Frustrations abound as MPs scrutinise social housing 'shocker'

Housing Minister Chris Bishop has acknowledged the increase in rent for social housing tenants was based on "no particular science", merely what the government "felt was appropriate".

He says he is frustrated over a lack of progress in housing the vulnerable, highlighting an "unfairness" that nearly a third of tenants could afford private rents but had not left social housing.

Despite implementing his reforms to the sector in stages, with the final changes three years or longer away - he says they must be viewed as a "package".

Opposition MPs in Wednesday's select committee scrutiny hearing were more frustrated by one specific solution: the government's increased rental charges for social housing tenants.

Bishop said the question the government was trying to answer was who social housing was for, and who should get priority.

"Given limited resources and constraints, you do have to prioritise - and that is just the reality, no matter who's in government."

He said about 29 percent of social housing tenants earned enough to be able to afford a "lower quartile rent in the private market".

"So there's inequity in the system at the moment ... we are grappling with that system and trying to fix it, but I accept that it's not easy, and it's built up over 20 years ... I am just, like, intensely frustrated at the disaggregation of the system. Health does its thing, MSD [Ministry of Social Development] does its thing, HUD [Ministry of Housing and Urban Development] does its thing."

The most expensive social housing the government provided was prison, he said, and the second-most expensive was mental health beds.

"It's extraordinary how much money we spend as a country and yet we still have guys in mental health for four years, or the guy in New Plymouth ... a disabled man in a motel room with his son in a studio room in New Plymouth, even though he'd been allocated a social house because ACC couldn't organise him a ramp.

"The system is (thumps desk), the system fails too many vulnerable people."

The government's work on ensuring support available to such people was more linked up between government agencies had not made "as much progress as I would have liked", Bishop said.

Speaking to reporters, he later identified the government's changes to social housing settings as the solution to that unfairness.

"The status quo is like manifestly unfair and unsustainable and we have to fix it and successive governments have kind of acknowledged the problem at a level, but no one's done anything about it," he said.

"We're starting on the journey and I'm just being fully upfront and transparent around it and what we've decided to do and what work's under way, and what we think some of the solutions are - but we haven't nailed it already, and we're not going to nail it tomorrow either."

Changes already made included increases to the Accommodation Supplement, alongside hiking tenants' social housing costs from 25 percent of their income to 30 percent, while the government was yet to finalise changes like more stringent criteria for accessing social housing, limits on tenancy duration, and check-ins.

Green MP Tamatha Paul identified the rent hike as the "biggest shocker" related to housing in this year's Budget, and questioned why 30 percent was landed at.

Paul: "Did you just stick your finger in the air and think 'let's try put it up 5 percent'? Did you model different numbers?"

Bishop: "Don't take this the wrong way, but like, why, why is it 25?"

Paul: "Because there's international measures that say that 25 percent is affordable. That's why it's at 25 percent."

Bishop: "Mmmm, I'm not sure that's the rationale as to why government income related rent subsidy support is 25 [percent of income], I suspect it's just a finger in the air ... there's no, no particular science to it, we thought it was an appropriate amount..."

Paul: "Did you talk to some public housing tenants when you were setting the rate ... their fridges are already empty, they can't pay their bills, they skip GP appointments."

Bishop: "That's true of some social housing tenants, it's not true of all of them, and I just, I just repeat what I said before which is this is about creating a more equitable system."

The minister said the reforms needed to be looked at "together as a package".

Paul questioned whether some of the 29 percent of tenants who could afford a private rental may be in the system because they may be disabled, when only 2 percent of New Zealand's housing was accessible; Bishop said that was "the whole point".

He said social housing eligibility was currently largely focused on who could afford it, and people with disabilities or mental health challenges, victims of domestic violence, or former prisoners were left to "languish on the wait list".

"It's about rebalancing the system around that, and we're fully upfront that there will be a group of people for whom the government should just provide a house forever ... but there's also equally a group of people who - respectfully, and this is a challenging conversation, it's difficult to say this ... maybe they need a social house for a while, but they don't need one forever."

Paul asked why the coalition government - which insists on targets - had then removed accessibility as a target for Kāinga Ora.

The agency's chief executive Tracey Taylor said: "A good percentage of our homes are accessible, the removal of the target doesn't mean that we aren't focusing on accessibility ... it doesn't mean that it's less important and isn't happening".

Bishop said the government was pushing towards a new system - another work in progress - to get better data: "There's no point building accessible homes in places that don't need them".

Paul also questioned how the public could accept Bishop's argument given the coalition's cancellation of hundreds of Kāinga Ora development projects, saying the scarcity of social housing was "artificial" or manufactured.

Bishop laughed this off, denying that the government had cancelled hundreds of houses. He said the Arlington development in Wellington's Mt Cook suburb had been cancelled by the previous Labour government due to the cost.

"The average cost was $423 million for 300 social housing units in central Wellington, which is over $1m per apartment," he said.

Paul responded: "You've been saying for two and a half years that an announcement is coming that's never come."

Bishop: "Yes, well, we're working on that and I'm as frustrated about it as you are, and we're making progress."

He indicated the end of that "reform journey" was two or three years away, "and probably longer".