 and one hour later on TVNZ 1 + 1. Repeated Sunday evening at 11:35pm. Streamed live at www.tvnz.co.nz

Thanks to the support from NZ On Air.

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