Over 80,000 social housing tenants will face average weekly rent increases of over $30 from next year, as part of a drive to reduce what Housing Minister Chris Bishop has labelled a “cliff” between the social and private housing markets.
The change, unveiled ahead of next week’s Budget, represents the start of multi-year reforms that could include a new needs assessment and duration limits for tenancies – tweaks that Bishop argues will introduce greater fairness into the system.
In a pre-Budget announcement on Thursday, the Housing Minister announced the Government would increase the minimum contribution for social housing tenants receiving the Income-Related Rent Subsidy, rising from 25 percent of their income to 30 percent from April 1 next year.
The change would create $387.5 million in savings over the forecast period – most of which would go towards increasing the maximum weekly Accommodation Supplement (which goes to low-income New Zealanders in private rentals) by $10 to $30 a week, at a cost of $374.3m over the same period.
Separately, Bishop said the Government would reduce the Temporary Additional Support hardship payment, provided weekly for those who need help meeting their essential living costs, to account for “unintended increases” – a change that would save $195.6m.
Speaking to reporters, Bishop said the changes were another step in the Government’s efforts to ensure social housing functioned as a safety net rather than a trap.
At present, similar households received widely differing levels of support, with social housing tenants on a main benefit having roughly $105 more in hand each week compared with those in the same situation but receiving the Accommodation Supplement for a private rental.
Government spending on housing support had more than doubled over the past decade, rising to $5.5 billion, but the social housing waitlist had grown roughly six-fold during the same period.
“That tells you something important: we’re spending more, but the system is still not delivering for those who need it the most,” Bishop said.
In addition, 30 percent of social housing tenants had been in place for more than a decade, making it harder for those in need on the waiting list to access a home of their own.
According to official figures provided as part of the announcement, roughly 84,000 families in social housing will pay just over $31 extra each week once the changes take effect.
A further 45,000 families not in social housing will pay just under $11 extra per week, while 111,000 families in the same situation will be better off by roughly $15 a week as a result of the Accommodation Supplement changes.
Asked how he would defend the rent increases during a cost of living crisis, Bishop said it was not an easy decision but the current system was unfair.
“I don’t think it’s defensible that we have a system where people in the same circumstances faced with similar pressures receive quite different levels of financial support depending on what sort of house they live in.”
Around 30 percent of those in social housing already earned enough to afford a private rental in the lower quartile of the market, according to a government analysis.
Asked by Newsroom whether increasing the Accommodation Supplement risked driving up rental prices, Bishop said it was a legitimate concern but research had indicated such increases were “overwhelmingly captured by households, not landlords”.
Separate changes were in the works, with plans to develop a new social housing needs assessment to prioritise those with “severe and persistent barriers to accessing private housing” (such as selection bias or addiction issues) instead of focusing primarily on affordability.
The minister acknowledged that could increase the need for further investment in wraparound services to support those in social housing, but said the Government was “up for that” challenge.
To help improve the turnover of social housing places, the Government was also considering putting duration limits on tenancies. Illustrative modelling showed that an extra 10 percent of social housing tenants moving out after five years would free up an extra 6000 vacancies over a decade – although Bishop said the number was merely a proxy to demonstrate the value of increasing turnover.
“This is not about pushing people out with nowhere to go – it’s about helping people move forward when they can, so social housing is available for the next person who genuinely needs it.”
Changes in those areas would not take place until the next term of Parliament, with officials set to start targeted consultation with iwi, community housing providers and social services groups on the proposals.
Labour Party housing spokesperson Kieran McAnulty accused the Government of “trying to balance the books on the backs of people already doing it tough”, comparing it to Ruth Richardson’s reforms in the 1990s.
“A whole generation of New Zealanders paid the price for those policies through poverty, homelessness, and insecurity. National is now dragging the country backwards and asking vulnerable people to pay for it again,” McAnulty said.
