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On The Nation: Housing Debate

Press Release – The Nation

A Salvation Army report says 2,000-2,500 new social houses are needed every year just to keep pace with demand. Neither National nor Labour will commit to that figure – Phil Twyford says Labour will build enough social houses to have a net increase …On The Nation: Housing Debate

A Salvation Army report says 2,000-2,500 new social houses are needed every year just to keep pace with demand. Neither National nor Labour will commit to that figure – Phil Twyford says Labour will build enough social houses to have a net increase of at least 1000 a year. Amy Adams says National plan to build 6,400 over three years.

Adams says demand has peaked for emergency stays in motels, despite the latest publicly released figures showing an increase.

Twyford says Labour can end homelessness – housing about 41,000 people – over two terms in Government.

Adams refuses to admit there’s a housing crisis, instead saying “There is absolutely housing pressure, but the numbers are heading in the right direction.”

Lisa Owen: Well, housing is one of the hottest election topics this year as house prices continue to rise, immigration increases demand and social housing supply struggles to keep up. This week the Salvation Army put out a report saying we need thousands more social houses every year. So who is listening to that advice? I’m joined now by National’s Amy Adams and Labour’s Phil Twyford. Good morning to you both.
Amy Adams: Morning.
We can start off by just getting a benchline here. Do you believe a safe, dry house is a human right, Mr Twyford?
Phil Twyford: Yes.
Twyford: Yes.
Ms Adams?
Adams: Everybody needs to have a safe, dry, warm place to live. That’s the basis for all of the other things we want them to have in life.
Okay. So in terms of social housing, how much social housing does the government need over the next 10 years to make sure that people have access to that right?
Adams: Well, interestingly enough, the number that the Salvation Army ended up with in their report of needing to build around 2000 more a year, we agree with. That’s the plan we’ve committed to. We have committed to building 6500 out to 2020. We do our projections over a three- to four-year window. There’s a new one coming out at the end of this year for the next period. So we are committed to and are building that figure of 2000 a year that they’ve indicated as what’s needed.
Well, the thing with that figure, that was the absolute bare minimum they said — 2000 to 2500 — and I think by your calculation, you’re building 1889 a year.
Adams: Well, we’re going to be building 6400 over the period out to 2020.
But you’re still be short. That’s the point. According to their calculations, you’re still short.
Adams: No. Well, I disagree with that. I think, actually, that our figures— We’ve done our own modelling. They’re very robust. We’ve gone through all of the projections. Some of the assumptions underlying the Salvation Army numbers, we wouldn’t necessarily agree with. But, look, broadly they’ve said, ‘You need around 2000 extra a year.’ We’re going to be building 2000 extra a year over the next three years. And as I said, our projections for the year—
They’re talking about 10 years.
Adams: That’s right. We don’t do projections over 10 years. We review them every year over a four-year window. The next lot will be coming out very soon.
Let’s find out what Mr Twyford is offering in terms of social housing. Per year, how many will Labour build?
Twyford: So we’ve said we’ll stop National’s state house sell-off and we will build enough to deliver a net increase of at least 1000 a year every year until demand is met, and we expect to be much more ambitious than that. But, Lisa, let’s talk about what’s happened over the last nine years cos under Amy’s government, there has been a net reduction in the number of state houses of 5000. When you factor in community-provided houses, that reduction is 3000. That’s why Amy’s spending $140,000 a day putting people up in motels right now.
Adams: Those numbers are just not true, Phil.
Twyford: They are. They’re your numbers, Amy. They come from your office.
Adams: There were 67,500 houses. There’s now 66,300. So, yep, there’s 1200 less and we can talk about why that is. But interestingly enough, Phil, over the same period we’re providing right now 2000 more places than when we took over from your government—
Twyford: Yeah, but you budgeted extra subsidies, Amy, but you don’t have enough houses to put people in. There are only 63,000 people living in subsidised houses. Because you’ve sold off so many houses, you can’t even use the 67,000 subsidies that you have budgeted. That’s why the Salvation Army says we’ve got the worst homelessness in living memory. That’s why Yale University says we have the worst rate of homelessness in the Western world.
Adams: Those numbers are quite wrong yet you quote them shamelessly. It’s incredible. The Yale report said quite clearly you can’t compare country to country because the way New Zealand measures its homeless numbers is quite different to anywhere else in the world.
Twyford: They ranked us number one for homelessness, Amy.
Adams: They said themselves if New Zealand measured its homelessness the same way Japan did, then we’d be one of the best in the world.
Okay. There’s a couple of things I want to raise here. You are saying that National’s cut state houses. They’re not doing enough. You’re saying 1000 houses net increase but you’re not promising enough either because the Salvation Army has clearly stated 2500 houses will only keep us at the same level of homelessness we have. So you’re not doing enough either. You’re not promising enough.
Twyford: We’ve said as a bare minimum and we expect to do more. But bear in mind, we are also going to build 100,000 affordable homes.
No, no. We’ll talk about affordable homes soon. We’re talking about social housing now. So how many more can you commit to?
Twyford: Well, I’m not going to make up numbers on the show this morning, Lisa, but we’ve said a minimum of 1000. We’ve said we’ll be more ambitious than that. We are committed to increasing the stock of state and community housing.
But you do have to have a policy on it and that involves projections. So what are you basing your 1000 houses on? What projections are you using to tell you that that’s enough?
Twyford: So we’ve looked at very similar projections to the Salvation Army’s. In fact, we’ve spoken extensively with the Salvation Army about this. And we’ve said that we’re going to commit to increasing the stock by a minimum of 1000 a year, and we expect to do a lot more than that. Amy’s overseen a massive reduction in the number of state houses.
Adams: But, Phil, the fact remains we’ve committed to double that, so we’re committed to and are in the process of building a net increase in the number of social houses over the next three years of 2000 a year, every year. That’s what the minimum the Salvation Army—
Twyford: Amy, you’ve had nine years, and now to put out a press release before the election saying you’re promising to build all these houses after you’ve spent the last nine years selling state houses off, the country deserves better than that.
Adams: That commitment was made in December last year. We put it out December every year. We’ll put out another one December of this year. And as I’ve said, what you’ve seen under us is better quality stock, better configured, newer, more money on maintenance, more money on upgrades. When we took over from the Labour government, we had run-down stock, we had stock that hadn’t had any money spent on it, that wasn’t warm, that wasn’t dry.
Twyford: Rubbish.
Adams: And we’ve spent $500 million a year upgrading the quality of that stock and making sure we have the right houses in the right place with far better tenant services than we ever had under Labour.
Twyford: You’ve been selling them off, and you’ve run down Housing New Zealand. It’s a glorified property management agency. You’ve stripped all the functions out of it.
Adams: Phil’s made that comment several times, so let’s talk about it.
So, he said you’re 500,000 houses short. Salvation Army says that you’ve dropped–
Adams: He’s absolutely wrong.
Twyford: No, they’re her numbers.
Just a minute, Mr Twyford. The Salvation Army says that you’ve dropped in stock by around 2000 houses since lowest levels – since 2005, they’re saying.
Adams: No. Our numbers are that we were about 1200 below when we took over government.
Twyford: In the middle of a housing crisis.
Adams: But what I will say to you is that when we’ve removed houses, it’s been for a number of reasons. We’ve taken houses down because there’s been earthquake damage. We take them down because they’re significantly meth contaminated.
But it’s not getting better, though, is it? Net growth is not getting better.
Adams: Well, it is.
And you’re putting people up in motels. You’re putting people up in motels.
Adams: Let’s talk about that. So, first of all, we have to look at the number of people who are on the social housing register. Interestingly enough, if you look at the number of individuals on the social housing register, it is the same level now almost to the single individual as it was in 2006. There were 15,900 individuals on the social housing register then.
Twyford: That’s not an accurate measure of need.
Adams: And there are 15,900 now.
Twyford: It’s almost impossible to get on the waiting list.
Adams: What we’ve seen now is very similar levels of need. We are increasing the stock 2000 net every year – double what Labour is promising. But at the same time, we’re also increasing the quality of the stock, we’re improving the tenancy services surrounding it and we’re making sure there’s a much more diverse range of providers.
Twyford: It’s got worse.
Adams: One thing the Salvation Army did say is that, actually, government doesn’t have to be the owner of all these houses. It works well if you have a range of providers, and that’s what the National government’s provided.
But the numbers still have to increase in net.
Adams: We’re promising double what Labour’s promising.
But by Salvation Army’s estimates and by our best guess, there’s around 40,000 people who are homeless in New Zealand. And the Salvation Army has said categorically, if you only build 2000 – 2500 houses, you are committing us to the same level of homelessness. Are you happy with that? Can you tolerate that level of homelessness?
Adams: Well, first of all, we don’t accept the 40,000 figure. The number that came out of the deprivation study–
But you don’t have a number, though.
Adams: Yes, we do. We have a number that came out.
Twyford: It’s the official government definition of homelessness. There are 41,000 people.
Adams: If I could finish my answer. The number that came out of the deprivation study showed that there are around 4200 who are classed as rough sleepers or homeless. And, as I say, that number we’re absolutely working on. What we have is, for the first time ever, a dedicated programme dealing with long-term homelessness.
I want to establish what level of homelessness you are happy to tolerate, because 2500 houses will just keep us where we are.
Adams: We don’t agree that it will just keep us where we are. Let me say this – I don’t accept any level of homelessness. We want to see every New Zealander in safe, secure housing. That’s why our programme isn’t just about building real estate; it’s about working with tenants on the underlying issues to make sure that they move out of that pattern.
Okay. Mr Twyford, those homeless numbers – how many are Labour prepared to tolerate?
Twyford: We’re committed to a New Zealand strategy to end homelessness. That will be the goal of our government.
Over what period of time are you going to do that?
Twyford: I would expect over two terms we could end homelessness in New Zealand. It’s not just about building emergency housing. You know, Amy promised–
Hang on just a minute. You accept there’s 40,000, don’t you?
Twyford: 41,000, actually, according to the government’s own official definition of homelessness.
And you would house all of them over two terms – six years. Is that the commitment you’re making?
Twyford: It’s not just about building emergency housing, Lisa. It’s about the higher housing spectrum.
I understand that.
Twyford: We need to build more state houses. We need the emergency housing.
This is really important, Mr Twyford.
Twyford: It’s very important.
You’ve just said 41,000, you accept, are homeless. You will tolerate zero homelessness. And two terms, you reckon, is the period of time it will take you to get rid of it.
Twyford: I think that’s a reasonable period of time to do it. But it’s about building more state houses, not selling them off. It’s about delivering the emergency housing. Amy promised 1400 extra emergency housing beds nine months ago. She’s delivered only about 300 of those extra beds. That’s why Te Puea Marae in South Auckland have opened their doors to the homeless for the second winter in a row.
Adams: With housing that we’ve provided, Mr Twyford, Te Puea Marae are part of our programme. We have provided them with units on the site, and we’ve provided them with funding to fund those services.
Twyford: Amy, it’s not something to be proud of that people are living in cars and garages and the marae are having to house the homeless. That’s not an achievement, Amy.
Adams: If you’re going to talk to me over the whole debate, it’s not going be very constructive. This is something that was a problem right through Labour’s term. I can point to any number of media reports through 2004 and 2005 where they were being turned away by the Salvation Army, by Monte Cecilia. These problems are not new.
But you’re in government now, so we want to talk about what you’re doing.
Adams: That’s right, and that’s why our plan is credible. Labour had three terms previously and did nothing about chronic homelessness and short-term housing.
Why do you think–?
Adams: We have created the first ever fully funded programme for short-term housing, transitional housing and dedicated funding for Housing First to deal with long-term chronic homelessness.
Twyford: But you haven’t built the houses.
We’re coming up to a break, and I just want to get this clear. Why are we buying more motels? You’ve said recently that you believe emergency stays in motels have peaked. But the first two quarters of this year, the budget was 20 million bucks spent on putting people into motels. What makes you say that this has peaked? Published numbers don’t support that.
Adams No, that’s right. But I see the numbers week by week, and I can tell you that from the peak in late June, they’ve come down by 25%, which is exactly what we expect will happen.
Over how many weeks?
Adams: Well, from the end of June till now. So they’ve come down from a peak of around 895 grants per week to around 650 grants. And that is because those transitional places that we were talking about – we now have 1600 of those available. And that is exactly what we’ve set out to do. We said the short-term motel stays were a short-term gap filler while these places came to market.
So, Mr Twyford, Ms Adams says the peak is over. Do you believe her?
Twyford: Let’s see the numbers. I’ll believe it when I see it. The Salvation Army say homelessness is worse than ever. There are families living in vans and garages and campgrounds. This is the legacy of nine years of Amy’s government.
When are we going to see those numbers? When will you make them available to us?
Adams: Well, the numbers come out every quarter. We’re obviously happy to release them.
Yeah, but you’re seeing them in advance.
Adams: Yeah, well, I see them week by week. I’m the minister; of course I keep close tabs on it.
So we’re not going to see them before the next election? Because the next report is not for release until–
Adams: Well, I’m very happy to make them available. But I can tell you right now that the last lot of numbers I saw had taken that peak down from about 895 per week to about 650, so they are petering off as we bring on more of those transitional places. A point I would make, Lisa, though, is that the only reason we have this is because we have funded–
No, just one thing. To be clear, you are prepared to release those–
Adams: Absolutely.
Sorry. You’re prepared to release those to us after the show.
Adams: Absolutely. Very happy to. So, what we’re providing, though, is something that has never been provided. It’s crocodile tears from Labour, who sat there in government for nine years, did nothing for chronic homeless, did nothing for emergency estates.
Okay, just before we go to the break–
Twyford: Rubbish. Amy, you’ve been in government for nine years. You’re blaming a government that was elected 18 years ago. You’re the minister.
Adams: And, Phil, we have been working on this for nine years. Now we’re making a difference.
Time out, people. Before we go to the break, I just want to ascertain – are we in a housing crisis yet?
Adams: Oh, there is absolutely housing pressure. I would say–
No, no, I’m asking if we’re in a crisis.
Twyford: ‘Is there a crisis?’
Adams: And I’m answering the question. There is absolutely evidence that all of the indicators are now tracking the right direction. We have the biggest building boom ever underway. We have 100,000 new houses and apartments.
Twyford: Nonsense.
So that’s a no from you? We’re not in a housing crisis.
Adams: There is absolutely housing pressure, but the numbers are heading in the right direction.
So we’re not in a housing crisis, according to you.
Adams: Well, look, ‘crisis’ can mean different things to different people. There are pressures we need to deal with, but the numbers are heading in the right direction.
Okay. Mr Twyford, just before we go to the break, are we in a housing crisis?
Twyford: The National Party cabinet are the only people in New Zealand who believe that there is not a housing crisis.
Okay. We’ll leave it there.

You’re back with The Nation in our housing debate. Let’s move on to the topic of affordable housing. Mr Twyford, Auckland houses cost about 10 times income. What should they be?
Twyford: Ideally, they should be three times. If we had a housing market that was working properly, your housing would be— the median price would be about three to four times the median household income. But it’s totally out of whack. The Economist magazine recently said, on three out of five indicators, New Zealand had the most expensive housing in the world relative to income.
So is it Labour’s goal to get it down to that – about four times?
Twyford: We want to stabilise the housing market and stop these ridiculous, year on year, capital gains that have made housing unaffordable for a whole generation of young Kiwis.
But in essence, you’re going to drop the value of houses, if you want them to be four times the price of the average income.
Twyford: Well, we’re going to build through KiwiBuild. We’re going to 100,000 affordable homes.
I want to come to KiwiBuild in a moment. I just want to talk to you about the price.
Twyford: That will make housing affordable for young Kiwi families. That’s our policy.
Well, do you need a capital gains tax to get that threshold down to where you would want it to be?
Twyford: Well, we are going to shift the goalposts by taxing speculators. So under our plan, if a speculator sells within five years—
Yeah, that’s the bright-line. I am asking you about capital gains – a bit of a sensitive issue for Labour.
Twyford: Not a sensitive issue at all.
So do you think we need a capital gains—?
Twyford: If a speculator sells a rental property within five years, they will pay income tax on the capital gain.
Yeah, we know about the bright-line. What we don’t know about is a capital gains tax. So do you think that you need a capital gains tax to get house prices down to the ratios that you think are right?
Twyford: Well, we think comprehensive tax reform is overdue in this country, not only to tilt the playing field away from real estate speculation
Last chance – capital gains tax?
Adams: Answer the question, Phil.
Twyford: In the first three years, we’re going to do a tax working group that will redesign the entire tax system.
I know that. Do you think we need it? All right, so he doesn’t want to answer that one.
Adams: So it’s another tax they won’t tell us about until after the election. This is becoming a consistent theme from Labour.
Okay. So, Ms Adams, Phil Twyford is saying about four times the average income would be about right for the ratios. Do you think it would be a good thing for house prices to go down?
Adams: Look, what we want to do – and where I do agree with Mr Twyford – is it is about getting the housing market working correctly. And that’s why our approach to affordability has had three prongs to it. First of all, when Government is involved in building and developing market houses, we’ve committed to at least 20% of those being affordable in terms of the HomeStart KiwiSaver contributions. The second part of our reforms, and the biggest part of it, is getting that market working correctly by ensuring that there is adequate land supply coming to market, by freeing up the development. Because we’re seeing, Lisa, in Christchurch, that when you do that, prices absolutely adjust, and in some cases, do fall, but certainly level. And of course, we’re funding the infrastructure, because you can’t build houses without the infrastructure to support them. Now, we’ve committed $1.6 billion to support that infrastructure. And the final part around affordability is making sure that we have a strong economy, because if Kiwis have jobs, if they have good incomes, and if the economy is working well, then the interest rates stay low.
So you’ve outlined sort of market measures. But the thing is, between 2011 and 2016, the median house price in Auckland went up 70%, according to Barfoot figures. Are you happy with that, or is that a failure? Because it was on your watch that that happened.
Adams: It’s no doubt that there was a very overheated part of the Auckland housing market. But what’s interesting is if you look at the—
So that’s a fail, is it?
Adams: What I’m saying is that there was no doubt that they, in my view, went up too fast, too quickly, and that they had to slow down, and we’ve been working very hard. Now, the reason they did that—
But your party was in charge of market, kind of, conditions that you’re laying out – you’ve just laid them out before.
Adams: Let’s look at that. So, actually, if you look at the—
And it went up 70%. So is that a fail?
Adams: Okay, so let’s look at two things with that. First of all, the nine years under the last Labour government, house prices
I’m asking you about your tenure. I’m interested in your tenure, because that’s what you can control.
Adams: The comparison, though, is 100% under the last Labour government to around 57% under us. What I’m saying to you is that the biggest indicator of what drives those prices up is land use regulation. Now, when we have wanted—
Hang on.
Adams: Well, he had a lot longer to answer this question. When we’ve wanted to reform the RMA to address land use regulation to bring on legislation for areas like Pt England and Three Kings, every time, Labour has opposed it. So they talk a good game about working the housing market, and they oppose every single reform that addresses it.
Mr Twyford, you’re blocking reforms to make housing more affordable,…
Twyford: How are we blocking them, Lisa? How are we blocking them?
…according to Ms Adams.
Adams: You’ve voted against every RMA reform. You’ve voted against Pt England. You’ve voted against Three Kings. You’ve opposed the Urban Development Strategy. You’ve done nothing to address land supply rules.
Twyford: So, Amy’s party has been blaming the RMA for the last 10 years for expensive housing. They’ve done nothing effective in nine years in government to reform the RMA. We’ve promised to abolish the urban growth boundary and reform the planning system so that our cities can grow. National has voted against it twice in the Parliament. They talk a good game, but actually they’ve done nothing to fix the planning system.
Adams: Even your mate Phil Goff doesn’t believe that will work, because, actually, if you don’t look at the infrastructure that underpins houses, you’re pulling numbers out of thin air, Phil.
Twyford: No. We’ve promised to reform infrastructure financing, Lisa.
Adams: You’re talking about houses you can’t build, you can’t pay for, you have no land for and you have no infrastructure for.
Twyford: We’ve promised to reform infrastructure financing with infrastructure bonds. They’ve done nothing about that in nine years.
Adams: That’s just more tax for Council and more debt for Council.
Okay, let’s move on to one of your core promises, one of your flagship policies, KiwiBuild. So 100,000 houses over a decade. Your finance guy has told us that he appreciates that it’s going to cost more than you originally costed.
Twyford: Because land prices and house prices are going up so fast.
$2 billion is what you put aside for it. So how much more is it going to cost you?
Twyford: We’ll work that out in government. We’ll see what the PREFU says.
Adams: Again, they have no idea. They have no idea. No land, no idea, no plan.
But it’s construction prices as well. It’s not just the land. 30% to 40% increase in construction prices.
Twyford: Yeah, it is.
So is it not irresponsible that you can’t give me a figure for how much more it’s going to cost?
Twyford: We’ve said we’ll put $2 billion up. $2 billion will be borrowed…
Yes, and Grant Robertson has acknowledged that that’s probably not going to be enough.
Twyford: …to kickstart a process of building 100,000 homes over 10 years.
So you don’t know how much more you’re going to need?
Twyford: Grant has said if we need to put more in, we will. But, look, under Amy’s government, house prices have doubled since she’s been in office. Doubled.
But you’re all about responsible budgeting, Labour has said. So I’m asking you why this figure isn’t in your budget and how much it is.
Twyford: We’ve said we’ll put $2 billion in. If we need more, Grant said he’ll find it.
Okay. All right.
Adams: So in other words, they have no idea. They don’t know where the land is, they don’t know what the cost is, they don’t know how they’re going to do it, and they’re not funding the infrastructure.
Twyford: At least, Amy, we’re building affordable houses.
Adams: Phil, you’re building nothing. You’re building nothing. You’re pulling numbers out of the air.
Twyford: You promised 4000 affordable houses in 10 years. We’re going to build 100,000 affordable houses. That’s the difference between our two parties.
Adams: Phil, the difference is ours is costed, we know the sites, we’ve funded the infrastructure, we have a plan. You’re making numbers up that you can’t substantiate.
Twyford: Yeah, but you’re not building any affordable houses.
Adams: We are building affordable houses.
Twyford: People need houses they can afford to live in.
Adams: And that’s why we’re fixing the market, we’re fixing land,…
Twyford: You’re fixing the market, are you?
Adams: …we’re funding the infrastructure, and we’re making sure people have good jobs and higher incomes and low interest rates.
Twyford: Look at the Special Housing Areas. How many affordable houses were built in Special Housing Areas? How many?
Adams: We have 150 Special Housing Areas, and they are building 59,000 houses.
Twyford: How many affordable houses, Amy?
Adams: Well, Phil, the point of that was to bring more land to market.
Twyford: I’ll tell you, Amy, because you don’t seem to know – there were no affordable houses built. You’re too embarrassed to count them and tell people.
Adams: Well, at the moment, Phil, I’m not able to get a word in edgewise, because you’re talking over the top of me. What I’m saying to you is that Special Housing Areas were part of our plan – again, that you opposed – to bring more land to market for development, because the fastest way—
Twyford: They didn’t result in any affordable houses.
Give her a right of reply.
Adams: …the fastest way to address affordability is to increase the amount of land coming to market. You only have to look at Christchurch. I know Phil doesn’t get out of Auckland often.
Twyford: And how’s that working, Amy?
Adams: In Christchurch, when we freed up land supply post-earthquake, and we legislated to make large areas of land available for land development, we saw house prices come back sharply. In fact, there’s a glut now.
All right, we’re running out of time. I want to clarify two things. You know that there’s a shortfall of about 40,000 houses in Auckland alone.
Twyford: On National’s watch.
We’ve got to build about 17,000 a year now with population growth. So in the past nine years, under the National Government, ballpark, how many houses have you built in Auckland?
Adams: Well, the government is not building it. The government is fixing the market. What we know, Lisa—
Well, how many have been built? Because you’re fixing the market.
Adams: What we know, Lisa, is there has been 20%, year on year, growth in the construction sector across New Zealand, and I would argue the construction sector can’t grow much more.
Well, last year only 7000 were built in Auckland.
Adams: And, actually, if you look at the pipeline that’s coming up, 30,000-plus a year over the next three years,…
Twyford: People can’t live in a pipeline, Amy.
Just before we go—
Adams: …because we now have reformed the planning process, we have changed the planning.
Twyford: You haven’t. You haven’t.
Adams: Phil, I passed the legislation for the Auckland Plan Process. You opposed it.
Twyford: It hasn’t made a blind bit of difference.
Adams: That has delivered the intensification potential in Auckland that we’re now seeing come to realisation.
Twyford: Where are the affordable houses?
All right, we are going to have to leave it there with that question unanswered. Thank you both for joining us this morning.

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