Bryce Edwards: National's dangerous social housing plans

State housing. Photo / File

How risky are the National Government's radical reforms in the social housing sector? There are arguments that the reforms will be a danger to the public, the poor, and even the National Party. Certainly we can expect ongoing debate about housing, as the Government forges ahead in shifting from a pure state housing model to one that utilises NGO-provided 'social housing'.

Dangerous ideologies?

Are the state housing reforms a bizarre and unnecessary return to neoliberal reform? That's the view pushed recently by John Armstrong in his scathing column, Taxpayer looks the loser in English's pet reform. This strong critique argues that Bill English is ideologically opposed to state housing and has therefore let the Treasury ideologues off the leash to experiment with a 'masterplan'. According to Armstrong, the new model for state housing has 'the ultimate goal of getting the state out of providing houses for the poor' and killing off Housing New Zealand. He paints the reforms as an unnecessary and 'bizarre' experiment in which 'the taxpayer is the loser'.

The policy seems 'predicated on no more than an ideological desire to get the state out of social housing provision' says Russell Brown in his blog post, Housing, hope and ideology. He argues that 'Key's plan to save money by increasing an already out-of-control cost to the taxpayer seems insane', and that it 'could well go terribly, terribly wrong'. See also, No Right Turn's Wealth transfer.

TV3's Tim Watkin has branded the changes as 'a return to the ACT-style thinking of the '80s and '90s' - see: When is an asset sale not an asset sale? And other questions about the Social Housing mess. He argues that the ideologues in National have been cautious about pushing neoliberal-style vouchers in the education sector, but are happy to experiment in the knowledge that there is less political risk with introducing such ideas into the housing sector. He sums up the approach as: 'remove the government and let the market come in and work its magic'.

Others are equally skeptical. The Dominion Post has questioned the model and said that 'It is not clear how much its project is being driven by real social need and how much by an ideology of privatisation' - see: Social housing needs cautious approach. It warns local government about getting involved in the plan.

If the reforms are purely ideological, then does this foreshadow other similar radical reforms? Certainly such devolution could be replicated elsewhere in social policy says Tracy Watkins in her recent column, What's ahead for National?. She says 'Expect this approach to be mirrored across other sectors, particularly in welfare, where Finance Minister Bill English is impatient to shift the centre of gravity away from Wellington and into the community and grassroots service providers'.

Advocates for reform

But is the social housing programme really that extreme? And are the narratives about the state getting out of housing even true? According to Pattrick Smellie, the facts just don't bear out the above concerns. His column, Bill English's creeping social housing crisis, is the must-read alternative view. He argues that the National Government is actually increasing its expenditure in this area, and that National has consulted widely on the issue and achieved a broad consensus on its plans.

Similarly, the new Minister of Social Housing, Paula Bennett, was on TVNZ's Q+A in the weekend, and also argued that the government was committed to further spending on state housing: 'Housing New Zealand alone had an extra 320 houses that it built last year. We're on track now to build about another 700 next year and I've got to say that, compared to what's happening overseas, that's high, really high' - you can watch her 10-minute interview, Social housing will become a 'voucher' scheme.

Although the reforms can be painted as 'privatisation' or 'neoliberalism gone mad', there are in fact some strong advocates for the principles behind the reforms who are hardly neoliberal extremists. In reality, the ideological underpinnings are more Blairite 'third way' than neoliberal. All over the world, social democratic governments and political parties are often enthusiastic advocates of the 'social housing' model, in which community, not-for-profit groups provide accommodation. Countries like the Netherlands and the UK have very well developed social housing sectors that apparently work well.

The origins of New Zealand's current reforms lie in the report commissioned by the National Government in 2010 - see: Home and Housed: A Vision for Social Housing [pdf]. Even economist Rod Oram described this report as 'excellent' - see his recent column, A radical shift. Oram says that the 'report's central proposition was that private sector organisations could more creatively than government provide social housing and devise new graduated ways for people to move from renting to owning rather than the single huge leap needed now. Plenty of overseas experience justifies such hopes. This is a good strategy to pursue'.

The Labour Party also supports the shift to social housing in principle. In fact one of the Party's policy innovators, academic David Craig, has pushed social housing as an initiative worth pursuing. For example, in a previous blog post on Reconceiving the welfare state, he wrote this: 'There needs, simply, to be a new housing market compact hit upon. A part of this compact will no doubt be community sector housing providers: community housing trusts, complementing the state's social housing roles, and, in some areas, replacing it. What the community sector genuinely does off here is a level of local engagement, much needed entrepreneurialism, and a responsive working relationship with tenets which can go a long way further than Housing NZ has been able to, for a range of reasons'.

Bill English has expressed a similar view - in strong language - saying recently, that the state housing service hasn't served the poor well: 'So where we are selling a house, it's not greed, it's to get all better houses instead of treating them like shit, which is what's happened with Governments and state housing for years' - see Simon Collins' 'No point' in new state houses - Bill English.

Has the case been properly made?

It's far from clear that the Government really has done enough solid background work to justify and make the case for the social housing model being implemented. One housing scholar, Elinor Chisholm, who is writing her PhD on 'inequities in power, housing and health', is fairly scathing about the original Home and Housed report for the Government. She says that the report, written in a five-week period is inadequate: 'For something the Minister is claiming as legitimation for massive reform, it's pretty shallow, reflecting its rushed origins' - see her blog post, The (lack of) evidence to support stock transfer.

Chisholm says: 'It doesn't provide a lot of evidence for its recommendations. I don't think a student would get away with handing in a paper with this few references - even if he had as little as five weeks to write it. There are just twelve references, some out of date, few peer-reviewed, and a couple authored by people who have a financial interest in supporting stock transfer'. She backs this up with further criticism of the report provided by Statistics New Zealand. See also: End of a (state housing) era.

It should be pointed out that Rod Oram also raised problems with the policy making process for social housing, criticising the rushed nature of the reforms. Other commentators have also highlighted their concerns about the incomplete background work. For example, Tim Watkin says 'the Nats don't seem to have thought this through properly' and 'This has got 'mess' written all over it'.

Concerns about NGO capacity

There is also widespread concern that the community agencies simply do not have the capacity and resources to take on the major housing role that the Government expects. Rod Oram comments: 'It has scant regard for how they will raise the capital and develop the management skills they will require to out-perform the Government, which has lower capital costs and abundant skills in social housing'.

Similarly, Chris Trotter asks: 'From what possible source will the not-for-profit sector acquire the resources to construct social housing on a scale even remotely commensurate to the urgent need of the homeless?' - see: National's Housing Policy: Squander and Squalor.

The answer, it seems, is that the Government wants the NGOs to partner up with the private sector in commercial consortiums. Simon Collins reports that 'English expects buyers to be consortiums likely to include community housing providers, financiers and possibly property developers and iwi' - see: 'No point' in new state houses - Bill English. See also Collins' report, Tainui puts hand up for English's state house sale.

So far, according to Patrick Smellie, at least 32 agencies have registered as Community Housing Providers (CHPs). This is likely to also include local government agencies. The Wellington City Council, in particular, is looking at the possibility of 'forging an alliance with property developers, construction companies, and social service agencies to create a mixed model of low-cost rentals, rent-to-buy homes, and quality apartments' - see Jo Moir and Dave Burgess's Council bullish on buying state houses.

Of course there will be significant iwi interest in providing low cost housing under the scheme. For example, today Simon Collins reports on the plans of Ngati Porou to buy 600 state hosues - see: Iwi sets its sights on state houses.

Also, Tahu Potiki reports on Ngai Tahu's thoughts on the prospect of getting into the business of social housing provision - see: Home ownership opens up a new world. See also, Radio NZ's Maori housing provider planned and the Herald's State house sale an 'opportunity' for iwi - Marama Fox.

Lack of expansion or reinvestment

Perhaps the major problem with National's social housing programme is that it lacks any sign of showing how housing stock will be expanded. As No Right Turn says, 'It is simply shuffling deckchairs. We need to significantly increase the number of state houses. The best way to do it is for the government to build them directly, leveraging its size to get economies of scale' - see: A policy that makes no sense.

The proportion of state houses is on the decline. Back in the early 1990s there was one state house for every 50 citizens, and now there is only one for every 66. Given the housing crisis, it seems appropropriate the numbers be increased, not decreased. But National is giving no promises that any proceeds from the sale of state houses will be reinvested to create more housing stock - see Dan Satherley's Twyford: State housing proceeds must be reinvested and Simon Collins' Call for state house funds to be reinvested in social housing.

In fact, few political parties are actually arguing for more state houses. The debate about the housing crisis has mainly concentrated on the problems of affordability at the 'middle' - i.e. home ownership. The problem at the bottom - amongst renters - struggling to afford to obtain and pay for their accommodation has largely been ignored. For this reason, economist Seamus Hogan blogged during the election campaign to ask: Why do all political parties hate renters so much?.

Certainly the Labour Party wasn't focused on any real increase in state housing. Instead its Kiwibuild policy was aimed at building houses to sell. In contrast, the Mana Party advocated building 10,000 new state homes 'each year until no more were needed' - see: Build 10,000 state homes a year: Mana .

Dangers to the National Government

The greatest risk of the social housing reforms might actually be to the National Party. Many commentators have already questioned the Government's mandate to push ahead in this area, especially in terms of the sale of large numbers of state houses.

But more than this, the bold reforms threaten to show the National Government as ideologically blinkered and extreme. There is clearly a significant electoral danger inherent in what is being progressed, especially if the reforms don't work well.

On top of this, the Government is already extremely vulnerable in the housing area. Progress in producing more houses has not been evident - see No Right Turn's National's failure on housing. And for a personal account of the severity of the situation, see Duncan Garner's I'm an instant millionaire - but can't afford my house. See also, Dave Armstrong's The sad state of our state housing.

Finally, to see how cartoonists have been portraying the housing issues lately, see my blog post, Cartoons about the politics of housing.