Affordable Housing: Enabling Territorial Authorities Bill

Hon MARYAN STREET (Minister of Housing) Link to this

I move, That the Affordable Housing: Enabling Territorial Authorities Bill be now read a first time. At the appropriate time I intend to move that the bill be considered by the Local Government and Environment Committee. The Affordable Housing: Enabling Territorial Authorities Bill enables territorial authorities, as it says, to promote the provision of affordable housing to low and moderate income households in a way that encourages mixed communities. The bill will provide new powers to local authorities to help solve affordability problems.

Housing is becoming increasingly unaffordable. More working households are locked out of the housing market because of escalating house prices in relation to household incomes. In Auckland alone, the number of working households unable to buy a modest house that meets their needs rose from 20,400 in 1996 to 54,900 in 2006—an increase of 169 percent. At the same time, starter homes are not being built in new developments. Houses are increasingly getting bigger, with more modern amenities, making them too expensive for first-time home buyers. In addition, more people are renting. Renters have become a more diverse group, including households with children and older renters, who will increasingly out-compete single-parent and single-person households that have traditionally relied on the rental sector. Without affordable rental options, households are spending too much on rent and less is left for other essential living costs, including saving a deposit to buy their own home.

A lack of suitably located affordable houses has economic and social consequences. People live further away from work and have to spend extra hours commuting, at a cost to families and to the environment. Without a range of house types within neighbourhoods people have to move out of their community if their housing needs change. Homeownership has significant social and economic benefits. It can promote greater family stability, improve the connections with communities, and create continuity of education as well as community stability. Homeownership also provides long-term security and a buffer against poverty before and after retirement.

This bill gives territorial authorities the ability—not the compulsion—to require some affordable housing to be built in new developments, or to contribute money or land towards affordable housing being built elsewhere. Territorial authorities have been asking for this legal clarity and this mandate for some time. The Affordable Housing: Enabling Territorial Authorities Bill is enabling rather than prescriptive and provides a robust and transparent process for any territorial authority wanting to use the new powers.

Only those territorial authorities that want to do so need to develop an affordable housing policy. The bill requires territorial authorities to carry out a housing needs assessment so that they have a clear picture of housing need in their areas. Based on this assessment, territorial authorities can develop an affordable housing policy that sets out how they will respond to the housing need. The territorial authority must consult with its community before adopting any housing policy. An affordable housing policy will form part of the territorial authority’s long-term council community plan and will, therefore, be a public document. It will state what is required of developments, how any contributions will be collected and used, and what models the territorial authority may put in place to make sure any resulting housing continues to be affordable for future community needs, and this is a very important provision in the bill.

Territorial authorities can choose how they keep housing affordable. A territorial authority could, for example, vest a house in a community housing trust that sets up a shared ownership scheme or rents the house to a moderate-income household. Alternatively, a house may have a deed restriction that preserves its affordability over the long term. Territorial authorities will also need to consider what incentives they can provide to developments that are contributing affordable housing. The bill permits territorial authorities to use a range of incentives to offset the costs of providing affordable housing. For developers, this is an opportunity to target housing at a growing segment of the housing market. The bill is designed to encourage affordable housing, not deter development.

Safeguards will be put in place to ensure that any affordable housing contributions are considered reasonable by the community. Territorial authorities will have to consult with their communities before adopting an affordable housing policy, and that policy can be appealed to the Environment Court.

The bill will also prevent the use of covenants on land titles that aim to exclude social and affordable housing. These covenants, which are used in urban areas in particular, unfairly discriminate against some of our most vulnerable people, such as older people, children, and people who require assisted living, such as people with intellectual disabilities. The use of such covenants is a small but growing issue. The bill does not aim to address building costs. Nor is it the purpose of the bill to address land supply or land price issues, although it may have a positive effect on these in the future.

This bill is one of a number of tools that will be necessary to address the housing affordability problem. It is only one tool, but it is an essential one. The Affordable Housing: Enabling Territorial Authorities Bill balances the need of the community for affordable housing—and what is wrong with that—with developers’ needs for consistent and predictable planning guidelines. The bill promotes housing choice through ensuring that a range of housing type, tenure, and cost, to meet the needs of moderate-income households, is being built into new developments. I commend the Affordable Housing: Enabling Territorial Authorities Bill to the House.

PHIL HEATLEY (National—Whangarei) Link to this

The National Party will not be supporting this legislation, quite simply because it does nothing that matters in a climate where, for the last 5 or 6 years, property prices for both land and buildings have got out of reach for tens of thousands more New Zealanders. Many of them are young New Zealanders, but the Minister ignores the fact that many of them are also older New Zealanders entering retirement, who would love some sort of accommodation stability. In a climate where housing is getting out of reach for more and more New Zealanders, the Government has tabled legislation that it heralds as its magic bullet, but all it does is give district councils more and more work to do at the expense of their ratepayers, and give builders and developers more and more paperwork and regulatory hoops to jump through, costing them more. Quite simply, they will pass those costs right back to the first-home buyer. The question the National Party has is why the Government does not do something that matters. There are lots of things it could do to address the appalling housing affordability problem that would actually do something for first-home buyers.

First of all, we found out through the housing affordability inquiry, which the National Party called in front of the Commerce Committee—and which the Prime Minister and the Minister of Housing at the time said was not necessary—that developers, builders, first-home buyers, consultants, university representatives, those in the Department of Building and Housing, and all sorts of others say it is the cost of land that is driving up property prices, more so than the cost of building. Are building costs driving up property prices? Yes, absolutely, over and above the cost of inflation, but their effect is nothing like the cost of land in driving up property prices, overall. When I say “property prices” I mean the cost of building and the cost of the land underneath. So the land component is driving up property prices much more than anything else.

The Government says we need to free up more land for development so that the supply-demand equation is met. That is land on the outskirts of cities, and new land and land within city boundaries. At the moment if a couple, say an elderly couple, want to split their section into two or four sections, which would supply more housing for those in the market, the lengths they have to go through, the hoops they have to jump through in terms of local council regulations, or of legislation that this Government has given councils, mean that it is all too hard. Why would a couple within the city boundaries of Auckland want to split their property in half? It would take 2 or 3 years and cost tens of thousands of dollars. They would have to consult with someone in Bluff, if the local council wanted them to, because through the Resource Management Act anyone can object to anything, anywhere! That is the first thing. Why does the Government not make sure that more land is freed up for subdivision?

After 8 years of this Government and 15 years of the Resource Management Act, everyone up and down the country on the front line, not just to do with housing but also to do with electricity generation and transmission, road building, telecommunications, you name it—anything to do with infrastructure—is saying that the Resource Management Act needs to be streamlined. This Government has ignored that call for 10 years. How can it be that a subdivision in Whangarei can be objected to by someone living in Invercargill? How absurd is that! The hoops one has to jump through quite simply have to be fixed so that builders and developers are not paying $10,000 to $30,000 per section to get their applications through the Resource Management Act process. When they have to pay $10,000 to $30,000 through that process they slap it on the price of the section, and the first-home buyer ultimately pays it. But this Government ignores calls to streamline the Resource Management Act.

We have seen two or three pieces of amending legislation to the Building Act brought before the Parliament in the last 3 or 4 years. Has the Government made it easier to build better houses? No it has not. If builders want to shift a window 3 inches to the right they have to submit more plans to the council, get more consent, and have more visits from an inspector. Does that make the house any less leaky? No, but it certainly slaps another five or 10 grand on top of the price of housing for first-home buyers—just another bill they have to pick up.

Lastly, housing affordability is made up of two components. Firstly, skyrocketing property prices have occurred over the last 5 or 6 years because supply has not met demand. Secondly, take-home pay has not kept up with those prices, and interest rates have gone through the roof, to a point where they are the highest in the developed world—at roughly 9 to 10.5 percent.

Let us take the interest rate component first, before we look at take-home pay. Interest rates have skyrocketed in the last few years simply because of the Government’s poor management of the economy and its unproductive spending. It is unproductive spending to pour billions of dollars into health but not provide for more doctors, nurses, and operations. It is unproductive spending to pour billions more into health and billions more into the bureaucracy but not provide for more operations, more doctors, or more nurses. Unproductive spending drives up the costs in the economy. This Government will pour money into the Ministry of Education, but it will not provide for more teachers or for teaching more children. Unproductive spending has driven up interest rates in this country, and first-home buyers pay the bill.

The second aspect is take-home pay. If only this Government would recognise that a significant tax cut to those young families who are trying to pay off a mortgage would make all the difference in the world.

DAVID BENSON-POPE (Labour—Dunedin South) Link to this

I am pleased to take a brief call in support of the Affordable Housing: Enabling Territorial Authorities Bill. Before I begin I observe that we have just heard a most extraordinary contribution from a member of a previous Government that gave us leaky homes and, of course, the Resource Management Act; but those discussions I will keep for another day.

I am pleased to speak in support of this legislation. I refer Mr Heatley and his colleagues to the bill’s title. This is another example of a pattern of behaviour that Labour has demonstrated since 1999—of working with local government to achieve solutions that it is happy with. The solutions that happen in each area will be determined by local communities, not by people who rely on the free hand of the market to mess up most things.

I compliment my colleague the Hon Maryan Street on the introduction of the bill. It meets, and will begin to address, some of the challenges that this Government and this community face. The first challenge, in the wider housing area, was the assault by the previous Government on the State housing stock. The community has not forgotten that members opposite, who are bleating right now, tried to cover, with a most unsuccessful smokescreen, the fact that National sold over 13,000 State houses. The other pattern of behaviour that has contributed to some of the difficulties that we all acknowledge in our community in this area right now is the interesting and extraordinary behaviour of the banking and non-banking financial sector. Clearly, people who have not been required to put equity into loans have unfortunately exposed themselves more than prudent investors would have done in terms of the housing market.

As the Minister said earlier, this bill is one part of a palette of initiatives that will address those challenges. First of all, we have the work that the Housing New Zealand Corporation is doing right now in our communities in terms of replacing, reconfiguring, and restoring our housing stock; secondly, we have the initiative around the Welcome Home Loan scheme; and, thirdly, we have the very, very great success of KiwiSaver enrolments. Members will be aware that we were expecting KiwiSaver enrolments to be at 300,000 at this point. Well, they are already at 316,000, so the end-of-year target has been well exceeded. That will be very good news for a large number of New Zealanders when it comes to moving into their own affordable housing. This involves work with local government in order to enable what is appropriate for its communities.

As the Minister said in her first reading speech, this bill is one of a number of tools that will lead to further productive collaboration with local communities, and it will help New Zealanders to build their communities in the shape in which they want them to be built. I am pleased to commend the bill to the House.

Dr WAYNE MAPP (National—North Shore) Link to this

The disappointing issue about this Affordable Housing: Enabling Territorial Authorities Bill is that, after 8 years, all the Labour Government can promise is a survey. I have heard and I have read that the new Minister of Housing, Maryan Street, is quite promising, but her first initiative is to promise a survey. She tried to say to the National Party that we should not be too worried about this bill because it is not prescriptive, that no one has to do anything, and that no territorial local authority will force anyone to do anything.

You know, in some respects that is our fundamental complaint, is it not? This particular response is pathetic. The best that her hard-working department and her hard-working Cabinet team can come up with today is a survey, and the ability, I guess, to make a few by-laws—an ability not for the Government but for local authorities.

I guess she will go out next year to the voters of New Zealand and say: “Vote for Labour because we are going to fix your housing problem with a survey. That is our solution, and, in fact, we did such a good job of it that we sought to pass the legislation through urgency, because that is how important the survey is.” I have to say to the Minister that it is simply pathetic.

If a survey is Labour’s response to the front-page article in the New Zealand Herald today that shows an increasing gap of wealth between Australians and New Zealanders in housing affordability, frankly it is not surprising that more and more New Zealanders are making the choice to go to Australia. Last year 40,000 New Zealanders moved to Australia; 40,000 New Zealanders made a vote of no confidence in the Government. That is the truth of it. New Zealanders are moving to Australia because they are sick and tired of this Government and its lacklustre response to all sorts of problems.

The Government could have done a whole raft of things. My colleague Mr Phil Heatley pointed those out: more land availability and fewer prescriptive building regulations. I just point out to the Minister—she may not know this, you see—that in Wellington City, according to the council, as a result of the Government’s building legislation, people now have to provide 300 pages of documentation and 12 A3-sized plans just to build an ordinary house. We are not making this up; these are Wellington City Council’s own figures. That is a tenfold increase from just 4 years ago. I know there has been a leaky buildings crisis, and I know that things had to be done to fix that up, but multiplying the paperwork tenfold is not a solution.

Earlier this year I went to a forum in Auckland run by Arthur Grimes. He identified the most critical issue for housing affordability as the lack of urban land for subdivision. He specifically identified metropolitan urban limits as driving up land prices, and he had a huge amount of data on that. My colleague Mr Phil Heatley was also there. We read that material. I want to share something with members: not a single Labour person was at that meeting. This is important research. Arthur Grimes is a highly respected economist and there were hundreds of people at that meeting, but not one member of the Government was there.

Arthur Grimes identified the critical problem as being lack of land availability and because the metropolitan urban limits have not shifted for well over a decade. What has this Government done about that? It has done absolutely nothing.

RON MARK (NZ First) Link to this

I rise to take, hopefully, just a short call. It is interesting, is it not? I actually enjoy listening to my colleague over there, Dr—Captain—Wayne Mapp. But I have to say that I get tired of these Māoris who cannot pronounce English, who are all the time standing up and talking about “New Zillun”. Mr Mapp had me wondering for a while which country he was referring to. Here in New Zealand we have had—

SUE BRADFORD (Green) Link to this

The Green Party is pleased to be supporting the first reading of the Affordable Housing: Enabling Territorial Authorities Bill, which is in front of us this morning. As I think every political party in this House realises and accepts, barriers to homeownership are huge at present, and the percentage of people in this country owning rather than renting their housing is dropping all the time.

Like other members here I am sitting on the Commerce Committee’s affordable housing inquiry at present, where we are hearing a large number of excellent submissions all stressing the enormity of the problem we face, and the complexity and range of possible solutions. I find it very ironic that Mr Heatley and Dr Mapp from the National Party are opposing this bill, given that National actually called for the housing affordability inquiry and, like the rest of us, it has been hearing the realities of what is going on out there. This bill at least presents us with one small and rather tentative part of the answer.

In respect of this I am glad that the Minister and the Government have seen fit to change the name of the bill to more accurately reflect the limited scope of what it seeks to achieve. In its original form the bill was labelled the Affordable Housing Bill. One of my main objections at that point was to the fact that the name was rather grandiose in the context of legislation that attempts to achieve only a very small, incremental, and non-binding improvement to one aspect of a much larger crisis. I was concerned that somehow the Government was conveying the impression that it could sort out the housing affordability problem with just one bill, perhaps for political or tactical reasons, but I am sure that this would have backfired when people realised its limitations. So I commend the Minister and the Government’s common sense in bringing the title back to a more realistic reflection of what the bill might hope to achieve.

The Green Party certainly supports the underlying purpose of this bill, which is to enable local authorities to develop and implement affordable housing policies in relation to new developments. I have been aware for some years now of the sterling efforts being made in the Queenstown district, by its local council and others in the community there, to try to turn back the tide on its becoming simply an enclave for the wealthy. That district has had a crisis for decades with the shortage of affordable and available accommodation for workers and their families. For example, a recent study found that someone on the average income in the Queenstown Lakes district of around $63,000, or $1,227 a week, would spend about $900 a week servicing an interest-only mortgage on a low-end house in the area—with “low-end” being around the $500,000 mark. With tax as well, the homebuyer would have only a few dollars left to live on.

In response to this situation, the council is working hard at strategies to help homebuyers, both through the council’s partnering with a local housing trust and the Housing New Zealand Corporation to work on a new affordable housing scheme, and through plans to add new rules, definitions, and incentives to develop affordable housing for over 2,000 households by 2016. I commend the Queenstown Lakes District Council for its progressive and far-sighted efforts.

I contrast these with the attitude of the new Auckland City Council, which seems to have the opposite approach, despite Auckland also having one of the biggest problems with unaffordable housing in the country. A meeting is happening in Auckland today, I believe, that will evidently decide whether to break an affordable housing contract that the council signed up to earlier this year, when it formed a partnership with the New Zealand Housing Foundation to build about a hundred affordable homes over the next 5 years. This is trifling compared with what Queenstown is attempting to achieve, but even this small, worthy, progressive first step by Auckland City may be doomed because of John Banks’ apparent commitment to reverse any socially responsible policies, now that he is in charge again. And this is despite the fact that although Auckland prices might not be quite as bad as Queenstown’s, it does take nearly a whole average wage to pay off an average mortgage on an average house in the Auckland region.

I understand that one of the motivating factors for the Government in bringing forward this bill at this time is that the Queenstown Lakes District Council may have run into some legal and technical difficulties in being able to do anything about requiring developers to include affordable housing in their plans. I think it is great that this bill aims to break the deadlock over this, and that where a council has a will, it will be able to go through with its planning once this bill goes through. Councils will have legal certainty about pushing forward with planning, which is so important.

At the moment, it is apparent that the regulatory tools available to councils, including the Local Government Act 2002, do not directly address the issue of affordable housing. This bill will allow those territorial authorities who choose to do so to develop an affordable housing policy that specifies what actions a developer may be required to undertake, on the one hand, and what the council must do, on the other hand, to help compensate the developer—for example, through excusing payment of development contributions, having rates remission policies, providing direct funding assistance, or applying things like a density bonus. Before a council can do any of that, it has carry out a housing needs assessment and consult the community about the development of an affordable housing policy.

The Green Party thinks that all this is grand. Our only problem with it is that it is completely optional, and that only some councils will choose to go down this path. I am sure Queenstown will take the lead, and I hope it will be followed quickly by places like Wellington and Christchurch, which seem to have a comparatively progressive attitude towards accepting that there is a council role in helping to house the local citizenry. However, in places like Auckland City, Rodney, Northland, and others, I fear we might see quite a different approach, despite a very high housing need among low and middle income earners in those districts.

The Green Party believes that housing is a fundamental social good and that it is a basic human right for all citizens and residents, not just for some. We believe that not only central government but also local government must play a leading role in developing policies that ensure that everyone has their basic housing needs met through either renting or buying their homes. Therefore, although we will be supporting this aspect of the bill as far as it goes, we would prefer it if the Government were to go a lot further.

We believe that all local councils should develop affordable housing policies, after undertaking needs assessments and consulting well with all stakeholders. All councils where a housing need is identified should be required to put together policies that require developers to facilitate the provision of affordable housing, as per the trade-offs allowed for in this bill. All councils should also be willing to facilitate the release of surplus land to help with future land supply for community and State sector housing, and where need exists they should also be actively building more housing themselves and supporting community sector social housing initiatives. Thus, our main problem with this bill is not with what it sets out to do, but with the fact that it does not go anywhere near far enough.

One further aspect of this bill that I have not mentioned so far is the element that brings to an end restrictive covenants on developments that attempt to exclude any or all affordable housing from those developments. This tool has been used with increasing frequency in the Auckland region. I am not sure about other areas, but it is certainly a feature in our part of the world. Such covenants prevent the Housing New Zealand Corporation and other social housing providers from buying or leasing properties within a development. This means from the developers’ point of view, of course, that covenants are keeping property values high while keeping low and middle income people out. But from a social justice perspective, they are increasing and rigidifying the gap between the haves and have-nots that, sadly, is already increasing in this country, as it is in many parts of the world.

In a small way, this provision within the bill is a microcosm for a decision about which way we want Aotearoa to go. Do we want a future where the rich live safely within their gated communities and secure compounds and no riff-raff are allowed within the walls? Or do we want a country that still has some notion of social equity and a fair go for all? The Green Party totally supports the removal of the power to place exclusionary covenants on developments, and I congratulate the Minister and the Government on taking this step.

HONE HARAWIRA (Māori Party—Te Tai Tokerau) Link to this

Tēnā koe, Mr Assistant Speaker. Tēnā tātou katoa e te Whare. The link between decent housing and good health is well established. Indeed, for centuries, the saying “A man’s home is his castle” has represented the concept of a man’s home reflecting his identity and character. Even in te Ao Māori we say something similar: He matua pou whare, e rokohia ana; he matua tangata, e kore, e rokohia—the main ridge pole of a house will always stand, but not so a person.

For far too many citizens of Aotearoa New Zealand, and in particular for more and more Māori and Pasifika, the problems of housing affordability are rapidly eroding these longstanding values. This bill seeks to remedy these problems by providing councils with the tools to address housing and rental affordability. But for many of our whānau the low level of incomes, and the fact that many Māori whānau have young children and larger families, poses real challenges for suitable housing options.

On top of that, developers are building larger and more expensive homes, the starter-home market is shrinking, a property price boom has seen the rate of homeownership plummet in recent years, and today hardly any low to medium income whānau can even consider buying a home.

I will share with the House some staggering statistics on housing affordability and homeownership that show that fewer than 30 percent of Māori own or even partly own their own homes, compared with 65 percent of non-Māori. Of those who do own or partly own their own homes, only 6.7 percent are Māori. Of those who rent their homes, 67 percent are Māori, compared with only 44 percent of non-Māori. And with rentals of $275 a week in Auckland and $211 a week in Wellington dramatically eroding the standard of living for far too many of our people, even rental affordability is becoming a major issue for the future.

I would like the House to consider the critical state of available housing options in this country, particularly in light of a national forum held at Te Papa Tongawera less than 10 days ago. There we learnt that homelessness is becoming a significant and growing problem for people moving between temporary forms of shelter, for people living in boarding houses or other inadequate housing, and for people forced to sleep rough in parks, streets, deserted buildings, and so on.

Dr Guy Johnson from the Australian Housing and Urban Research Institute has analysed the frightening reality of the homeless population. He told us that 75 percent of homeless youths become homeless adults, that 30 percent of all homeless people were first homeless in their youth, and that there is a growing population of people who have been homeless for much of their life. The effects of this are apparent in a life characterised by a lack of continuity and certainty, anxiety about the constant search for where to go next; the disruption to education or employment prospects, and the increasing likelihood of exposure to violence, discrimination, and exploitation. As a consequence of such a lifestyle, physical and mental health decline, and the impacts of isolation and alienation are profound. In the land of plenty, these increasing levels of homelessness are an indictment on our society and a condemnation of this Government’s current housing policies.

I also refer the Minister to the very valuable resource published last August by the Family Centre social policy research unit and the research centre for Māori health and development at Massey University. The study—Maori Housing Experiences: Emerging Trends and Issues, by Charles Waldegrave, Peter King, Tangihaere Walker, and Eljon Fitzgerald—confirms the fall in Māori homeownership rates, and catalogues the issues of overcrowding, inadequate heating, and substandard housing as critical factors in any discussion on the status of Māori health.

We know that the economic conditions we have regularly profiled in this House have also had a massive and adverse effect on the ability of whānau to afford adequate housing. We note that this bill enables, but does not require, councils to assess the level of affordable housing in their districts. Given the dire circumstances surrounding Māori housing and the access to appropriate housing in Aotearoa, we are keen to know why such an assessment is not a core part of the business of local bodies.

The Māori Party commends those councils for pushing for legislation to help resolve the desperate housing crisis we are in, and encourages local bodies—particularly those in and around Auckland and other high-growth areas—to respond positively to the lack of affordable housing in their regions. The Māori Party urges the Minister of Housing and her ministry to consider the vital need for policies that will help to house the homeless and prevent homelessness. The Māori Party urges the Minister to ensure that Māori will be involved in further developing Māori housing policy—particularly around design and location and the conditions pertaining to Māori whānau.

This bill is worth supporting if it will genuinely promote the provision of affordable housing to low and moderate income earners. We will support it as part of our efforts to work with councils and any other agencies to develop affordable housing policies that can be taken up throughout Aotearoa New Zealand. Tēnā koe, Mr Assistant Speaker.

JUDY TURNER (Deputy Leader—United Future) Link to this

I rise on behalf of United Future to speak to the first reading of the Affordable Housing: Enabling Territorial Authorities Bill. United Future will be supporting this first reading, because affordable housing is an issue that we are passionate about. But I will signal at this first reading stage that we have some concerns. We are not sure that this legislation is the solution, but it certainly is an opportunity to hear from the wider public, particularly those with a vested interest in the housing industry. Over the last few years members from United Future have had some very interesting discussions around the issue of affordable housing. I remember very acutely some of the issues that came up at the affordable housing summit in Wellington that we attended.

We are concerned that this bill is an opportunity wasted, and that there could be more helpful things included in it. The bill enables, but does not require, territorial authorities to assess the level of affordable housing in their districts, and following that assessment it allows a territorial authority to develop an affordable housing policy and to implement it.

The bill says that the implementation of that policy includes enabling territorial authorities to require developers to facilitate the provision of affordable housing, and it says in clause 12 that an affordable housing policy must state how territorial authorities might assist those developers who are facilitating the provision of affordable housing. Territorial authorities will be asked under clause 11(2) to consider in their policy development a requirement of a developer to include a proportion of affordable housing in a development. That is an area that concerns us, because there will have to be some fairly good incentives in there for developers to factor that into their thinking. I guess a territorial authority could include in its own plan an intention to free up appropriate land specifically for affordable housing. This would mean that when people were purchasing land for development they would understand what the intention of the territorial authority was. We are a little bit concerned that people who have invested in land for development will then discover, after the fact, that they have all sorts of requirements slapped on them in a way that I think could be extremely “business unfriendly” and unfair.

One of the things I am acutely aware of is a discussion I had with one of the leaders of the Registered Master Builders Federation, who talked about the federation’s estimates around the issue of compliance costs. It figured, allowing for reasonable and fair compliance on a residential property, that New Zealand homeowners could save up to $30,000 per average house if there were more sensible compliance regulations around housing. The fear being expressed at the time was that in the wake of the weathertight homes issue, the industry had become so risk-averse that it had a level of compliance around the building of houses that was unreasonable and that added to the problem of making houses unaffordable for middle to low income New Zealanders.

We recommend to the Government and to the committee that they look at some of the very fine work that has been done by the social policy unit of the Salvation Army, which has some fantastic recommendations about the way we could be making greater progress on the issue of affordable housing. We are not completely convinced that this bill reflects the kinds of suggestions that the unit has thoughtfully put forward, and that is of concern to us. [Interruption] The Green member is quite right: there are some positive things in this bill. I am not trying to say that this bill is not worth the paper it is written on; I think there are some interesting and positive provisions. I guess our fear is that those provisions do not go far enough and that they have some heavy-handed ways of approaching affordable housing that penalise the wrong people and do little for the people who are in need of affordable housing. But we are very happy to support the bill’s first reading, because this is a discussion that must be had. United Future wants to reassure the House that we are supporting this first reading.

MARK BLUMSKY (National) Link to this

I rise to speak to the Affordable Housing: Enabling Territorial Authorities Bill. “My house, my castle” is a term that is well used when people talk about their houses. I suggest that with this bill that may not be the case anymore. Under this legislation it could be that when people want to sell their houses, they will sell at prices that are not the prices they want to sell them for, or the prices they would expect, because in this legislation there is a caveat that will be placed to ensure that people’s houses, when sold, will be affordable.

Normally people would want to be able to sell their houses for what they are worth. With this legislation, they will not be able to. Other people will decide what their houses can be sold for. If a person gets one of these affordable houses, that is fine, but when that person sells it, he or she will not be able to sell it for the price that it may well worth—someone else will decide the price.

People in this situation may say: “OK, fine, I bought my house cheaply; therefore maybe there should be an obligation to sell it cheaply to keep the affordable housing stock at a certain level.” But I ask members not to forget that if a house is bought cheaply initially, it is because it was made cheaply. It either had a smaller floor plan, one garage less, or maybe not such ritzy fittings inside the house. A house bought cheaply as part of a bigger development will have some characteristics about it that make it cheaper. People will say: “Fair enough, I bought it cheaply, it should be sold cheaply.”

But the problem is that when Kiwis own their own house, no matter what price they bought it at, many have a pride in it. It is their castle. They make adjustments to it, they develop it, they put on an extra room, they make the garden bigger, they add to it, they built on—it is the Kiwi way. It is DIY, and it is what we do as Kiwis. They add value to the house because they love their house. But what will happen with one of these houses is that the owners ain’t going to be able to get the value for their efforts in the house because someone else will decide what price they can sell it for, because affordability needs to be retained.

So why would people bother? If they get one of these affordable houses, why would they then bother adding value to it? Why would they put in the effort? There is no upside. At the end of the day, they will have probably the worst house in the best street, because they will not bother. Their neighbours will love it when the person next door has the worst house in the best street. What could well have started as a pretty swanky, smart development with 20 houses—a couple of them being affordable, and all of them looking pretty sharp at the start—will, at the end of the day, be dragged down. It is the old story: the worst house in the street drags down the rest of the street. My goodness, there are a lot of people who have put their life-savings into investing in houses, and that investment will be impacted on.

It is sad that the Labour-led Government, when it wants to make housing affordable and talks affordable housing, immediately picks on the developer to fix that. Why should it pick on the developer? It is because developers are a very easy target. There are not very many of them, so there are not too many lost votes. It is a bit like deciding: “Right, affordable housing—let’s make the developers do the work. Let’s blame them; let’s make them carry the can.” To use an analogy, it is a bit like deciding that kids need to be healthier. To make kids healthier we think they need to eat more apples, so we pass legislation that forces greengrocers to sell two apples every day to every customer. But the problem is that not everyone will want to buy those apples. Yet, if there is legislation forcing the greengrocer to give away green apples to the kids, they will be given away—they will not be sold. And who will carry the cost of those apples? I can tell members now that it will certainly not be the greengrocer; it will be every other customer who will carry the cost. There is no difference in what this legislation is doing.

In the last 24 hours I have managed to speak to a couple of significant property developers who build a lot of housing in New Zealand. I have to say they all endorsed the concept of affordable housing. There is no doubt that these people would love to see more affordable housing in New Zealand. But none of them felt that this bill and what it is trying to do is, in fact, the answer.

It was thrown at me—and I thought it was a very good point—that when cars were first manufactured Henry Ford decided he wanted cars to be available for the masses, to be cheaper, so he developed the Model T. He developed an affordable car for the world to drive. He did it because he manufactured a lot of the same car. So it makes one wonder—as it was thrown at me yesterday—why we do not encourage one or two manufacturers to make the Model T of houses and develop and produce a range of houses that are all very similar, bulk produced, and available to be put on the land that becomes free. I thought there was some real merit to that. The only difference is that we would probably not want all the houses to be painted black as the Model T was—the cars were any colour a person wanted, but they had to be black. By definition, if houses are mass produced in that way, they will be cheaper.

Then the issue just comes down to land availability, and that is when councils can play their role in this crusade on making sure there is affordable housing. A council can and does have a huge role in making sure that land is available. Councils can revisit their city boundaries. They can revisit the containment line that they put around cities currently beyond which development cannot go. Land on the other side of that fence could become available for housing, which it currently is not. I know Wellington City, for example, actually puts the containment line around Wellington City to force housing development to go to infill. We are suggesting that maybe that containment line should disappear to make land available for housing. The other thing that could happen is that councils, instead of selling land, could make land available for affordable housing and charge just a lease—a rental of, say, 5 percent return on the leased property; a subsidised mortgage. A council could own the land and lease it to the housing owner on a perpetual lease. By having that subsidised mortgage the land costs become a lot more affordable.

One has to wonder just how much difference this bill will really make. In a 20-storey apartment building with 120 apartments, 12 of those might be made to be affordable. If there were 100 of those 20-storey apartment buildings, there would be 120 of those apartments that may be affordable. At the end of the day, what difference will that make? I say that because in San Francisco, which is often used as an example of a place where there is good, affordable housing, in the last 10 years 278 affordable houses a year have been developed using the type of concept suggested in this bill—that is 278 houses a year in a city of 7 million people. So we have to wonder whether this is the solution.

The bigger picture is the bigger answer and that is to make sure that personal tax cuts are delivered—and the National Party will do that. The bigger answer is to enable people to have more money in their pockets, to sharpen up the regulatory regime, to keep interest rates lower, and to reform the development rules and make sure the Resource Management Act behaves—because it certainly does not behave—to make it easier to build a house. The bigger picture is the answer, not picking on developers and suggesting that that is the way to answer the problem—it is not.

MARTIN GALLAGHER (Labour—Hamilton West) Link to this

I want to take a brief call on the Affordable Housing: Enabling Territorial Authorities Bill. I certainly want to commend the Minister for her excellent introductory speech. I also take this opportunity to observe that even in Hamilton, in the Waikato, the issue of affordable housing is very important. I want to make a couple of brief observations.

To those people who say that all we need to do is create more greenfield sites, and that it is purely an issue of supply and demand, I ask them to have a look at Hamilton. The city has grown literally by about one-third or more in the last decade or two, with new greenfield sites. Have we had affordable housing sections in those new greenfield sites? No, absolutely not! So obviously legislation is going to be required to have some impact in order to create those affordable housing projects.

The other week the Minister visited Habitat for Humanity in the Waikato and met Mr John Gallagher, the chairman, and also Pete North. It was a fantastic meeting and I have to say I was exceptionally impressed, as was the Minister, with the wonderful work that Habitat is doing. I am hoping, as a result of this bill, that that will be one of the organisations that will be a partner in this context. We visited one of the residents of a Habitat property who is moving to own her own property and she said: This is not just about the bricks and the mortar—the structure—it is about having a home and a house that realises our dreams and aspirations, and lets us get on with our life journey.”

That was a very, very fantastic day. As the member for Hamilton West I give credit to that organisation. [Interruption] The difference between Labour members and Opposition members is that they talk, and we do.

JOHN CARTER (National—Northland) Link to this

What a laugh that is!