The Government’s tightening up of social housing yesterday was hard real politics at its most basic.
There are very few National or ACT voters in Kāinga Ora housing.
Reforms unveiled yesterday by Housing Minister Chris Bishop are consistent with National’s private enterprise philosophy because they have an emphasis on shifting social housing tenants to the private sector.
There would seem to be little political downside for the Government in this.
The chorus of complaints that came from Labour and the Greens showed where the Kāinga Ora residents’ votes most probably go.
At the same time, the cuts yesterday move towards levelling the playing field between public and private housing.
From April 1 next year, state house tenants will now pay 30% of their income in rent, against what the research group Property Knowledge found last December was an average for private sector tenants of 40%.
The change is expected to generate $387.5 million in operating savings over the forecast period, which, Housing Minister Chris Bishop says, will be reinvested in higher maximum weekly Accommodation Supplement rates.
Those rates will now increase by between $10 and $30 per week.
“This change is about narrowing the gap between social housing and private renting,” said Bishop.
It is clear that the Government will increasingly rely on the supplement and thus require tenants to use private sector accommodation as its way of dealing with social housing for those for whom affordability is the main issue.
“We’re going to refocus social housing on those who need it most,” Bishop said yesterday.
“The needs assessment will be redesigned so it better identifies people facing severe and persistent barriers to housing.
“That includes people dealing with issues like mental health, addiction, family violence, discrimination or a lack of suitable housing supply.
“Affordability still matters, but where affordability is the main issue, the right answer is usually a subsidy like the accommodation supplement, not a social house.
“Social housing is one of the most expensive and intensive forms of support the Government provides. It should be focused on those with the greatest need.”
Unsurprisingly, the Opposition parties came out firmly against the move.
Labour’s housing spokesperson, Kieran McAnulty, said the changes were nothing more than a plan to remove support from struggling New Zealanders to save money.
“Luxon’s Government has built on their despicable pattern of finding ‘savings’ in their budget from the empty pockets of the poorest people in New Zealand,” said the Green Party Housing spokesperson, Tamatha Paul.
But ACT housing spokesperson Cameron Luxton said a household in social housing had, on average, $105 a week more left over after housing costs than a comparable family renting privately.
“Budget 2026 begins to close the gap,” he said.
“By moving the minimum tenant rent contribution to 30% of income, we are levelling the playing field.
“Crucially, the $387.5 million saved is being used for higher Accommodation Supplement rates.
“That means we are shifting support to low-income private renters who haven’t had the benefit of a state-owned house.”
The state social housing agency, Kāinga Ora, is an easy target.
In recent years, it has been an increasing fiscal problem for the Government.
The 2017 -23 Labour government poured billions of dollars into Kāinga Ora, with debt on its balance sheet rising from $2.3 billion in 2017/18 to $16.5 billion in 2023/24.
Operating deficits grew from a surplus of $76 million in 2017/18 to a deficit of $568 million in 2023/24.
Kāinga Ora’s debt was forecast to grow to $24.8 billion by 2026/27.
Staff numbers grew from around 2000 in 2020 to around 3477 by the end of 2023.
“In December 2023, the Government commissioned an independent review, led by Sir Bill English, into Kāinga Ora.
The report made two broad findings: that Kāinga Ora was underperforming and not financially viable without significant savings as well as funding and financing changes, and secondly, that the wider social housing system was not delivering the results New Zealand needed.
The Kāinga Ora board then conducted its own review of the organisation, and last December unveiled what it called a “reset” which revealed more damning details on what had been going on.
The board found that the complex and changing scope of its obligations led to operational inefficiencies, complex governance and decision-making, and increased overheads.
Consequently, there was a significant increase in debt, funding and overhead costs required to deliver.
Kāinga Ora’s cost to build was higher than the market
There were significant increases in operating and overhead expenditure.
At the centre of the Reset Plan was a directive to refocus Kāinga Ora on its core function as a social housing landlord.
That emphasis will now be reinforced as it focuses on those with a more desperate housing need.
And the Government, which has already made concessions to housing landlords with tax changes, can offer its private sector landlord supporters the prospect of more state-subsidised tenants.
