Dialogue: Housing bill fails to face real problems of poverty

A new rents bill for state-house tenants discriminates against low-income earners renting from the private sector, says MURIEL NEWMAN*.

Last week, claims were made in Parliament that the Housing Restructuring (Income-Related Rents) Amendment Bill would cure poverty.

This bill, which establishes income-related rents for 40,000 state-house tenants, fails to help 160,000 low-income families who do not live in a state house but need housing assistance.

An estimated 200,000 families receive the accommodation supplement; state-house tenants are just a small proportion. Any bill that ignores the needs of the low-income majority while helping a minority cannot support the broad claim to be eliminating poverty.

This bill, which introduces two controversial initiatives - discrimination and income and asset-testing - received a black mark from Attorney-General Margaret Wilson.

It was claimed that it breached the Bill of Rights by discriminating on the basis of age, marital status and number of children. Ms Wilson recommended that more work needed to be done on it.

But she failed to address a wider issue. The bill introduces into legislation a new form of discrimination. While providing extra financial help to low-income families who have the state as a landlord, it fails to help families in the same or worse situations who do not have the state as a landlord.

It allows the Government to discriminate against most low-income families who need help but rent from the private sector, in favour of the few who rent from the state.

In another surprising move, the bill introduces income and asset-testing. Those families seeking help will be required to open their books for inspection, to see whether their income and asset position will enable them to qualify for rental help.

Broad claims that this bill will eliminate poverty are spurious. A relatively small number of low-income families, who receive less than or equal to the superannuation rate ($225.55 single and $347 for couples), will receive, on average $20 to $30 extra a week.

While that extra money will help those families lucky enough to qualify, it will not eliminate poverty. What it will do, as Minster of Housing Mark Gosche has confirmed, is create a growing waiting list for state houses.

We have been through this before. By 1988, as a result of the Labour Government's income-related rent policy, over 60,000 people were waiting for a state house. Labour had to phase in market rents as a mechanism to curb the growth of the waiting list.

The crisis facing some families on the waiting lists was recorded in a Housing Network survey: dozens of Auckland families live in vermin-infested hovels.

There is no logic in going back to policies that create that sort of outcome.

In the 1980s, New Zealand had a national housing shortage. The introduction of the accommodation supplement in the 1990s encouraged the private sector into the low-income rental housing market. Residential property is New Zealand's preferred investment over any other form of saving.

But the future of that investment is now questionable because the Government's move to abolish market rents for one in five tenants will invariably force down property values at the lower end of the market. The move will also force down the value of the Government's property portfolio.

Some commentators have predicted that income-related rents will wipe $2.7 billion off the Government's balance sheet. That would put at risk the security of the $1.3 billion in bonds and euronotes, secured on Housing New Zealand's $5 billion book value. The Government's response on this is unclear.

The reality is that the only way out of poverty is through work. Governments must put in place fair policies that support education and training and give people the skills to participate in the workforce and their communities.

All low-income families need and deserve opportunities to escape the poverty trap.

A few extra dollars in the pockets of the minority of low-income families in state houses who qualify for the Government's special treatment may help in the short term. It will not solve the longer-term problems for the thousands of families struggling on low incomes.

* Muriel Newman is the Act spokeswoman on housing.