Source: Radio New Zealand
Local government minister Simon Watts. RNZ / Mark Papalii
The local government minister cannot guarantee a rates cap will not cause higher costs for tens of thousands of social housing tenants.
Simon Watts said the final rates cap policy was still being designed, but did not anticipate it would cause higher costs for those living in roughly 10,000 council-owned rental homes.
Advice from the Ministry of Housing and Urban Development (MHUD) to the Department of Internal Affairs said if rate rises were restricted and replaced with more user charges then the impact would likely be a rent increase for those living in council homes, which was predominantly pensioners.
It would also lead to increased levels of housing need, MHUD said.
Green MP Tamatha Paul said this “crucial advice” was omitted from the Cabinet paper Watts presented to his colleagues.
The advice also stated councils would likely shift to market rents for properties it owned, and rely on higher accommodation supplement payments for tenant assistance.
Yet, the impact of an increased Accommodation Supplement had not been costed by the government.
This would especially impact older New Zealanders, the advice read, advice that was not included in the Cabinet paper on the policy.
Watts told RNZ he was confident the concerns raised by officials, particularly around rents, were not going to be a concern.
“The rates capping final policy model has not been finalised yet.
“On that basis, the concerns that have been raised, in my view, are not predicated on what the final design of the policy will be.”
He said the government did not “anticipate” the rates cap would have an impact on council services like council-owned rental homes.
Asked if he could guarantee the cost increase would not occur, he would not. Instead he reiterated the government was not far from finalising the policy following a round of consultation.
He said it would be the appropriate time to comment once that was announced, and the advice could be compared to the final policy.
Paul said the minister did not have any evidence to back up his assurances, and was concerned 10,000 households in New Zealand would be hit with a “crisis in their weekly bills”.
“Unless he was going to put some specific carve out in the rates cap that councils could continue to collect rates for council housing subsidies, then I don’t understand how he’s supposed to stop that from happening.”
Green MP Tamatha Paul. VNP / Phil Smith
She was worried the minister did not consider council housing as part of local government’s core functions, and instead was a “nice to have”.
Paul said many people did not understand councils were some of the “biggest landlords” for pensioners and elderly people on fixed incomes who would not be able to “weather a dramatic rent increase”.
Watts told RNZ it was not the government’s intent to adversely impact any specific group, and wanted to make sure he was putting in place a policy that was going to provide benefit across the board.
“Where there are concerns that that may have an implication on one group over another, then we want to work through that and take that on board.”
The advice from MHUD was not included in Watts’ Cabinet paper on rates capping, because ministers got a lot of advice from officials “across the board, across a variety of areas”, he said.
‘Devastating for Dunedin’ – housing advocate
Leader for the Otago Housing Alliance, Aaron Hawkins, said the outcome of the minister’s policy decisions could be “devastating in Dunedin”.
“If councils had to charge market rents, it would simply be unaffordable,” said Hawkins, who was also running in the Dunedin City Council by-election.
Leader for the Otago Housing Alliance, Aaron Hawkins. RNZ / Nate McKinnon
There were more than 900 units owned by council in Dunedin, the vast majority of them homing older people living alone on fixed incomes.
Currently a single bedroom unit for a council tenant was $150 a week, whereas the current median rent for a one bedroom apartment in St Kilda was $375 a week, he said.
The maximum accommodation supplement in Dunedin is $80, “so there’s no way they’ll be able to afford the balance”.
“We’ll have hundreds of older residents looking for somewhere else to go, and there isn’t anywhere else obvious for them to go.”
He also was not suprised the advice was not in the Cabinet paper. He said rates capping was nothing more than a slogan, and no way to run a city let alone a country.
“People need to understand the implications of that, and this is one very stark example of where we are heading.”
Hawkins explained Dunedin would be impacted more than anywhere else because the council chose to maintain control of its supply of community housing, rather than transferring ownership in various forms into community trusts or community housing providers.
“That was the right thing to do, but it certainly does mean that the city is more exposed to this kind of outcome.”
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
