Profits should be put into product

WE, AS a nation and a benevolent society, have invested in state housing for the poor because we care about people.

I grew up in one of these state houses in the Pepper Block and Kowhai Street, as did Prime Minister John Key and many other New Zealanders.

As an investor, I would like to see businesses making a profit - even state-owned businesses like Landcorp, Kordia and TVNZ, along with various power companies.

However, what I do object to is the government making $636 million profit from Housing New Zealand over the past seven years - especially when there is still plenty of room to improve the condition of many of these properties.

Through Housing New Zealand, the government - under both National and Labour - has been a poor landlord. Generations of poor New Zealanders have lived in these cold, damp and poorly insulated state homes.

The first state house was built in Miramar, Wellington, in the 1930s, with then Prime Minister Savage even helping to carry the furniture in himself. State housing has come a long way since then and there are now 193,000 New Zealanders housed in 68,000 state homes throughout New Zealand - 620 of which are in Wanganui.

The good news is that Housing New Zealand has finally lifted its game in recent years. It has extensively improved the condition of its housing stock.

It is wonderful that people in need get to be housed in cheap accommodation that they otherwise could not afford. However, the government needs to set the standard as an exemplary landlord for other landlords throughout New Zealand to follow.

Although Housing New Zealand has improved its performance dramatically, the government is not the exemplary landlord it should be. This makes it hard for them to impose minimum requirements on other landlords - requirements which are long overdue.

Minimum standards need to be in place for all rental properties. That is because some landlords are nothing but rogues who prey on the poor and destitute. Unfortunately, there are very few minimum standards - especially in Wanganui where many rental properties are cold, damp, uninsulated and in need of serious repair - and it is an issue we have ignored for far too long.

A government has a responsibility as a landlord to keep its properties in the best condition. Profits should not be creamed off the top unless all of their properties are of a very high standard.

In 2013-14 Housing NZ did 407,000 repairs to their properties and spent $300 million a year maintaining them. Good on them - but that is still not good enough if any of these properties are not up to a high standard.

Housing New Zealand states that 97.4 per cent (they only surveyed 90 per cent of their properties) of their properties score seven or more (out of 10 on their Property Quality Index). One has to ask the question: Is a score of seven good enough and why is this not 10 out of 10 when profits are being made?

Evidently, due to lower demand, the state housing stock in Wanganui has dropped substantially. In 2008 we had 805 state house, we now have just 620 - a 23 per cent drop, with only nine properties being sold to Housing New Zealand tenants.

On a positive note, most of these properties were sold to low income families as part of the Government's First Home Scheme. This may be part of the reason for less demand.

Wanganui state houses received an average Property Quality Index rating of just over eight, using Housing NZ's baseline rating of seven. This is some kind of positive, but again, with $636 million profit sucked out to bolster the Government coffers, why are these properties not the 10 out of 10 which you would expect from an exemplary landlord.

Steve Baron is a Wanganui-based political commentator, author and Founder of Better Democracy NZ. He holds degrees in economics and political science.