The Labour Government has now spent over $1.2 billion on housing people in motels and emergency facilities. This is an indictment on a government that refuses to build enough state houses for vulnerable people who are the biggest victims of the housing crisis. But what's more, the staggering $1 million spent each day on emergency housing has also been a social disaster, the scale of which is becoming too apparent for the Government to ignore.
The scandal of the $1.2bn emergency housing programme has become most visible in Rotorua, where the homelessness problem is particularly acute, and the rorts of substandard motel accommodation are stark. TVNZ's Sunday programme just released an excellent 30-minute programme on their investigation into how this scandal is playing out in Rotorua.
This is quite rightly turning into the biggest political story of the week. Today the National Party and Te Pati Māori are united in calling for an independent inquiry into the debacle. The answer has to lie in building up greater state capacity for dealing with those at the bottom – a solution that the Labour and Green parties in government seem strangely allergic to.
The Government's policy of dealing with those faring worst in the housing crisis has been to use the private sector to provide accommodation. In lieu of building enough new state houses, Labour has adopted the policy of the last National government and simply pushed the homeless into motels.
This policy had some strong logic when Covid struck. Up until then the problem of homelessness had been a growing social crisis, but with the pandemic it was a potential health crisis that might spread the virus, so the Government decided to make use of all the empty motels and other private accommodation that was no longer required in lockdown. Moving rough sleepers into motels on a large scale was celebrated as a significant achievement.
But what was meant to be a temporary solution – a band-aid at most – was then leaned on by Labour as an almost-permanent way to deal with the crisis. Labour wasn't willing to develop any other solutions for the most vulnerable, and so has left those in motels to rot. For example, in Gisborne, one family of six have recently been revealed to have been kept in a one-bedroom motel for four years.
Emergency housing has become 'big business'
The policy of paying the private sector to house poor people has been a gigantic boon for motel owners and the like. It's rightly been labelled as a "get-rich-quick scheme" for those contracting to the Ministry of Social Development (MSD), which pays the bill. One motel company has so far received $60m in emergency housing payments.
The Government is generally paying well above market rates for the motels and rentals it uses. Broadcaster Rachel Smalley explains: "Over the years, MSD has paid private landlords to rent their properties – in private lettings, these properties would be rented for $1400 a month. When the government arrived with its chequebook, the landlords would ask for $2900 and get it. The rent would more than double."
What is particularly problematic is the quality of the emergency housing. Many of the motels being used could be euphemistically described as "budget". Many are unmaintained dumps that would otherwise have been due to be bulldozed or condemned.
The Rotorua rort
TVNZ's Sunday documentary exposed how the Government is now paying for about 50 different motel companies in one area of Rotorua to house the homeless and vulnerable. What used to be called the "Motel Mile" in the tourist city, along Fenton St, is now known as "MSD Mile".
The documentary shows the exploitation and grim living conditions of the vulnerable people who are shifting into the motels. One particular organisation, "Visions of a Helping Hand", which has received about $14 million in funding is alleged to have treated its clients extremely poorly. Not only does the organisation contract for accommodation but, using its own security firm, it also polices the clients.
Kristin Hall, the journalist who made the documentary, explains: "It's alleged Visions staff have kicked women and children out of motels and transitional homes, including a woman who was in labour at the time. Another woman says her children were so scared of Tigers Express Security guards, she bought a car to sleep in with her children instead. It's also alleged Tigers Express Security guards have been involved in sexual relations with vulnerable tenants, taken drugs on the job and that patched gang members have worked security shifts for the company."
National's spokesman Chris Bishop has described the TVNZ expose as highlighting the "appalling scenes of intimidation, violence, misery and crime" going on in Rotorua.
Left-wing political commentator John Minto has responded to the scandal, saying "TVNZ has reported what can only be described as a scandal of epic proportions. The sheer scale of the social and economic disaster Labour has created for low-income tenants and families across Aotearoa has to be lived to be believed."
Housing Minister Megan Woods. Photo / Mark Mitchell
Minto argues it's simply a case that "All the Government's chickens have come home to roost in Fenton St, Rotorua", and he points to Labour's failure on the housing crisis, and in particular its failure to build more state houses. He poses the question: "why have Labour MPs not demanded the resignation of the hapless Housing Minister Megan Woods?
It turns out that Woods has known about the Rotorua situation for many months. But in an apparent buck-passing manoeuvre has relied on accounts from the Police and lawyers who effectively tell her not to worry.
Jacinda Ardern has now also been forced to respond to the scandal, and essentially said that using motels is better than having families sleep in vehicles. Perhaps missing the point on purpose, Ardern fails to consider that there are other options. What's more, she ignored the fact that under her Government the number of children sleeping in cars has been calculated to have increased about 350 per cent.
Many of the vulnerable people needing emergency housing have lots of needs that aren't being dealt with by simply pushing them into dirty motels. As Rachel Smalley explains, "in order to support people to improve their situation, they need a home. They need stability. Their children need to go to the same school. They need to establish long-term friendships. They need a fixed address before they can get employment."
The problem is that the Government doesn't have any sort of effective wrap-around support service for those it places in emergency housing. Instead, the Government wants others to do the heavy lifting, and contracts out so much of this to so-called charities and the private sector. In the Rotorua expose we get a sense of how this private sector system is working out.
This is the sort of thing that Kāinga Ora could be providing, if mandated and resourced. After all, this is the Government's own housing delivery agency, which already has expertise in managing emergency housing.
The problem for the Labour Government is that this would be expensive. And Labour doesn't want to take risks. It's had five years to come up with solutions, but it can't even put an end date on when it wants to stop using motels as emergency housing.
In terms of the necessary cost, housing researcher Alan Johnson says that the Government should be using the billions of dollars that it plans to keep paying to private businesses to actually invest in its own emergency housing. He says: "It apparently has never occurred to the Government that it could just go out and build these houses. Such short-sightedness borders on an ideological blindness with an unwillingness by Labour's leadership to truly appreciate the extent of the role the state must play in order to address the housing crisis."
Similarly, broadcaster Duncan Garner says the money just has to be found: "New Zealanders had every right to be hopeful Labour might finally change the game and use the Government's significant balance sheet and ability around procurement to genuinely build a proper and vast network of emergency and transitional houses."
Labour inherited a state housing wait list of about 5000 families, but now it's edging ever closer to 30,000. In fact, the Government is actually demolishing lots of state houses, and in some places selling off the land to the private sector. For example, it has been reported recently that while 193 houses have been built so far this year, 202 houses have been demolished since January.
The OECD points out that the New Zealand Government spends relatively little on state housing. Looked at proportionally, state houses comprise only 3.6 per cent of total housing stock (down from 5.4 per cent of houses in 1990).
So although the Government is building more state houses than recent Labour and National governments, the numbers are still insignificant. Some have calculated that if Labour was going to build state housing on the same population ratio as the First Labour Government of Michael Joseph Savage, they would need to be constructing about 10,000 a year.
A shameful outcome for a Labour Government
Jacinda Ardern came to power in 2017 on the back of the housing crisis, rightly pointing to the National Government's abysmal handling of this problem. She pledged that ending homelessness was a priority for her Government. But brushing it under the carpet is not the same as fixing the problem.
Ardern will tell us that she is still aspirational about fixing homelessness, and will bristle at any notion that she hasn't done enough. But it's obvious to most people that she has simply put the problem in the "too hard basket", unwilling to grapple with what it would take to genuinely deal with an urgent problem.
There are other politicians in power who also need to account for their failure. Does anyone still have confidence in Megan Woods as Housing Minister? Or Marama Davidson as Homelessness Minister? And, what about Social Development Minister Carmel Sepuloni?
Before being elected, Labour's then-Housing spokesman Phil Twyford got plenty of hits on National for its policy of using motels for the homeless. He complained that spending $90,000 a day was proof of a government that had failed. But now his Government is spending about 10 times that much. And the number of motels on MSD's books has apparently gone from 200 to 1200.
No wonder the Salvation Army says that the National government's "housing crisis" has morphed under Labour into a "housing catastrophe".
• Dr Bryce Edwards is Political Analyst in Residence at Victoria University of Wellington. He is the director of the Democracy Project.
