Behind the Loafers Lodge tragedy is a story of deep-seated poverty and chronic housing shortages, writes Bernard Hickey.
This is an edited version of a post first published on Bernard Hickey’s newsletter, The Kākā.
Very early on Tuesday morning more than 90 of Wellington most vulnerable people had to scramble, crawl and jump for their lives to get out of an office building converted to rooms for rent at up to $240 a week, some without windows, and none with sprinklers. At least six of them, and possibly as many as 11 more, died trying to get out of a building on fire, clogged with smoke, that was given a building warrant of fitness two months ago.
These were people who were mentally ill, homeless, alone, unemployed, on probation, under community orders and often estranged from whānau and friends. Some were Filipino nurses on temporary work visas and unable to find a proper home. Some were “501s” living in rooms being paid for by the state, having been wrenched from whatever familial support they might have had in Australia and distrusted and despised here.
They are the people who keep falling off the edge of the public gaze in our political economy, pushed out to the margins of society by chronic housing shortages, a stressed to breaking point health system, and little-to-no disposable income.
“I’ve lived at Loafers for three years. That fire alarm has been going off for three years, at 12am, 3am, 5 in the morning and we ignore it.” – Loafers Lodge resident Aiden Tavendale via NewstalkZB
Last night the survivors of the fire slept in shelters, motels and in marae, if they slept. All their belongings are gone. They are there because our country has:
- Built the fewest new homes for every 1,000 new residents in the world in the last 30 years (FT);
- The fastest rise in real residential land values in the world, along with the most expensive rents and homes relative to incomes in the world (FT);
- The highest proportion of stressed renters in the world, with just over a quarter of renters paying more than 40% of their disposable income on rent (Stats NZ);
- A total of 24,030 households on the housing register for social housing, more than quadruple the numbers registered as needing housing in 2017, and including 2,165 on the register in Wellington (HUD);
- State spending on housing subsidies of $4 billion per year, including $1.2 billion on state housing subsidies, $2 billion on the accommodation aupplement and $800 million on emergency special needs grants to pay for people to stay in motels and boarding houses (HUD);
- 430,000 households receiving so little income for such high rents that they need the support of the Government in the form of the accommodation supplement and special housing needs grants (HUD); and,
- 480,104 households who needed to use food banks in March, up 165% from pre-Covid levels (NZ Food Network)
Twin crises laid bare
This is a moment when Aotearoa can see the results of our twin housing and poverty crises in the starkest and most brutal light. Politicians have agreed on the need for inquiries into the fire and building standards, but the bigger question is whether this moment of clarity lasts and makes any difference. I personally doubt it.
The people affected are not median voters and have no public voice, so they can be ignored once the spotlight has shifted. They can and often are blamed for and sanctioned into living in this situation. Until Tuesday, some politicians’ focus was on cutting their benefits and restricting their access to housing while charging them to get their medicines. The current government has repeatedly ignored official advice to remove benefit sanctions, increase benefits by a considerably higher rate, and to build much, much more social housing. Every time the government has said no, because to do otherwise would lead to a higher net debt trajectory and slightly higher interest rates, and therefore slightly lower residential land values.
Just after 2pm today, we’ll open up another “business as usual”, “bread and butter”, and “just the basics” budget that is focused on cutting down the size of publicly provided services as a share of the economy to ensure there’s room for more tax cuts and to keep public debt and interest rates low. Budget 2023, promoted as a “no frills” document, is already printed.
Making choices to keep the status quo
Prime minister Chris Hipkins and finance minister Grant Robertson decided months ago on this approach, in line with years of adherence to the default long-run fiscal settings of low public debt before
Yet 10% of our population are so poor and stressed they can’t afford a place to live or food without government help to pay their rent, or to eat without food parcels donated from leftovers being thrown out by supermarkets.
This is a country with net household wealth of $2.25 trillion, which is $450,200 per person. How is it that 90% think it’s OK for 10% of our people to be so poor they can’t afford a place to live or enough food to eat?
A business as usual response?
So far, the response to Tuesday’s fire in real financial terms by the government is business as usual: investigate the individual disaster, change some regulations and blame the residents and/or the landlord. I asked Robertson yesterday morning if the government was building enough social housing and whether it planned to ramp up investment dramatically in the budget. He acknowledged it was not enough and said we should wait for the budget. I don’t expect any increase in social housing investment beyond Kainga Ora’s plan to build a net extra 11,780 homes between 2018 and 2024 – of which it reported it had delivered 6,401 by the end of December.
Kainga Ora said in June 2022 that it assumed it would not be building net extra homes from next year, because of increased construction costs and higher interest rates. It would instead focus on renewing its existing stock, unless it was given extra funding in the budget 2023 funding round. We will see today if that suspension is confirmed.