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Image: Getty/Archi Banal
Image: Getty/Archi Banal

PoliticsSeptember 25, 2023

Did National really just simply sell off state houses?

Image: Getty/Archi Banal
Image: Getty/Archi Banal

New Zealand has a massive deficit in state housing, but is that all National’s fault? Max Rashbrooke runs the numbers.

It has become a truth universally acknowledged, at least on the left, that the last time National was in power, its only interest in state houses lay in selling them off. But did it really?

For a long time, the actual facts were obscured by a fog of data uncertainty. You’d think public housing numbers would be a simple matter: either the state owns a specific home or it doesn’t. But dwellings can be tenanted or empty, rented at subsidised or market rates, transferred to charities to run or kept firmly within the state. They can be sold, bought, demolished or leased.

Voyager-award-winning reporter Kirsty Johnston once spent weeks trying to untangle the data, a process she describes as “somewhere between a merry-go-round and a nightmare”. Now, in response to Spinoff enquiries, the Ministry of Housing and Urban Development (HUD) has produced official data that allows the question to be resolved.

First, though, some history. State homes came into being in the 1930s under the inaugural Labour government, as it attempted to not just accommodate the most vulnerable but also, in the words of historian Ben Schrader, “provide an alternative to private housing”. State housing was to be built at such a scale that it could influence market rents and have “a social status equivalent to home ownership”. And, briefly, the vision worked. “When I interviewed [the first generation of] state house tenants, they said it was great to have a state house and they had sort of ‘made it’,” Schrader recounts. “It was a step up in the social hierarchy.”

Working at scale and pace, Labour built nearly 30,000 state houses in the 12 years to 1950. Technically, of course, it lost power in 1949, but its building pipeline (and that of any other government) can reasonably be regarded as extending a year after its time in office: an incoming administration can hardly cancel signed contracts or halt work underway.

Adjusted for population, Labour built the equivalent of 10,000 homes a year today. But construction slowed under subsequent National governments, and although Sid Holland and Keith Holyoake built a little under 1,000 a year across most of the 1950s and 60s, the dream of competing with private homes died. State housing, Schrader says, became more and more a “residual” service for the poor. And although the fourth Labour government erected around 13,000 houses in six years, a hammer blow landed soon after.

Jim Bolger’s National government was, by 1991, managing around 70,000 state homes, roughly 5.4% of the total housing stock. This was not, by global standards, an enormous percentage, either then or now. In countries like the Netherlands, nearly one-third of all housing is provided outside the market, often constructed by the state and handed over to charities to run. In Vienna, 50% of all residences – many of them in architecturally stunning apartment blocks – are owned by the city council or co-operatives.

Nonetheless, Bolger and his successor Jenny Shipley took New Zealand’s small state housing stock, and made it even smaller. Influenced by anti-government ideology, they sold off one in every seven homes, leaving the incoming Helen Clark and colleagues with just 59,000. Clark then restored numbers to around 67,000 in 2009 – the year in which John Key’s housing policies took effect, and the historical Te Ara data on state housing stops.

What happened then is revealed in the previously unpublished HUD data covering 2009 to 2016. (The post-2017 ‘Housing Dashboard’ then picks up the story.) It confirms that National did indeed sell thousands of state homes. Of the 67,627 it inherited in 2009, just 61,426 – some 6,000 fewer – were left in Kāinga Ora ownership by 2017.

Many of the sales, though, were to the community housing providers – charities like Tauranga’s Accessible Properties – that National believed were superior to state agency Kāinga Ora. The charities were, crucially, given access to Income-Related Rent Subsidies (IRRS), which set rents at 25% of income. This effectively put some charities’ tenants on the same financial footing as Kāinga Ora’s, and brought them into the “state” or “public” housing sector.

Whether or not charities are indeed superior housing providers remains a vexed question, though their representative, Community Housing Aotearoa chief executive Paul Gilberd, takes a diplomatic stance: “We need them [Kāinga Ora] to be going really, really well, as well as our sector.” Either way, as the data shows, IRRS-covered charity places rose to over 4,700 by 2017, leaving National with a net loss of around 1,500 state houses. (A similar story is told in the data Johnston assembled.)

The state housing waiting list now stands at more than 24,000 (Photo: Shutterstock; photo illustration by Archi Banal)

Case closed, then: National did sell state houses. But wait: if, as above, a government should be attributed a one-year post-election pipeline, National gets to claim the year to June 2018 – a 12 month period in which over 1,000 state houses were added, as the party finally twigged to the need to build. That would leave National with a net loss, from 2009 to 2018, of just 340 homes.

Not so bad, then. But the amount of state housing matters less than the proportion it represents of all dwellings. A state-housing stock that stays static while the population grows is accommodating less of the public, and providing a reduced service.

The figure below shows how many extra government dwellings would have been needed to maintain the 1991 level of provision, when state houses made up 5.35% of all homes. The destruction of the Bolger years comes into sharper focus: National left, on this measure, 20,000 fewer places than it inherited. Clark did no more than halt the losses, which – in the final analysis – mounted again under Key and English, worsening the shortfall by another 14,000 homes.

Number of state houses needed to restore the 1991 state-housing share of dwellings. Blue = National-led government. Red = Labour-led government. Each administration is attributed one year’s worth of building after it left office.

It is no surprise, then, that senior National figures like Nicola Willis have admitted the party sold too many state houses. Her colleague Chris Bishop even told RNZ that National would “build enough state and social housing” to clear the state-house waiting list – a startling claim given that the list currently sits at 24,717, but one to which he will no doubt be held if his party wins power. That waiting list has ballooned under Labour, but the government can at least point to having added 13,000 places to the state housing stock, of which roughly half are newly built. (The broader construction boom has, however, seen the share of state housing fall further.)

The wider picture here is what Gilberd calls “30 years of profound neglect” from 1991 onwards. And even before that, state housing’s status had been dented. In Schrader’s words: “It had been a step up, but it became a step down.” To change that dynamic now would require not just higher building quality from Kāinga Ora but also the immediate addition of – at least – 43,000 homes, to restore the (not overly generous) 1991 level of provision. That, though, seems a distant prospect.

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