The government is trying to pick up the pace of public housing construction and is sticking to its target of building 18,000 homes by 2024 despite covid delays.
The Social Services and Community select committee met on Thursday as it examined the housing and urban development 2022 budget allocation.
Housing minister Megan Woods outlined large-scale projects by the public housing agency Kāinga Ora, including in Mangere, Mount Roskill, Tāmaki and Porirua.
Woods said the aim was to build neighbourhoods with a mix of public housing and affordable homes.
“I don’t think there’s anyone in the world who would think you’d build sixteen hundred public houses all in one place.”
One point of dispute was over the net new housing builds compared with the gross new housing builds.
The National party’s housing spokesperson Chris Bishop pointed out that only a net 21 new homes had been built in the year ending May 2022, due to the large number of public housing demolitions that had occurred in the same period.
Woods said the demolition of old public housing allowed new higher density housing to replace it. “We’ve gone in and sped up some of the demolitions because we’re getting in and doing the infrastructure work.”
Bishop didn’t dispute the need to demolish as part of the renewals but said the net stock had to be added to in the end.
Referring to the minister’s 2021 announcement of an additional 18,350 public and transitional housing places by 2024, he wanted to know if the government was on track to achieve that, after accounting for demolitions.
Woods said that Kāinga Ora would deliver about 1,815 public houses and transitional homes this year. “I think that certainly is shy of what the original statement of performance expectation target was.”
But given that the largest share of new houses was for Auckland, which spent long periods in lockdown, that was a strong delivery track, she said.
Woods attacked the previous National government's record on public housing, stating that there were 674 fewer public houses in June 2014 than a year earlier, and the stock had decreased by 486 houses the year before that.
“We are in our current housing crisis because for a decade, we did not add to our public housing stock.”
Rising staff, rising costs
Bishop said Kāinga Ora’s staff had increased by around 1,700 in the past five years and had around 3,000 staff now.
“Are you confident you’re getting value for money from the staff at Kāinga Ora, when I will put it to you the build rate is not what anyone would like it to be?”
Woods again said she rejected the build rate was slow and although she did not have the figures to hand, Kāinga Ora was providing exceptional value for money at present.
Committee member Karen Chhour (ACT) noted the huge increase in the amount allocated for public housing and wanted to know how much of that was due to the building supplies shortage, and how the shortages slowed down delivery.
Woods acknowledged this added to costs, but the government stood by its commitment to build an extra 18,000 homes by 2024.
Kāinga Ora chief executive Andrew McKenzie told the committee that trade labour rates had risen 33% over the past five years, whereas rents had only risen 15-16% in the same period.
“The total construction costs, which includes the materials, have gone up around 40% in that time.”
That meant there was a growing divergence between Kāinga Ora’s rental income and the cost of providing and maintaining houses, McKenzie said.
Ministry of Housing and Urban Development chief executive Andrew Crisp said prices were impacted by the lack of readily available land at the right price.
Another factor was the building industry. "So lifting up the productivity of that sector, and putting the issues around the labour force skills and how we think about training is also a pretty high priority," he said.
Woods presented statistics that showed Rotorua's population had risen by 9,000 since 2013 but only 1,500 homes had been consented since then. This had driven annual rental growth up 7% and increased crowding and homelessness. The use of motels to manage this problem grew sharply from 2018.
However, more than 400 new homes had been consented in the 12 months to May 2022. “Rotorua is an absolute priority spot for building new public houses,” she said.
Contracted motels were supporting around 200 families and ongoing funding of $147.5m was committed in the 2022 budget.
Chhour wanted to know why motels would be used for emergency housing for another five years in Rotorua.
Woods acknowledged that Rotorua’s housing problems would not be solved overnight. “There are simply not enough houses in Rotorua. That is the grim reality for the population.”
Ministry of Housing and Urban Development's deputy chief executive of solutions design and implementation Anne Shaw said the five-year timeline on motel use was to make sure they didn’t have to repeat the resource consent process allowing the motels to be used as emergency housing.
Committee member Ricardo Menéndez March (Green party) asked when the building programme would start decreasing current waiting lists for public housing.
Woods said the waiting list showed how great the need for housing was and it would not be solved just through public housing. There was a need to rebuild the community housing provider sector also.
“When you’ve got as many people on the public housing waiting list as we have, you just have to keep building houses and that’s exactly what we’re doing."