Affordable Housing: Enabling Territorial Authorities Bill

I will raise an interesting matter with the Committee of the whole House on Part 1—that is, the interpretation or definitions of various terms used in the bill. The first one up is the most telling. It is the definition of “affordable housing”, which means “housing that—(a) is for persons living in households that—(i) have low to moderate income; …”.

I found it particularly interesting some months ago when I asked the Minister of Housing, Maryan Street, in the debating chamber during question time whether the definition in this bill of “affordable housing” with regard to people on a low to moderate income was the same definition she used in relation to the affordable housing being built in Hobsonville. Apparently, the housing being built in Hobsonville by the Government is called affordable housing. In fact, the Government is proposing that several hundred affordable houses be built in Hobsonville. The Minister told us at the Local Government and Environment Committee that those houses will be worth $350,000 to $370,000. People owning those houses will require an income of $75,000 per annum to service their mortgage, without paying back any capital cost.

In other words, the Minister of Housing’s definition of someone who is a low to middle income earner is someone who can afford a $370,000 house and is on an income of over $70,000 a year, which is absolutely ludicrous. Low-income people do not earn $75,000. In fact, those on the average wage in New Zealand earn about $65,000, so one could say that low to middle income earners might earn anything up to $65,000, yet the Hobsonville houses, which are to be provided by this Government, will cost $370,000, and people will need to be on an income of $75,000 to be able to afford them.

We have a Minister of Housing who is completely out of touch on two levels. The first level relates to what low to middle income earners earn—and we need only go to Statistics New Zealand to discover that it is $65,000 a year, not $75,000 or above. The second level relates to what an affordable house is.

I can tell the Minister of Housing, if she is listening, that $370,000 for a first home is very, very expensive indeed for a low to middle income earner in this country. That is a huge burden to undertake when it comes to a mortgage. So for the definition of “affordable housing” in this bill to state that it is for persons living in households that have low to moderate incomes is an absolute nonsense. The Minister of Housing thinks that those people should be able to afford a $370,000 house that would require its owner to be on an income of $75,000 a year in order to service the mortgage, plus those people will want to eat and drive a car, as well. Of course, the Minister said at the time that there was actually no connection between the definitions. That might be all very well in legalese, but in reality, it does not help those who cannot buy their first home.

That is why we keep bringing this Minister of Housing back to two very important points. The first point is to acknowledge that the most significant thing we can do for first-home buyers is to give them more money in the back pocket to service a mortgage, because take-home pay pays the mortgage, not gross pay. The next best thing we can do is to get interest rates under control.

If one has a mortgage of $200,000, which is not the average cost of a house but the average mortgage across the country, then one is looking at paying $2,000 a year to service the mortgage on that house, which is about $40 a week. An interest rate of 1 percent interest on an average mortgage equates to $40 a week, which is an awful lot of money in some households.

The CHAIRPERSON (Hon Marian Hobbs): Before I call the next member, can I just give a word of warning to members. This is not a second or a third reading. We are talking about Part 1. The last member began to suggest solutions to provide affordable housing, which are not in Part 1.

Thank you for the timely warning, Madam Chair.

The CHAIRPERSON (Hon Marian Hobbs): Good. Before I hear about your mother!

The gate is open but the stock is quiet! I want to specifically address Barbara Stewart, Keith Locke, and Te Ururoa Flavell—and any of the Labour members who may care to listen—and to talk about clause 6. I do so from the point of view of saying that although the intention of this bill is to provide more affordable housing to low-income people, if we look specifically at clause 6, we see that it fails. It fails because all that clause 6 does—and the other clauses—is say that local government bodies will find out whether there is affordable housing in their districts, provide a needs assessment, etc. What that means is that local government bodies will end up having to employ people to go through the steps of producing the reports required. They will probably come out with a report that says there is not enough affordable housing in their districts.

That is the nub and the problem of this legislation. The sad fact is that this bill merely provides for local government bodies to write reports. It actually requires local government bodies to go out and make assessments. What it does not do—and what I thought was the intent of the bill—is ensure that we end up with more affordable housing. Nowhere in this bill, as members will see if they read it carefully, does it say that the end result of the local authorities’ endeavours, of their assessments, will be that we have more affordable housing.

I say to the representatives of those three parties here tonight that National members oppose this bill because it is back to front in addressing housing need. The sad and unfortunate fact in this country at the moment is that the expectation of the starting step for house ownership is too high. We would have done better to work with the building industry and with local authorities together to ensure that there are lower-level homes—still of good quality, still secure, still safe, and still watertight—at a lesser cost that people on lower incomes can afford. That is the dilemma we face in this country today. For most people, the price of a first home is out of their reach. Yet we have the ability in this country to provide lower-cost homes. I am not saying they are cheap homes; I am not suggesting that for a minute. What I am suggesting is lower-cost homes.

When the likes of Trevor Mallard and I were starting off in this country as young men, we had expectations of stepping into a home that was of a smaller size but still adequate for us to start our families. Unfortunately, today all of us have an expectation of being able to step into a more expansive home. Quite honestly, we need to change that attitude. We need to accept that a first home can be a small 3-bedroomed home that does not necessarily have all the bells and whistles, but is adequate. It can house our children—

💬 Hon Trevor Mallard: Some of them have two bedrooms.

Maybe it has only two bedrooms. The point is that the home does not have to be a great big expansive palace. It can be a first-step house. It can be something we can turn into a home. It might have only two bedrooms, one for mum and dad, and one for the first child, maybe.

💬 Hon Trevor Mallard: I can remember when kids shared bedrooms.

Of course; we all did that. The point I am making is that our expectations are now above the level that we should reasonably expect.

I say to the members of the smaller parties here, and, indeed, to the Government members, that we should have said we will work with local government and we will work with industry, and the whole focus will be on ensuring that we have an adequate supply of lower-priced homes of good standard that allow families in New Zealand to get a start. That is where this bill fails. In fact, it actually adds to the cost. I say to the Government and I say to this Parliament tonight that what disappoints me about the smaller parties, which I know genuinely want affordable housing—as do we—is that their supporting this bill in the manner in which it has been put forward will make it harder for young people to reach that first step. That is most unfortunate, and I say that genuinely. This is one of the times in this House when we really need to reflect on what we are doing. We are not achieving what we set out to do as a Parliament. This body has a responsibility to the people of this country, and tonight I say that, unfortunately, rather than achieve what we set out to achieve, which is a laudable goal, we will push it further out. I say to Parliament that it is sad and unfortunate that we are doing that this evening. Thank you.

I fully concur with my most eminent colleague John Carter. He is absolutely right. He has said the very things that needed to be said about the fact that this Government should have taken a step back and should have done the work necessary so that we would not find ourselves in this very unfortunate position in respect of considering the Affordable Housing: Enabling Territorial Authorities Bill. The first definition in clause 4 covers affordable housing, which “means housing that—(a) is for persons living in households that—(i) have low to moderate income; and (ii) have no, low, or moderate legal or beneficial interests in property; and (b) is priced so that the persons are able to meet—(i) their housing costs; and (ii) their other essential basic living costs; and (c) is within the regulatory criteria for determining what affordable housing is, if regulations setting criteria exist”.

I am blowed if I know what that means, and I am sure it is a lot of gobbledegook for most people. But when we look at moderate incomes, I am concerned. The average income of the majority of people in my electorate is around $26,000 a year. That is the average income for the Coromandel electorate. How could anybody afford to own his or her own home on that level of income? We talk about most people now earning around $60,000 a year, but, coming from the Coromandel, I find that very, very hard to believe.

Business is incredibly important in the Coromandel because we need those businesses to provide jobs for the local people, and housing is certainly an issue. We have a very limited land resource and we need to use it to the very best of our ability.

I would like just to pick up on some of the points made by John Carter when talking about affordable housing. He referred to providing housing that can be affordable. If local government and central government are to work together, then they need to look at the cost of building a house. They need to look at the cost of purchasing the land in the first instance, the cost of building the house, and all of the constraints that start to come into play the moment someone takes a step into the council to begin the process. Firstly, there is the resource consent cost, and, secondly, there is the building consent cost. The bill has a definition of affordable housing; paragraph (c) of that definition states: “is within the regulatory criteria for determining what affordable housing is,”. This Government has not done that. Obviously the expectation is that local authorities will do that, and it will place an incredible burden of cost on them because it is not an easy undertaking to start pulling all of that analysis together to determine what affordable housing is.

In the first instance, councils are required to implement legislation passed by the Government, like the Resource Management Act and the Building Act. They have to do that, regardless of how poorly the legislation has been drafted and how it has not been changed to accommodate some movement in the cost of housing. Councils have to work with that. They do not seem to be able to control the costs incurred by people who want to build houses through that process. That is absolutely where it needs to start. When I talked before about a $150,000 development contribution, it was $150,000 after the costs of about $40,000 or $50,000 just for the resource consent and the building consent alone. We are looking at some councils charging up to $1,000 for building a carport.

It is going out of control and is becoming a nonsense. The sooner some rationality is put into the process around how resource consents and building consents are dealt with, the sooner we might be able to have more affordable housing for people in New Zealand. I wish that some sort of sense could be made within the regulatory criteria, as defined in the bill. The purposes clause talks about enabling territorial authorities “in consultation with its community, to require persons doing developments …”. But it is done in consultation with its community. People who know anything about what it is like when someone starts to consult the community, will know this is just another one of those exercises that adds hundreds of thousands of dollars on to the cost of starting an affordable housing scheme.

I would like to begin by speaking to clause 3A, which states: “This Act binds the Crown.” I feel quite sorry for the Minister in the chair, the Hon Trevor Mallard, because this legislation is abysmal. It is on a par with the emissions trading scheme legislation. What I am getting at is that the Act binds the Crown, but this whole bill is concerned with territorial authorities. When the Minister speaks at some point, I will be very interested in his explanation as to why this Act binds the Crown, because clearly it does not. I feel very sorry for the Minister because this legislation is terrible. I do hope the Minister is reading Paul Quinn’s column in the Hutt News, which, I see, he is engrossed in.

💬 Hon Trevor Mallard: Who?

Paul Quinn. He is the fellow who is standing against the Minister.

💬 Hon Trevor Mallard: Is he?

Yes.

Clause 4 states: “In this Act, unless the context requires another meaning”—brilliant—“affordable housing means housing that—(a) is for persons living in households that—(i) have low to moderate income;”. This would apply to most people in my electorate in the Wairarapa, who typically earn $12 to $20 an hour. But what is a moderate income in that context? Next, subparagraph (ii) states: “have no, low, or moderate legal or beneficial interests in property;”. That does not stop someone with property held in a trust from being able to make him or herself eligible for affordable housing. Paragraph (b) of the definition goes on: “is priced so that the persons are able to meet—(i) their housing costs;”. Well, that is really wonderful legislation. Why do we need a rule for that? Then, paragraph (c) states: “is within the regulatory criteria for determining what affordable housing is, if regulations setting criteria exist”. This is appalling drafting; it is appalling legislation.

Let us turn to clause 5, “Purposes”. It states: “The purposes of this Act are to—(a) enable a territorial authority, in consultation with its community, to require persons doing developments to facilitate the provision of affordable housing—”. Why do we need legislation to do this? The bill goes on to state in clause 5(a)(i) that it is “for the purpose of meeting a need for it that the authority has identified by doing a housing needs assessment:” That is wonderful! Why do we need central government to waste its time, to waste the time of the Local Government and Environment Committee, and to waste the time of officials by asking them to come up with legislation that states a territorial authority can do a housing needs assessment. We do not need this legislation to do this; this is wasting the taxpayers’ funds.

Then the bill states, in clause 5(a)(ii), that facilitation of housing must be “in a manner that takes account of the desirability of the community having a variety of housing sizes, tenures, and costs:” For heaven’s sake! This is the real world; we do not need legislation that says that. Then clause 5(b) states that the purpose of the Act is to “void covenants that have, as one of their purposes, stopping the provision of affordable housing or social housing.” For goodness’ sake! Who drafted this stuff? This is meaningless arrant nonsense.

This is exactly the theatre that this Government has created around the emissions trading scheme. It is the theatre of appearing to be doing something for a community. But I say that this legislation will do nothing to deliver an affordable house to anybody in this country. It is unnecessary legislation. Clause 6(1) states: “Territorial authorities that want to find out whether there is enough affordable housing in their districts may do housing needs assessments.” What brilliant law! Who was the wizard who thought of this legislation? It is absolute and utter rubbish, and the Government is charging taxpayers to produce this sort of nonsense.

I am very pleased to rise to speak on Part 1 of the Affordable Housing: Enabling Territorial Authorities Bill. I start my contribution this evening by saying I am a little puzzled at Madam Chair’s directing my colleague John Carter—I believe—not to move beyond the scope of Part 1 into providing solutions. I think I have correctly picked up her direction.

The CHAIRPERSON (Hon Marian Hobbs): This debate is consideration in Committee. That can be done in the second or the third reading, but not in this debate.

Thank you, Madam Chair. I understood, and I thought, and I do believe that this bill is about providing solutions to affordable housing, and it is in that context that I make my comments.

I want to make my contribution very local, and to put the Committee in the hands of a small local authority such as the Waimate District Council, the Mackenzie District Council, the Waitaki District Council, the Timaru District Council, or the Ashburton District Council, all councils in my region that may, or may not—because this is an enabling bill—decide to take a housing needs assessment on behalf of their community. How will that housing needs assessment be generated? It might be generated from a member of the community or a group within the community that feels very strongly about this matter—and there are members of the community who feel very strongly that there is a need to provide community housing within a certain town or district.

That is fine. A letter is written to the mayor and councillors requesting that a housing needs assessment take place. What does that mean for the Waimate District Council, which has got, say, one engineer, one community services officer, and one other officer? There will be a rating officer. Who is going to undertake this work? We can argue—probably quite rightly—that because every council in New Zealand is required to undertake a long-term community council plan, then a housing needs assessment can be undertaken alongside with, or attached to, an annual plan or a long-term community council plan. That is a case that can be argued. But when a council has one engineer, one community services officer, and one rating officer, who also have to deal with the day-to-day business of the Mackenzie District Council or the Waimate District Council, and who also have to deal with accreditation under the Building Act, which is still exercising many small local authorities not just in my corner of the world but throughout New Zealand, who will undertake that study? Who in a small, rural local authority has the expertise to undertake a housing needs assessment?

If we turn to the provisions contained within Part 1, we see that under clause 8, “Method of assessment”, subclause (3)(d) provides for a method that gives “a description of the current balance between supply and demand in the housing market generally and, if relevant, in different sectors:” If, say, the Waimate District Council is going to do that, does it do it just for the Waimate township, or does it also do it for the little villages that are spread around the Waimate District? Where does it end?

I think Part 1’s requirements of small local authorities, of which there are many around New Zealand, will impose an added amount of work, which they may be willing to undertake—this is an enabling bill, and if the community wants a council to do an assessment, then the council may well be willing to do it—but there is the question of their capability to do it. If they have to bring in consultants to undertake the work, who will pay the consultants? The concern I have is not about the willingness of a local authority to do a housing needs assessment; it is about the capability of a local authority to undertake an assessment, and the cost that it will impose on the whole of the community.

Madam Chair, I am concerned at your direction to my colleague not to stray into the realm of finding solutions when debating Part 1, because I think Part 1 is very much about the mechanism of finding solutions. I am very concerned that we have two directions here. On the one hand we are not to try to find solutions, yet we are debating Part 1, which provides the mechanism for finding solutions through a housing needs assessment.

I am concerned that a new industry of housing needs assessors will build up in New Zealand. I am concerned that there will be a number of consultancy firms—they are probably writing their job descriptions even now, and scoping out the type of work they will be doing. These housing needs assessors—I am sure they will find much flasher descriptions of their jobs than that—will offer themselves to local government to undertake housing needs assessments.

The concern I have on behalf of the Waimate District Council and the MacKenzie District Council is that although the aim of this bill is to provide affordable housing to people, the method does not actually follow through on it. This bill does not in any way achieve what it sets out to achieve. What it does is provide an opportunity for housing needs assessors to find a whole new vehicle for earning some jolly good fees from the ratepayer base of small local authorities.

Before I call Tim Groser I just want to make something very clear to the previous speaker, Jacqui Dean, who I think misunderstood what I was saying. I was saying that I wanted her to focus on the wording of the bill, on the intention in this bill, and not to focus on alternatives that are not part of this bill. Speaker’s ruling 104/1 states: “Consideration by the committee of the whole House is the nuts and bolts stage in which a bill is considered [part by part] and detail by detail, …”. It is not the wide things. That speaker did actually deal with that. But that was my warning, before people take off into the wide blue yonder of housing affordability in general.

Had I heard that explanation I possibly would not have risen to take a brief call. I have to be honest: in coming down to the Chamber it was not my intention to take a call on Part 1 of the Affordable Housing: Enabling Territorial Authorities Bill, but merely to enrich my parliamentary experience by listening to my National Party colleagues go through this bill with their customary forensic skills and tear the logic and ambiguities of Part 1 apart.

As members may have noticed, I was sitting next to my parliamentary colleague Mr Keith Locke from the Green Party—a man whom I have known for 40 years. We were discussing the strategic outlook for Hezbollah in the Lebanon, which is probably not quite part of Part 1. But I was forced to rise to my feet by the very observation that you have just made, Madam Chair. I wrote it down as: “Part 1 does not require us to focus on solutions to affordable housing.” I thought that this was very intriguing, given that the immediate description of the title of Part 1 is “Meeting housing needs”. I thought that we can afford to say this—

The CHAIRPERSON (Hon Marian Hobbs): Could the speaker resume his seat. The directions I give are not debatable. I have given a direction; it is not up for debate now. Please focus on Part 1 of the bill. Thank you.

Thank you; most certainly. The problem is trying to work out what exactly Part 1 is trying to fix. When I started to read this bill in the House just about 10 minutes ago I found the most childish drafting I think I have seen in my brief time in Parliament. Let me give members an example. Clause 6 states: “Territorial authorities that want to find out whether there is enough affordable housing in their districts …”. This sounds like a third-form essay on the issue.

Then when we come across other clauses we find bold declaratory statements. For example, let me take clause 13, “Criteria for allocation”, which states: “An affordable housing policy must state the criteria …”. This sounds bold and decisive, but when we look at the operational clauses dealing with the criteria, which are contained in clause 10, we then find out that the criteria are a purely illustrative list of criteria that have no particular force whatsoever. It states: “(1) An affordable housing policy must state the criteria …”. It then lists a series of criteria such as “(a) the proposed location of the development:” and “(b) the kind of development proposed, …”. But it is quite clear from later parts of Part 1 that this does not exclude the possibility that a local authority may decide on other criteria, which makes a nonsense of omitting paragraphs (c), (d), and (e) from clause 10(2).

The whole bill is a complete artifice. It has no intrinsic content whatsoever. One has to ask oneself why Part 1 is in this bill and what its actual, real purpose is. It seems to me—and no doubt we will come to this in a more complete examination of the bill when we start to look at it in total—that this is essentially a political fig leaf. This bill does not actually do anything. It is permissive of a policy that local authorities may in any event already do. It does not add anything to the sum of human knowledge in our country whatsoever. It is simply a political fig leaf for this Government to cover up 9 years of inaction on affordable housing.

I move, That the question be now put.