Extras put housing bill at $2.25 billion

State subsidy of rents is the biggest part of the housing budget. Photo / Paul Estcourt

The Government will spend about $2 billion on the housing sector in the coming year.

This includes the annual cost of state housing, more than $1 billion in rent subsidies, the leaky building disaster package and other payouts.

Housing Minister Phil Heatley said the Budget voted a total of $997 million to the sector in the year to June 2012, down on last year's $1.6 billion.

But with rent subsidies paid by the Ministry of Social Development, the total spend would be about $2 billion for the year, he said.

"Total Vote Housing in 2010/11 was $1.6 billion. In 2011/12 it will be $997 million. Why the difference? Because 2010/11 had a one-off Weather Tightness Financial Assistance Package of $697 million," he said.

"The largest part of the Vote Housing figure is the income-related rent subsidy to those renting a state house which ... in 2011/12 will be $587 million.

"This subsidy means tenants pay no more than 25 per cent of their income on rent. Some low-income people may only pay, say, $80 a week for a house, for example," he said.

That's only the subsidised rent of state-owned housing. In addition, thousands of poor tenants in privately-owned housing draw big Government rent handouts. But this came from the Ministry of Social Development and would be $1.26 billion for 2011/12, Heatley said, making total Government spending $2.25 billion.

The Budget also axed two schemes - the housing innovation fund and rural housing programme - replacing them with a $45-million fund to improve the ability of third sector providers such as Salvation Army, IHC, iwi, Habitat for Humanity and the NZ Housing Foundation.

Heatley said the Budget provided an additional $5.5 million for community group housing, a rent subsidy to organisations like IHC, Woman's Refuge and Budgeting Services which used state houses for special needs, safe houses or offices.

Acquisitions and upgrades of thousands of state houses was a core business for Housing New Zealand, funded out of rental income but supplemented with capital expenditure which would be $28.5 million in the coming year, up from $25.9 million for 2010/11.

Heatley said the corporation's focus would be on increasing state housing in areas of high demand, such as Auckland and Hawkes Bay, and having homes that fit local needs.

"While two thirds, about 42,000 of our properties, are in the right place and are the right size to meet the needs of the community, around 27,000 are mismatched to demand."

Heatley said there were too many three-bedroom homes. More one to two-bedroom and four to five-bedroom houses were needed

In the past few financial years, the net number of state houses had increased by hundreds of places, he said. An audit of the increased number in 2010/2011 was yet to be completed.

"For insulation, we've nearly finished all 38,000 state houses that needed it. We'll finish in two years."

GOVERNMENT HOUSING
529 new state houses built in 2008/09.

316 new state houses built in 2009/10.

State houses which meet people's needs: 42,000.

State houses mismatched to needs: 27,000.

Vote Housing spend in year to June, 2012: $997m.

Ministry of Social Development rent subsidy: $1.26b.

Total housing spend to June, 2012: $2.25b.