Bishop Chris; Woods MeganCHRIS BISHOP (National): Thank you very much Mr Chair. I want to ask the Minister about the Affordable Housing Fund which was appropriated in Budget 2022—$350 million in total. I note for the committee that the Treasury didn't invite the bid for the appropriation on the basis that existing baseline funding could be used to undertake a pilot programme with a focus on market affordable places. This is from the advice to the Minister of Finance: It is unclear what value supporting community affordable rentals would have over supporting additional public housing places. A smaller quantum of funding would also encourage the Ministry of Housing and Urban Development to support the development of the sector through better value for money measures." So I suppose my question for the committee is: what prompted the Government to appropriate the $350 million? Because it is yet another tranche of funding in the housing space and one could argue—as indeed the Treasury does—that a more effective use of the money would be supporting public housing places either provided through Kāinga Ora or indeed the community housing sector. So my question for the Minister is about why they went for that option and such a large quantum of money scaling up over four years.Hon Dr MEGAN WOODS (Minister of Housing): I'll address the three areas of questions that have been put here. First of all around the accessibility question the Kāinga Ora target is indeed 15 percent. In terms of delivery on that some of the COVID lockdowns meant that stuff that was contracted after that target was put in place is yet to be delivered into this year so most of that delivery takes place from here on in just because of the contracting cycle within there. The member is also right to identify it is Labour Party policy this term to have a target of 25 percent. I'd like to point out this term has not concluded.In terms of the definitions which Kāinga Ora uses in terms of how it is that we have obviously both universal design and accessible design that we are building to; they are very different as I'm sure the member will be aware. In terms of the universal design it is possible—although I haven't been in a universal design and I've been in a lot of our new-build Kāinga Ora homes—but I can't remember a universal design home that I've been in that does have stairs. I'd be interested in having more information about that. I'm assuming what the member is referring to is a property that is on ground level that may currently have stairs but has the ability to have a ramp added which will make it an accessible property. But I'm interested if there is more information about that. Of course our chair of Kāinga Ora Vui Mark Gosche is someone that is utterly personally committed to the issue of accessibility in housing and makes it an absolute priority for the organisation.In terms of the commitment for the funding of the retrofit this is work that we are still working through. I think it's unfortunate that some people use that information and caused a lot of anxiety in the community who thought there was going to be no accessible houses built. That is far from it. The question we have is: how do we fund the delta in terms of maintaining our properties? One of the consequences of a decade of not having redevelopments of homes means that we have an additional operating expense of $70 million a year for maintenance on our homes—it costs $4000 to maintain a home that is a new build; it costs $16000 to maintain one of our older undeveloped or redeveloped homes. So in terms of that delta there is a legacy from a decade of failing to fund housing properly in this country and indeed not only putting the funding in but extracting $580 million in dividends from Housing New Zealand along the way. So I hope that addresses the accessibility questions.We then had questions around the First Home Loan and First Home Grants and in terms of the number of people and what we do hope to see is—and the modelling that we have suggests that changes could support—up to 7000 additional first-home buyers to access the First Home Grant and 2500 additional first-home buyers to access the First Home Loan in the first year. There are a lot of "ifs" and obviously as with every model there are assumptions that are built into that. In terms of how falling prices may factor into that I guess what we'll see is actually more houses could potentially fall under the caps so there could be more choice. It's also I think a really salient underscoring of why it was that we chose not to do the indexation to market prices. This was a policy option that I originally was looking at to see if that was a better way than having the ad hoc taking back to raise those caps. What we saw was that we could just see a whole lot of volatility—really hard for people to know what their access would be around that—and that is why we have instead opted for a regularised review of those caps.Then we had a question around the Affordable Housing Fund in terms of why it was that we put this in and why we put this in over adding this to our public housing delivery. I think the member also asked whether the money could have been better used directed to community housing providers (CHPs). Of course the Affordable Housing Fund is largely a fund that is directed to CHPs. We have explicitly said that we want to partner with councils we want to partner with CHPs and we want to partner with iwi in delivery on this. The purpose of this and why I think it underscores a difference between the two sides of this House on housing—the question of why you have to put another scheme in place. Well the answers are really simple: it's to repair what I think was one of the most fundamental pieces of damage that was done to our housing system under the previous Government. The sell-off of State houses had the—Hon Gerry Brownlee: Where did they go? Where did they go?Hon Dr MEGAN WOODS: —effect of not only making—so I'm a being asked by interjections rather than someone taking a call: "Where did they go?" Well I'd like to know the answer to that as well Mr Brownlee because I know—Hon Gerry Brownlee: They're still there.Hon Dr MEGAN WOODS: —a number of tenants that could be put in them. It is simply not true to say they are still there. The National Government finished Government in 2017 with 1500 fewer public houses than they started with even accounting for transfers to CHPs. So if you are generous and you say that you'll account for the transfer to CHPs there were still 1500 fewer public houses in this country when National finished office than when they started. Added to that they failed to build over that period of time.What I'm saying about the Affordable Housing Fund and why that is required is that one of the effects of the sell-off of State houses was to pit CHPs or the community sector councils—what we used to call social housing in this country—against the then Housing New Zealand in competition for the income-related rent subsidy (IRRS). Of course the operating money of the income-related rent subsidy and the operating supplement that goes alongside public housing is the constraint on numbers. When we talk about number of places added it is usually around IRRS places that are funded—18000 by our Government over the course of our time in Government.What this effectively did was squeeze away what we used to have that sat between State housing and market rental homes. That affordable social housing that used to be a mainstay of so many of our towns and cities has been lost. And it is one of the reasons we are in the current housing crisis that we are. So when Mr Bishop asks why it was that we had to reintroduce this fund I think it underscores how little understanding there is of the complexity of the housing crisis that we face today and the causes and genesis of the shortages that we see and where they lie.We are a Government that are intent on fixing a decade of carnage in housing that was led by the National Government and we remain committed to it. We will pursue a suite of policies that work together. The Affordable Housing Fund fits very neatly with the measures that we've subsequently put in place around Build to Rent. We will fix a housing crisis by taking a systematic approach and funding it adequately—not flogging off houses."