Sunday 26th June, 2011

Q+A interview with Phil Heatley.

Points of interest:
- Historic state house reforms will see around 4500 people will be moved off the state house waiting-list on July 1 because their needs are not considered urgent
- state houses will only be “for those most in need”
- “there could be many, many people who end up moving out of state houses”
- From July 1 all new state house tenants will have their tenancies reviewed every 3 years, extending that to all tenants if National wins the election
- Accepts reviewable tenancies will create perverse incentive for people to reject pay rises in order to stay in their home
- Govt will consider using tools such as guarantees to private landlords, paying shifting expenses and bonds to move people from state houses into market rentals
- between 4000 and 5000 current state house tenants, who are currently paying “full rent”, will have their tenancies reviewed
- Govt will look to increase the involvement of community groups into providing social housing
- Govt won’t hand as much as 20% of state housing stock over to community groups as recommended by Advisory Group
- Cash, land and surplus houses will be handed to community groups to encourage them to house people who can’t afford market rent, but are not in urgent need
Tenancy reviews for elderly and disabled will be “desktop reviews” only
- Admits most state house tenants under new system will not be able to move into private rental sector
- Of 6000 state houses in Christchurch , 182 are in red-zone; just under half of these are still tenanted
- 280 state houses in orange zone
- Calls for govt assistance in Chch have been less than feared; “we’ve been stunned how people have self-helped”

The interview has been transcribed below. The full length video interviews and panel discussions from this morning’s Q+A can be watched on tvnz.co.nz at, http://tvnz.co.nz/q-and-a-news

Q+A , 9-10am Sundays on TV ONE. Repeats at 9.10pm Sundays, 10.10am and 2.10pm Mondays on TVNZ 7

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PHIL HEATLEY interviewed by GUYON ESPINER

PAUL The government’s been deciding some fundamental questions about state housing – who’s eligible for a state house, how long for, and even who should provide that state house. And there are some big changes coming to the government’s $15 billion worth of social housing. As Q+A revealed last year, the state house for life is a thing of the past. To find out exactly what is intended, political editor Guyon Espiner is with Housing Minister Phil Heatley.
GUYON Thanks, Paul, and thank you, Minister, for joining us. We appreciate your time. From July, you are effectively going to take 4500 people off the waiting list – people who are categorised C and D – in other words, they have lower housing needs than the urgent A and B category. What circumstances are the people in that you are going to remove from the waiting list?

PHIL HEATLEY – Housing Minister
Well, there’ll still the categories, the waiting list – the A, B, C and D categories – so A and B are the most serious and severe housing need; C and D is much less need – they’re already in accommodation and are just simply wanting a state house. But what we’re going to do – keep the A, B, C and D, but only the As and Bs will be going into state houses, so essentially they’re on the state-housing waiting list. The Cs and Ds will be on a housing-needs register. They may very well in time qualify for a state house and move to an A or B category if their situation becomes severe, but they will move into other accommodation or remain where they are.

GUYON So what sort of income threshold are we talking about? Do you do that? Do you categorise by income?

PHIL Oh, correct.

GUYON I’m trying to get a sense of— for us to judge whether this is fair or not, I guess we need to know what are the circumstances that a person who is in a C or D category is actually in. What level of income? What are their circumstances generally?

PHIL Well, broadly speaking, the A, B, C and D categories won’t change at all. It’s just that the As and Bs are more serious housing need. So what we do is we look at income, we look at the number of children in the household, the size of household that they need, we look at unique aspects to the family – there might be disability, mental-health issues; perhaps they’re elderly, perhaps they’re on a benefit. So we look at income, yes, but there’s a wide range of matters that we consider.

GUYON Because it begs the question why they would then be lining up for a state house. I mean, surely they believe that they have a need to go into a state house, or else they wouldn’t be queuing up.

PHIL Well, this is the big change that every government over the generations – Labour, National, Labour, then National – what they’ve done is they’ve said anyone can apply for a state house. You can be on $200,000 a year and apply for a state house, so there’s people on the waiting list now who will never get a state house, cos their incomes are very high. They know it, they’ve been told it, but they’re allowed to apply. What we’re saying is, yes, you can still put your name down for a housing-needs register, but only those who are A and B categories – that’s serious housing need, significant housing need – will be able to get a state house. So what we’re doing is we’re saying that the state houses that the state provides are for those who have genuine need.

GUYON And what happens to those people who no longer qualify, who are ineligible for a Housing New Zealand house, when they go to your register of accommodation? Will they get income-related rents in those other houses?

PHIL Well, as I say, they’ve always been able to do it, and they’ll continue to be able to go on a housing register, but now we’re giving them certainty. They understand that it’s not a state house they’re going to get. What we’ll be doing is working with them through the Options and Advice service to source some housing if they haven’t already got it, and most of them have housing in the private sector where they’ve got their accommodation supplement.

GUYON Right, so they won’t have income-related rents, where you only have 25% of your income at a maximum.

PHIL Correct.

GUYON So they will be worse off, won’t they?

PHIL Well, at the moment, as I say, they’re not in a state house. They’re categorised as a C and D under the current system, which has been going for decades. They could never expect to get a state house. Now we’re saying to them, ‘Look, you’re not going to get a state house. We are happy to help you get housing in the private sector, and you could get the accommodation supplement with that. Or you could move into the community-housing sector,’ and this is why we’re putting so much capital into the community-housing sector.

GUYON And I want to talk about that a bit later, but are you talking about rolling this policy out for existing tenants if you win the election?

PHIL Correct. So at the moment what we’re saying is that from the 1st of July, any new tenant enrolling with Housing New Zealand will go on the waiting list. If they’ve got significant housing need, they’ll be categorised as an A or B tenant, and then they could possible— will get a state house. They qualify for a state house, and so they’ll move through the system. Those who are C and D applicants will go to the Options and Advice service, and they will be looked at being placed in the private sector, perhaps with a government subsidy or into the community-housing sector.

GUYON But if you roll this out for existing tenants, then you’re effectively talking about booting people out of state houses who you don’t think have a serious enough need.

PHIL Well, yes, and the second step. So the first step is for any new tenant from the 1st of July this year. After the election, if we’re re-elected, we’re going to be rolling this out for current tenants. And what we’ll be doing is essentially saying to all current tenants that you will go on to a reviewable tenancy, meaning that you’ll no longer have your state house for life, you’ll be reviewed after three years, except, I must say, we’re not doing it for current tenants who are elderly – so those who are on the pension – and we’re not doing it for current tenants who are disabled, because their circumstances won’t be changing.

GUYON So how many Cs and Ds, effectively, are there in the 70,000 state houses?

PHIL Oh, well, we think— Well, currently, there’s about 4000 to 5000 state-house tenants at the moment who pay a full rent, meaning they could actually be renting from the private landlord next door, and yet they’re in a state house, and we don’t think that’s right. So those particular people will be— obviously go into reviewable tenancy, and they’ll go through that process.

GUYON So I repeat the question – how many people are you looking at moving? I mean, how many people are there who you don’t think should be in a state house? Just 5000? There must be significantly more than that.

PHIL Well, the interesting thing is that those people paying a full rent – we don’t know anything about them. We don’t know if they’ve got investment properties. We don’t know if they’ve got significant assets, own businesses. Because they pay a full rent, we historically have not asked them those questions. What we’re going to need to do is from 1st July next year if we’re the government is go through and have a conversation with those tenants and say to them, ‘Actually, can you afford to rent privately? Because we need the state house for someone desperately needy on the waiting list.’ And, yes, there could be many, many people who end up moving out of the state houses. In fact, we expect that will be the case, and we’re going to have to work with them over a period of time.

GUYON So you’re going to have some messy situations here, though, aren’t you, because there is going to be some people who simply don’t want to move. Housing New Zealand spent the thick end of $850,000 trying to evict some people from Pomare. I mean, if some just don’t want to go, how are you going to move them on?

PHIL Well, the interesting thing is that the current law allows us to move people out of state houses. It’s just it’s always been government policy that you don’t do that. And, I guess, ultimately it’s for New Zealanders to judge. If you’ve got someone in a state house who’s earning $80,000 a year and someone on the waiting list who’s only earning $15,000 a year, they’ve got three kids, they’re trying to raise them by themselves, quite simply, as Housing Minister, I’m comfortable with saying to the person in the state house who’s relatively wealthy, ‘Move on. Go into the private sector. I need to house this poor person.’

GUYON You might or might not win that argument, but how do you actually do it?

PHIL Well, we do it by working with the people. Essentially, Housing New Zealand will need to front those people who are on high incomes in state houses, say to them, ‘Look, you’re on a reviewable tenancy. Tell us more about your situation. Can we help you into other home— housing situations? Renting in the private sector, purchasing, perhaps moving into community housing?’ In either case, we’re going to have to work with them. It’s not going to be rocking up at day one, and I’d imagine that we’ll be working with them, and Housing New Zealand say they’ll working with them over a period of six to 12 months.

GUYON Have you looked at this reviewable tenancy in Australia ?

PHIL Yes, we have, and there’s a number of reviewable-tenancy type sort of scenarios in Australia . Sometimes they put people on to fixed-term tenancy, like three or five or 10 years.

GUYON It hasn’t been very successful, has it, because I’ve read a review by Heriot-Watt University – a review was done on this – and they said that 1% of 3500 reviewable tenancies – in only 1% of cases, people moved on. And they’ve had this since 2006, so people aren’t moving on in Australia .

PHIL Yes, but the difference—

GUYON Is that your reading of their system?

PHIL Yes, except the difference in Australia in that in the first instance and over the decades, Australians have been much tougher in determining who moved into public housing in the first place. In New Zealand, as I say, anyone has been able to rock up and put their name on the waiting list, and therefore we’ve got hundreds and thousands of families who moved into a state house 20 years ago, their four kids have left home, they’re by themselves, rattling round in a four-bedroom house. And, quite frankly, when there’s desperate people on the waiting list, we can’t afford to have that.

GUYON Sure, but one of the points that was raised in the Australian experience is incentive. Now, if you’re in a state house and you know someone’s going to review your tenancy, there is a temptation, perhaps, to refuse opportunity or to not earn that extra income, because you may think, ‘Well, I’ll lose my house if I take this job or I earn more money.’

PHIL And that’s something we’ll have to deal with over time, but when we—

GUYON Well, how do you deal with that? Because you create the incentive to stay there, don’t you?

PHIL Yes, and that’s correct. And one of the things that Housing New Zealand and the Department of Building and Housing are now looking very closely at is actually what incentives can we put in place to encourage people to move out of their state house?

GUYON What are they?

PHIL Well, for example, you can get involved in shifting expenses. You can give assurances to the new private landlord that this tenant is of good character and that if it doesn’t work out over a period of, say, six months, that we’ll actually find another replacement tenant so that landlords have got continuity of tenancy. And we can look at issues around bonds. There’s a lot of tools we can use to encourage people to move on. But, ultimately, if someone shouldn’t be in a state house, they need to move on. Housing New Zealand will make that call because we have to house the people in state housing who are in the most desperate need.

GUYON I understand that. I wonder, though, what the social impacts of this will be. I mean, if you are in a community where people are moving on every three years, it’s not a long time. I mean, people like to lay down roots and form a community and form bonds in a community, don’t they? You’ve got children in school, perhaps. I just wonder what sort of social impact you’ll have if you’re churning people through. Are you worried about that?

PHIL Well, it is a concern to us because we know that families, you know, have got a kiddie at the local school, they go to the local doctor and, as you say, they’ve got roots in the community. But I think it’s important to note that because what we’re saying is that new tenants coming into state housing will be, you know— are those who are most in need – we wouldn’t imagine that their situation changes, you know, hugely over time. Certainly over a period of five or 10 years, we would expect them to improve their circumstances. In fact, that’s what we want for them. But the reality is that most won’t. And what we’re dealing with around the edges here are those current tenants who have been in state houses for sometimes 20, 30, and I can tell you there’s some who have been in there for 40 years, whose circumstances have changed immensely, and they really shouldn’t be in a state house.

GUYON So would you imagine a lot of people will get rollover tenancies and contracts – that they’ll be there for three years, then that’ll get rolled over?

PHIL There’ll be a lot like that and particularly the elderly. I mean, their circumstances won’t change, and we’re giving them those assurances that – the seriously disabled – we’re giving them assurances that, ‘Look, when we review you, it’ll just be a desktop review. We won’t be knocking on your door, because we understand you’re on the pension...’

GUYON So they will actually be reviewed?

PHIL Oh, yes, no, what we’re doing— what we’re saying is that everyone will go on a reviewable tenancy in three years, but the disabled and, of course, the elderly, who we know their circumstances are highly unlikely to have changed unless they’ve won Lotto or something, essentially what we’d be doing is just doing a desktop review, not troubling them, and then that will just roll over.

GUYON The other big aspect of this is strengthening this third-party sector, if you like, the non-governmental organisations – the Salvation Army, for example – and letting them take over a core amount of social housing. You originally talked to of perhaps 20% of the Housing New Zealand houses going into that charity sector, if you like. Is that still your thinking?

PHIL Look, I just have to correct you there. We had an independent review team that actually were from—

GUYON They recommended the 20% figure.

PHIL And they recommended the 20%. We don’t envisage that many surplus state houses being passed over. What we’re doing is looking at how we can boost the community-housing sector because, actually, they’re key here. What we’re saying is as a government is, ‘Look, we can’t house all these people alone.’ We want to focus on those most in need, so what we’re going to do is pass cash, some surplus state houses and also surplus Crown land to these housing organisations across New Zealand and say to them, ‘Look, use these assets to house a lot of these people on the housing continuum that probably aren’t desperate enough to have a state house, but can’t quite go into private rental or ownership.’ And they’re saying that they’re willing to do that, and they’re quite enthusiastic about it.

GUYON OK, just a minute or so to go. I do want to ask you about state housing in Christchurch . How many Housing New Zealand state houses were there in that red zone of 5100 who were going to get— basically have to abandon their land.
PHIL Yeah, well, people forget, of course. We’ve got 6000 state houses in Canterbury . There’s about 182 in the red zone. Just under half of those are still tenanted, and then we’ve got about 280 in the orange zone. So there’s a significant amount of state houses down there, and we’re obviously having to have a conversation with our tenants about them being relocated.

GUYON And can we handle that? Have we got housing problems as a result of this?

PHIL Well, to date, Housing New Zealand have managed their tenancies down there – as I say, there’s 6000 of them – very very well, and we envisage that because of the long time frame that we’ve got, that we’re signalling in order to move people out and into alternative housing, which, again, could be other state houses outside the red zone, they’ll do that work. We’re pretty confident that we’re able to do that.

GUYON And you had temporary housing, like even caravans, etc, in Christchurch .

PHIL Yes.

GUYON I mean, have they been necessary? Are people using those?

PHIL Well, we invested in leasing a bunch of campervans – about 350 at first – and we’re phasing those out. They’ll all disappear in August because they’re needed for the World Cup. Very little usage. We’ve been stunned, actually, about how people have self-helped, but what we knew at the time when the earthquakes had just happened is that we didn’t want people sleeping in the streets and in the bushes, in the parks, and we got those campervans. They were there as a contingency, haven’t been taken up, but we’re still pleased we made that choice.

GUYON All right, that’s about all we’ve got time for, but, Minister, thanks very much for joining us. We appreciate your time.

PHIL My pleasure.

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