Budget 2022: The three housing decisions in this year’s budget illustrate the deep malaise of this government’s housing policy, argues Alan Johnson.

There were three notable features in budget 2022 for housing. KiwiBuild appears to have been quietly laid to rest, yet more money is to be spent on transitional housing and the provision of social housing may grow by 3-4%. Together these signal the extent of the government’s housing ambitions for the remainder of this parliamentary term and possibly for the rest of its tenure. If the government changes in 2023 then this is probably as good as it gets.

It appears the KiwiBuild programme will end on June 30, 2022 and its remaining budgets allocated to the land-for-housing programme*. Budget documents vaguely describe this programme as the “expenditure incurred in the facilitation, acquisition, and development of land and residential properties”, which can of course mean anything to do with housing.

Budget 2022 proposes that the pool of income-related rent-subsidised tenancies is expanded during 2022/23 from 72,500 to 75,500. Such an expansion should be welcomed although it needs to be seen in the context of a public housing waiting list that at the end of 2021 had reached almost 26,000 households and that continues to grow. 

The response to this growing waiting list has been more and more transitional housing. At their worst this is make-do accommodation in run-down motel units, although purpose-built housing has also been developed. The number of transitional housing places almost doubled between December 2018 and December 2021 to 5,100 while their cost has grown from $148 million in 2018/19 to an expected $466 million in 2022/23.

These three decisions illustrate well the deep malaise of housing policy and the government’s inability to make a difference to New Zealand’s chronic shortage of affordable housing. 

The demise of KiwiBuild, for example, illustrates a lack of realism both by Labour politicians and the officials who advise them. The vision of building 100,000 affordable houses in 10 years was laudable but lacked both an understanding of how difficult this would be and a sense of what needed to change to make it happen.

The extent to which the government is bereft of any wider vision for housing is well illustrated by its response to the chronic shortage of social housing in Rotorua. Almost nowhere else in New Zealand is the under supply of public rental housing so extreme as in Rotorua. At the end of 2021 there were 973 households on the local public housing waiting list, while the stock of already occupied public rental housing was just 788 dwellings. In response to this shortage, budget 2022 allocated $130 million over the next four years to provide transition housing support to 200 families in Rotorua. It apparently has never occurred to the government that it could just go out and build these houses.

Such short-sightedness borders on an ideological blindness with an unwillingness by Labour’s leadership to truly appreciate the extent of the role the state must play in order to address the housing crisis. 

In April 2021, housing minister Megan Woods acknowledged that the “days of thinking the state can be a passive bystander and the market will provide, I think, are over – I think we’ve seen that there is market failure, the market hasn’t delivered”. Yet a year later, as she announced a $1.4 billion spend to fund infrastructure rebuilds in Auckland, she was happy with the idea that most of the Crown land affected was to be sold off to developers for market housing. Of the 16,000 new dwellings planned for this programme, just 6,000 will be public rental housing owned by Kāinga Ora while 4,000 existing Kāinga Ora houses are being demolished in the process.

But it gets worse. Budget 2022 provided $188 million to pay for the sale of state-owned land and dwellings and a further $65 million in costs from the deferred settlements of these sales.

Since the 1950s state housing has been seen in residual terms, as a reluctant acknowledgement by successive governments that many citizens will not be able to be housed adequately by the private market. There has been no bigger vision for the state’s involvement in housing than to provide housing for some of the poorest and most vulnerable New Zealanders. There is no vision of what the state can do to reshape housing markets as a means of addressing inequality and poverty. There has been no ambition that governments can move beyond a mindset where almost everything is financed, planned and built by the private sector.

To give them their due, the Labour government has made its first serious commitment in almost 50 years to addressing the neglect of public housing. If they get a chance beyond the 2023 election to do so, they need to continue on with a much bolder vision, far bigger budgets and a confidence that a society where everyone has access to decent, affordable housing is actually achievable.

Alan Johnson is convenor of the Child Poverty Action Group and its housing spokesperson.

*In a written response to this piece, a spokesperson for housing minister Megan Woods said the KiwiBuild buy-off-the-plans programme was still running, but how it’s accounted for in appropriations has changed:

“The KiwiBuild Housing appropriation was established in October 2018 for a four-and-three-quarter year period ended in June 2022. This appropriation has been utilised to fund both buy-off-the-plans activity (KiwiBuild) and land-for-housing programme purchases. As part of Budget 2022, to provide more transparency to the individual activities, separate appropriations have been established for both the buy-off-the-plans and the land-for-housing programmes.

“As part of the finalisation of the appropriation at 30 June 2022, ministers have agreed that unutilised funds will be transferred into the buy-off-the-plans programme and the land-for-housing appropriation as in-principle expense transfers (which are a business-as-usual process governed by Treasury rules and processes).

“Like all in-principle expense transfers, these will be reflected in the supplementary estimates for 30 June 2023.”