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Q+A: Interview with Phil Heatley

Guyon Espiner

Published: 1:20PM Sunday October 24, 2010 Source: Q+A


PHIL HEATLEY - Housing Minister.
Well, that's certainly a recommendation in the report is that any new tenants coming on from now on would be under the understanding that they may just have the house for three years, five years or 10 years, and then we review that tenancy. So the tenancy wouldn't necessarily end in that time, but we'd review the tenancy and see if their circumstances have changed.

GUYON  And are you going to pick up that recommendation? Is that your intention?

MR HEATLEY Oh, that's certainly on the table for discussion for new tenants coming through. In terms of tenants that are already in state houses, we want to provide them some certainty. And certainly we would not be having people who are over the age of 65 - the elderly - or those who are, say, on an invalids benefit or others in quite difficult circumstances - we wouldn't putting those existing people onto reviewable tenancies, but those new people to state housing, we'll consider that and we'll think about that in depth before we make a decision.

GUYON It's a fundamental change, isn't it? So, for example, after three years, you could have your tenancy reviewed. Reviewed by what criteria?

MR HEATLEY So what would happen is& Well, a good example actually is someone's in a state house - you know, they've had it for 10 years. When they first moved in, they had three kids, they were married, it was a four-bedroom. Now they're alone or there's just two of them. They just need one bedroom. They've got, you know, spare bedrooms and their circumstances have changed, so should they be in state housing? Has their income increased? Or should they move to a smaller state house? Those types of things are happening at the moment, so what we want to do is we want to say to new tenants coming in to Housing New Zealand, 'Look, I understand your circumstances might change. After three years or five years or 10 years, we'll review your tenancy.' Now, we haven't made a decision on that yet, but that's something that we're seriously looking at.

GUYON And would those grounds be set out in the agreement? Would it be based on the average wage or how would you actually measure when someone was fit to move on?

MR HEATLEY  Oh, well, look, it would be a combination of things. See, at the moment it's not just about housing low-income people. You've got some people with very complex needs in state houses. Sometimes there's disabilities. As I say, we've got an awful lot people over 65 in state houses, which will be concerned about their future, and we want to give them some certainty.

GUYON So a range of circumstances?

MR HEATLEY Yeah, as long as people know up front what the rules are&

GUYON What say, though, that the officials at Housing New Zealand review a tenancy and think, 'Look, these people can now go to the private sector.' The person in the house goes, 'No, thanks.' What do you do then?

MR HEATLEY And that's why we've called it reviewable tenancies or the recommendations in this report as reviewing the tenancies. So what would happen is, say it was a five-year reviewable tenancy, is that a year out from that, you'd start working with the family and talking to them about, 'Well, OK, your tenancy's coming up for review. You earn significantly more. You don't need all these bedrooms. You need to move on.' If that decision was made - 'You need to move on' - then what we'd do is transition them either to another social&

GUYON You'd terminate the tenancy?

MR HEATLEY Oh, if we took on the idea of reviewable tenancies, the endgame for one of those& you know, that pathway could be to either continue the tenancy, transfer them to another tenancy with a social-housing provider; they might go into home ownership, they might go into private rental. But, yes, it could be that the tenancy ends with Housing New Zealand and some needy family comes off the waiting list and moves into that home.

GUYON We've seen recently three women with Mongrel Mob connections fight very hard all the way to the Court of Appeal, I understand, to try and stay in their homes. Is it going to be legally possible to terminate a tenancy?

MR HEATLEY Oh, look, at the moment Housing New Zealand doesn't need a law change in order to terminate tenancies. It's just philosophically New Zealand has grown up with this idea of a state house for life, and what we're saying is for new tenants, we might decide as a Cabinet that we want to challenge that from now on, simply because we've got a lot of needy people on the waiting list who really desperately need a state house, and we've got a lot of tenants who don't need one any more.

GUYON Housing New Zealand says that about half of its tenants couldn't cope in the private sector. Sometimes they're mentally ill, disabled, as you mentioned.

MR HEATLEY That's correct.

GUYON Is it your thinking that the other half who can cope in the private sector should be in the private sector?

MR HEATLEY Well, many of them could cope in the private sector. We've got about 6000 state-house tenants who currently pay a market rent, which means they could actually be renting off the private landlord next door, and yet they're in a state house. Now, we want to look at options to move them on as well, but when I say that, I need to stress that when we talk about reviewable tenancies, we are going to consider the concept of new tenants coming into state housing going on to renewable tenancies. The concept of current state-house tenants - that's another question again, simply because they've got an idea that they'd be in that house for a very long time.

GUYON And you've got some people on some pretty significant incomes.. You said in a speech in August that there was some families who had more than $100,000 in income per annum and were still in a state house. Is there anything you can do to actually proactively move people like that on?

MR HEATLEY Oh, look, under the current laws, we could issue a notice to say that they're no longer in the state house&

GUYON Will you do that?

MR HEATLEY We're not planning to do that at the moment, but certainly&

GUYON Why not? We've got 10,000 people in need on the waiting list. Why don't you move people on who can be moved on?

MR HEATLEY Well, Cabinet's yet to make those decisions, but what I am saying is that I'm very happy to go to my Cabinet colleagues and say, 'Look, I think for all new tenants, we should consider the idea of reviewable tenancies - three, five or 10 years.' For current state-house tenants, I personally wouldn't be comfortable, and I know the Prime Minister would not be comfortable, for putting the elderly, for those who are disabled, those with complex needs on reviewable tenancies. Certainly, though, those who are on high income who are currently state-house tenants, I'll lay that open to Cabinet as a suggestion. We're yet to decide.

GUYON Would one of the factors be the children in schools? Because, I mean, they might be on a decent income, but the kids might be in a good school. They might have a neighbourhood and a sense of community there and feel that that is their home. Would you take that into consideration?

MR HEATLEY Well, certainly that's what's interesting about the report, because the people that provided the report to us suggest that actually in some circumstances if someone is of a higher income now and does want to remain in that particular house because of the local doctor and the kids go to the local school, they could buy the house. You could transfer the house to another social-housing organisation or an organisation like the Salvation Army.

GUYON So there are other options.

MR HEATLEY And actually they could remain in the home. It's just the state housing& It's not part of the state-housing stock any more. That's quite a nifty idea, because it keeps people in their local community, but it means the taxpayer is not necessarily owning the house that they're in.

GUYON OK, the other big mismatch you've got is the type of houses that you've actually got. You've got far too many two- and three-bedroom houses. You've got a lot of people rattling around in houses that are too big for them. I think that you said there were 2700 houses with spare bedrooms, and about a similar number with crowded bedrooms. Are you going to have to engage in a large-scale selling and buying programme, in terms of selling houses you don't need and buying ones that are fit for purpose?

MR HEATLEY That's correct. In fact, we've got two types of mismatch, as you describe. The first one is that we've too many three-bedroom houses - in fact, 10,000 too many - and we haven't got enough one-bedroom houses for very small families - obviously people living on their own - and certainly not enough four- or five-bedroom houses. So what we're going to do is send a very clear signal that we want to realign all that, so we're going to need to dispose of all our three-bedroom houses and buy smaller and larger ones.

GUYON What sort of scale?

MR HEATLEY Can I just say the other mismatch, though, is that in some areas of the country, we've got too many state houses. In other areas of the country, we haven't got enough.

GUYON Understood. What scale are we talking about? Are we talking about tens of thousands of homes to be sold and bought back?

MR HEATLEY Yes, we are, but we're talking about a long period too. It's not something that you would do in 12 months for a number of reasons. We need to rehouse people, make sure we're not upsetting people's lives too much, but certainly we'd be talking about over a 10-year plan. We would want to reconfigure the state-housing stock - sell down in some areas, buy in others, sell down three-bedrooms, buy four-bedrooms, buy one-bedroom houses.

GUYON Will the numbers stay essentially the same at roughly 70,000? Or will you increase it or decrease it?

MR HEATLEY What we've said quite clearly, and we certainly said to the people that drew up the report for us, is that we're committed to state housing, we're committed to Housing New Zealand&

GUYON On what numbers?

MR HEATLEY  &we're committed to income-related rents.

GUYON Yeah, we'll talk about that in a second. What numbers?

MR HEATLEY In terms of numbers of state houses, what we've said is we want to house more people in social housing. We want it to be a combination of state housing and combination of houses provided by others in the community-housing sector. So we are going to move away from counting the number of state houses we own or manage.

GUYON That's fascinating. So at the moment, there's a ministerial directive that says you have to own just over 70,000 state houses by the middle of next year.

MR HEATLEY Um, no, the ministerial directive that's happened over a number of decades under National and Labour, and it's continued as they've gone in and out of government, is to increase the number of state houses.

GUYON OK, but roughly it's 70,000.

MR HEATLEY That's correct. And we're saying&

GUYON So you're abandoning that target? You're abandoning any target or minimum number of houses that you need to own?

MR HEATLEY Yes, what we're doing&

GUYON That's a massive change.

MR HEATLEY It is, but what we're saying now is that we want to increase the number of people housed, and we want to increase the amount of social housing in New Zealand, but we can't do it alone. The government's in no position to keep buying state houses the way we have been, so we're going to slow down and probably stop and go to the community-housing sector, who have put up their hand, and they say this in their report, and say, 'Look, we want to get into housing the most vulnerable.' In fact, many housing organisations are specialist in their area - disabled, mentally ill, elderly.  'And we actually need capital, cash or houses for you as the government to inject into us to grow.' And we're prepared to look at that.

GUYON In fact, this report says that you could shift 20% of the housing need within five years to non-governmental organisations. Effectively, and this is not a pejorative statement, you are privatising 20% of the housing stock.

MR HEATLEY Well, we've made no decision, but what&

GUYON But if you pick that up, you would be.

MR HEATLEY Well, no. What the panel says& And, you know, we had someone on the panel from Auckland City Mission, someone from the Salvation Army, someone from the New Zealand Housing Foundation. They've come back and they've said, 'No, what we would like you to do is transfer a whole lot of housing stock or cash or land into our community-housing organisations, which are not-for-profit organisations&'

GUYON On that sort of level? 20%?

MR HEATLEY They're suggesting moving very fast. If the ministers make a decision, we're going to have to consider our tenants, not upsetting people's lives. But the important thing I'd like to pick up on is this is not privatisation. This would mean a state house was transferred to a not-for-profit community-housing organisation who would have to retain the house. They couldn't sell it, otherwise it would have to come back to us. And they would have to house the most vulnerable. They couldn't just get, you know, anyone in that house.

GUYON Do they have the capacity do that? I mean, this is a massive transfer. If it was 20%... I think the stock's worth $15 billion, right?


GUYON OK, so that will be $3 billion worth of assets suddenly going into a community sector. Do they have the capacity to actually manage asset like that?

MR HEATLEY Well, of course, we've yet to decide, and we've certainly yet to decide if we'd go at that speed. They're very enthusiastic. They're saying that community-housing organisations in New Zealand would work with that scale. We're not so sure. We've got to consider it. But one thing they are saying that's really important is that they're willing to do it; they're willing to step up and help. And I'm more than happy to consider it. I know the Prime Minister is, and those are decisions that are going to have to go before Cabinet.

GUYON Just a minute or so left to go. I want to talk about the assistance that you offer. You did say that you were committed to the concept or the principle of income-related rents, where you pay no more than 25% of your income on rent. Are you looking at potentially changing the system in some way, though? Because your report does say you could move it, so for people who could afford it, it could move to 30% of their income. Are you open to changes in the way you deliver that income-related rent and accommodation supplement?

MR HEATLEY Well, we are committed to income-related rents for tenants in our state houses, so let's get that, you know, out there that that's where we stand on that. The housing organisations have said to us, the community-housing organisations have said, 'Look, if we take state-house tenants into our houses, we'd like them to receive income-related rents when they're not in a state house but one of ours.' So that's something clearly we have to consider.

GUYON What about the level, Minister?

MR HEATLEY But in terms of the level, the question is you've got income-related rents which are worth about $8000 to a household a year, and you've got the accommodation supplement for those people renting in the private sector, which is only worth $4000 a year. So the difference between a family subsidy of $8000 and $4000 is huge. We&

GUYON Are you going to align them?

MR HEATLEY Yeah, we're considering rather than shifting the 25% on income-related rents, we could have some sort of middle-type subsidy, so there was a transition, if you like - a pipeline, if you like - in terms of subsidy. As they get more and more on their feet, the subsidy would decrease and they would become more and more independent. State housing [to] community housing [to] housing in the private sector, and it would work something like that, but ministers are yet to decide.

GUYON Lots of things to decide, but we're pretty much out of time, but thanks again for appearing on the programme, Phil Heatley. We appreciate your time.

MR HEATLEY My pleasure.

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