SPECIAL REPORT: Fenton St, the Golden Mile. Once the jewel in Rotorua’s tourist town crown, is now known as MSD Mile. Rotorua is hurting from the proliferation of emergency housing in motels, concentrated on the once lauded Rotovegas strip. Crime and social issues abound inside and outside. The Government says it’s a ‘stop-gap measure’, a short-term fix. Felix Desmarais asks experts and a politician for their long-term solutions to find out how we get out of this mess.
Build 10,000 social homes per year for 15 years
A public policy expert says New Zealand needs to build social housing on a "massive" scale to address homelessness, which in turn would remove the need to use motels.
Victoria University of Wellington public policy expert professor Jonathan Boston said there were public policy developments over the last few generations in New Zealand "which clearly have not helped" to ensure adequate housing.
"If we went back 40 years, about 7 per cent of the housing stock was social housing. Mostly state housing, and some local government housing ... it's now down around 3.5 per cent."
He said in the early 1980s New Zealand had about 70,000 state or social homes, and that number was now about the same, but the population had grown by about 2 million in that time.
"The social housing stock has fallen as a proportion of the total housing stock very, very significantly, and that has clearly had a profound impact."
Home ownership had also fallen from about 73 per cent four decades ago to about 63 per cent now, with a larger difference for Māori and Pasifika whānau, he said.
"So you have a very significant number of Māori and Pasifika families – sometimes quite large families – mostly in private rental accommodation."
Victoria University of Wellington public policy expert professor Jonathan Boston. Photo / Supplied
He said that, critically, private rental accommodation was very insecure, compared to internationally, and tenants' rights were "more constrained than in many other parts of the world, particularly Europe".
That resulted in "very little security of tenure", resulting in frequent moves.
"That increases the difficulties for children in terms of socialisation, loss of friends, probably increased truancy and so on."
He said all of that meant the housing market was poorly suited to meet the needs of people on low incomes.
Boston said there was "no quick fix" but he believed the country needed a multi-party agreement on a "massive" social housing investment.
He said that didn't have to all be state housing, but could also be community group and local government housing.
"I think we should be aiming for something like 150,000 to 200,000 social houses ... so two to three times what we have now. I see no advocacy for such a scheme in the political arena.
"It would mean trying to build 10,000 social houses a year for 12 or 15 years."
Boston said if the social housing stock was not increased by that scale, New Zealand would continue to have large numbers of homeless people "in motels, or caravans, or in tents, or in cars, in vans, in garages, and anywhere else they can find that is dry".
"I think it is an extraordinary blight on our society that we let this happen.
"We failed for four decades to ensure that we had an adequate supply of affordable and reasonable quality homes for our most needy citizens.
"We essentially have a housing market that is almost designed to maximise the difficulties for our poorest citizens and intensify the critical social problems we have.
"Covid has taken the bandage off the scab and revealed the magnitude and seriousness of the problem.
"I don't see any other solution than a massive multi-decade building of good quality, affordable social housing throughout the country ... and that will require massive investment."
He said most of the funding would likely have to come from central government, and building 200,000 social homes would not immediately solve issues.
"But it would dramatically reduce the problems that we have."
Design issues would also be important, such as ensuring people on low incomes weren't forced to live far from workplaces, making transport and its cost an issue.
"We really need to have much higher level of density for our cities and much less expansion geographically. But we can't solve issues of urban form overnight either."
He acknowledged the medium-density residential standards – a policy change to allow more intensification – went some way to help but was "50 years too late".
'Urban sprawl is a myth'
Auckland University counselling, human services and social work senior lecturer Dr Mike Webster said solving housing and homelessness was what was known academically as a "wicked problem ... where the solution is virtually unknown".
Webster was part of a research group investigating housing affordability as a wicked problem.
He said, in his opinion, the "most critical element" was how housing affordability had plummeted since 1990.
New Zealand had "abandoned some very good policies" such as Family Benefit Capitalisation.
That was enabled through the Family Benefits (Home Ownership) Act, which allowed families to take the then-universal family benefit – paid weekly per child until they were 16 – as a lump sum. That lump sum was then used as a deposit on homes. It continued until 1986 when it was replaced with a need-based family benefit.
"The Fourth Labour Government removed that ... forcing more people into the rental market."
Home ownership peaked in 1991 at 73.8 per cent, plummeting to a 70-year low in 2018 at 64.5 per cent.
'You've got to move beyond simply a market response'
Auckland University human geography professor Laurence Murphy said placing homeless people in motels was an "unintended policy" that emerged as the previous National Government's response to the housing crisis, just before 2017.
He said the pandemic meant needs "expanded rapidly" while motels needed income.
"When we look at the crisis in motels we see that as potentially a local problem for existing communities but to me in a sense it was an unintended consequence of a short-term policy that happened way back, under National, which has revealed the serious housing need in New Zealand."
He said Housing First – where people were housed before any other issues, such as health or employment, were addressed – was one strategy that had been introduced to New Zealand in 2014 and Government funded in 2017.
Housing First had an evidence-base, he said, and needed to be scaled up.
But while Kāinga Ora had expanded social and affordable housing, the "production of housing takes time".
Another issue was New Zealanders' attitude to home ownership as a financial investment not just a site for living in and meeting daily needs.
Auckland University human geography professor Laurence Murphy. Photo / Supplied
"We see housing like an investment not as a home. And under those conditions, you're almost guaranteed to promote an affordability crisis.
"Out of that affordability crisis, you have people who can't get into the system, and they fall away."
Murphy said not everybody would be able to secure market housing at market prices and there was still a role and value in social housing providers like Kāinga Ora.
"I think you've got to move beyond simply a market response for housing ... There needs to be a willingness to support and expand non-market housing, including social housing, community housing providers, etcetera."
However, one approach could see the market participating in creating social housing – through public planning: inclusionary funding, a practice in the UK and US, according to Murphy.
In that scenario, a developer's planning permission is dependent on their willingness to provide some housing – as part of the development – which would then be managed by a social housing provider.
"The housing would be built by the developer, they make the profit from the whole development, but some housing is set aside [with] affordable rent."
Murphy said one of the drivers of homelessness was the reliance on the market.
"The market is an excellent vehicle for producing market outcomes, but it doesn't necessarily guarantee everybody gets a house.
"The market will produce a house that is sold at the market price, or rented at the market price – it doesn't mean everybody can afford it.
"We have to move away beyond the simple idea that if we build more houses, homelessness will disappear. If you build more houses and they're all market rents and market prices, you still haven't solved the need of the ones at the bottom."
Government needs to get out of the way - Act Party
Act Party deputy leader and housing spokeswoman Brooke Van Velden said there needed to be a national inquiry into emergency housing, which would include finding out whether government agencies were adequately sharing information with one another.
An example was whether the Ministry of Social Development was "talking to Corrections to make sure that [kids] are not being put next to somebody who's just been released from prison", she said.
An Act party priority would be to reinstate interest deductibility – the ability of home owners to deduct the cost of interest on a home loan from their rental income tax bill – and scrap the bright-line test.
Act Party deputy leader Brooke van Velden. Photo / Mike Scott
Van Velden said those rules imposed more costs on landlords, which were passed on to tenants, and therefore pushed affordability further away.
Landlords, investors and developers needed a "stable political environment" where they knew it was in their interests to develop and build, and this would boost supply, she said.
"That will drive down the cost of rent for people who don't have as much money."
And it wasn't up to the Government – at all – to boost supply through social housing, she believed.
"It's not really for Government or politicians to decide what the right types of housing are. Developers will try to build the types of homes that they believe New Zealanders want to live in and buy or rent.
"It's important that Government gets out of the way, just sets clear expectations about what the rules are ... and lets people build and develop."
She said mum and dad investors with multiple properties was "actually a good thing" and to be encouraged.
"The number of rules and restrictions that get put on them now means they're now needing to sell their homes to first home buyers and in many cases that means somebody who was on a really low income is now being forced to move."
She said a change to the Overseas Investment Act would also allow for more build-to-rent accommodation. She said the Act was "holding up" international investors keen on large-scale developments for rental.
"That would help a lot of people, especially at the lower end of the market."
Van Velden also had a member's bill – due for its first reading before the end of the year – which she believed would address the "infrastructure crisis" behind the housing crisis.
Under the Housing Infrastructure (GST-sharing) bill, each year, councils would take 50 per cent of the GST on every consent issued for that year.
Van Velden said that would amount to $1.4 billion going back to councils to help them pay for infrastructure.
"The more they do, the more they get.
"Every council knows that if a new home goes up, they get funding for it. I think that would make our councils more efficient, but importantly it would not pit existing ratepayers against new ratepayers."
It would be paid for by slashing tens of thousands of bureaucrat jobs, she suggested.
