Healthy Homes Guarantee Bill (No 2)

Thank you, Mr Chairman. I rise to reply to one of the questions raised by the honourable member Michael Woodhouse, about the regulations, now that we’re discussing clause 6 of the bill, which is basically about the regulation-making power that our amendment will give to the Governor-General. The member very kindly showed the House a photographic image of me, in the old days when we were in Opposition, showing the two different kinds of insulation. One was to convey the thickness of insulation typically found in the 1978 insulation standard that the former National Government’s legislation allows 70,000 to 80,000 rental properties to continue with under their new law. I compared that to the typical thickness of insulation required by the 2008—the most up-to-date—building standard. So my response to the member’s question is that the regulations that we will be developing over the next 18 months, after the bill is passed into law, will certainly require all landlords to implement and meet a higher standard—a more recent standard—than the 1978 standard.

It’s not good enough, in our view, that the current law passed by the National Government allows landlords to have 38-year-old insulation in their property—a 39-year-old insulation standard. The point of this legislation is that we are modernising and upgrading the insulation standards of New Zealand homes. That’s the point of this bill. So we are not going to allow 38-year-old insulation to continue in a house, because that’s simply not good enough. We will be—the Government will be, the officials will be—consulting with the public, with industry, with landlords, with tenants, and with the scientific experts on the appropriate standards for insulation, but I can reassure the member that we will not be allowing some 80,000 New Zealand rental properties that are currently insulated to the 1978 standard to continue with that woefully inadequate standard.

What will be the impact for landlords? I’ll tell the member. It will cost approximately between $3,000 and $5,000 or $6,000 for a landlord to put in a heat pump and insulate a standard New Zealand home. That property, depending on where you are in the country, over the lifetime of that insulation—and let’s say it’s a heat pump—will generate several hundred thousand dollars in gross revenue; that’s what that asset will generate. It’s a very small expense for an asset that generates quite a large amount of revenue.

On top of that—on top of that—our policy is to provide grants of up to $2,000 to assist both landlords and owner-occupiers with that expense. And for the benefit of tenants, we are going to be providing a winter fuel payment—$450 for a person living alone over the five months of winter, and $700 for a multi-occupant household.

In answer to the member’s question about the cost to Housing New Zealand, our estimate is that it’s going to cost about $87 million for Housing New Zealand to meet the standards that are likely to be required under the regulations that will be promulgated under this piece of legislation.

Well, I must compliment Minister Twyford. It took a while, but we got there. We now know that several hundred thousand 38-year-old properties—in fact, they could well be only 18 years old, because the 1978 standard was in place until 2001. There were some very modern and pretty well-insulated homes that were built in 2001, and what we now know is that for no other reason than the Minister has decided that an 82 percent thermal block is not enough, their owners are going to be forced to pay several thousand dollars in heating and insulation.

One of the things that I will say, and it’s, I think, an encouragement for the 52nd Parliament, is that we have in this debate stayed clear of some of the unfortunate hyperbole that permeated this bill in its first and second readings and the Residential Tenancies Amendment Bill last year. What we do know is that the worst houses in this country are the ones without any insulation, ceiling or floor, that were constructed prior to the 1978 standard being put in place. But the fact that it might be 38 years old—and I’m a bit older than that—doesn’t make it bad. There are some perfectly adequate 38-year-old cars on the road that are still performing adequately their task. Indeed, the regulation that is in place right now—the Residential Tenancies (Smoke Alarms and Insulation) Regulations—requires those insulation materials to be of a reasonable standard, to be fit for purpose. But that’s not going to be good enough.

We now have an estimate of $87 million for the Housing New Zealand bill and the taxpayers’ bill. That hasn’t been verified, because it isn’t part of any regulatory impact statement that’s on the Table for us to examine, but I do acknowledge that the Minister may have got that since we last debated this. But heaven knows what the unnecessary burden on mum and dad landlords is going to be when they find out that their houses—that could be as recent as 16 years old—are not going to be good enough for this Minister.

Sitting suspended from 6 p.m. to 7.30 p.m.

In the dinner break, I got the calculator out. Thanks to the confirmation by the Minister, we now know that the regulation that would be passed by the passage of this legislation will require all homes constructed prior to 2001—so only 16 years old—and that have not had in that period of time a substantial refit, will be required to upgrade perfectly good insulation in the ceiling and underfloor at a cost of—well, the Minister suggests between $3,000 and $5,000. I think the number is probably closer to $5,000 than $3,000, depending on the ability of the owner to put insulation over the top of, in the case of the ceiling, rather than replace.

He offered an estimate of the costs on the taxpayer for the Housing New Zealand upgrade of $87 million. Now my basic math to that suggests that at $5,000 per dwelling that would insulate only 17,000 of New Zealand’s State houses to the new standard.

💬 Hon Members: How many?

I haven’t been able—17, one-seven, of the 66,000-odd houses that we have—in the time available, to ascertain the proportion of the State housing stock that was constructed prior to 2001, but I would be almost certain that it would be far, far more than 17,000. I wonder if the Minister has made what would be a reasonably elementary but understandable mistake in assuming that the upgrade would be for pre-1978 houses. Indeed, that standard prevailed until 2001 and therefore—if, indeed, his commitment to the regulation is correct, and I’ve no reason to doubt it—all of the houses constructed, private or public, prior to 2001 would be required to be upgraded to the 2008 standard.

I simply ask the Minister two things. Firstly, in respect to the State housing stock, how many of those houses in Housing New Zealand ownership, Government ownership, were constructed prior to 2001, and is it considerably more, as I suspect, than 17,000? Because if it is, the cost to the taxpayer is more likely to be 2½ or three times that amount as we head towards, I don’t know, 40,000, maybe 50,000 of the houses that are in Housing New Zealand ownership constructed prior to that period.

The more pertinent thing, I think, for the many mum and dad landlords that are listening tonight who have just found out that they are going to get a bill sent to them by the Labour Government for about $5,000 in a requirement to upgrade perfectly adequate insulation with thermal properties pretty close to but not exactly the same as what we’ve got now—how many landlords own properties constructed prior to 2001 and will be required to pay that $5,000 bill that the Labour Government, remember, says won’t be passed on to tenants? So the other cost to the Crown is going to be increased income-related rent subsidies—

💬 Hon Amy Adams: That’s right, and accommodation supplement.

—and accommodation supplements. That’s right, Mrs Adams—very, very learned in this matter. But the bill to the Crown is going to be several hundred million dollars more than just the cost of the upgrade of the State housing stock. But, ultimately, the first payers of that are going to be the mum and dad landlords. I would like to know how many of them—maybe 100,000, maybe more—have dwellings constructed prior to 2001; that is possibly half a billion dollars of taxpayer funds into these regulations. The public have a right to know what we are debating tonight.

The question was put that the amendments set out on Supplementary Order Paper 1 in the name of the Hon Phil Twyford to clause 6 be agreed to.