5. Question No. 5—HousingRICARDO MENÉNDEZ MARCH (Green) to the Minister of HousingQuestion No. 5—Housing5. RICARDO MENÉNDEZ MARCH (Green) to the Minister of Housing: Does she stand by her statement that extending income-related rent subsidies to council housing tenants will come at the expense of the Government building new houses for people on the public housing waiting list" or do the recently announced fiscal rules mean that this Government could increase debt to pay for building new housing while also extending rent subsidies? Hon Dr MEGAN WOODS (Minister of Housing): To the first part of the question: yes. To the second part of the question: the Government's new fiscal rules apply to fiscal policy as a whole; they don't specify particular spending outcomes on a portfolio basis. The debt rules are a ceiling not a target. There are two significant financial constraints in increasing the number of public houses. One is the capital expenditure required to build the homes. The second is the continued annual and ongoing commitment to provide the operational expenditure for the income-related rent subsidy (IRRS). On the first—the capital constraints—Kāinga Ora leverages its own balance sheet to borrow to build houses. Kāinga Ora is able to issue its own debt up to a Government-set limit of $8.3 billion in the private market. It also has nearly $2 billion in loans from the Crown. The debt is not solely for additional housing delivery as it also funds a number of other activities undertaken by Kāinga Ora including redevelopment land acquisition and infrastructure. However the IRRS expenditure or the income-related rent expenditure the member refers to is operating expenses not debt funding and it needs to come within the operating allowances of the annual budget. Since we have come into Government I'm pleased to report we have increased the expenditure on IRRS from the $890 million the previous Government annually paid in 2017-18 to $1.318 billion forecast for this financial year. This represents a 48 percent increase in IRRS. If we were to apply the IRRS to council houses that have already been built we would be applying this to existing housing rather than continuing our record house-building programme. If we are to solve the housing crisis we simply have to build more homes and we are unashamedly pulling every lever to increase housing supply. Simeon Brown: It's a speech. SPEAKER: Order! Order! Look—Hon Paul Goldsmith: It wasn't! SPEAKER: The member does have a question later and he's a bit lucky he's going to be here for it. Can I just say that the length of answers is something for my judgment and reflecting on my judgment is something which is not appropriate. I was warned that that was to be a longer answer. I will say to the Minister that there was probably a bit more in it than was absolutely necessary. Hon Dr MEGAN WOODS: I like to be helpful. SPEAKER: The member will stand withdraw and apologise. Hon Dr MEGAN WOODS: I withdraw and apologise. Ricardo Menéndez March: Does she believe that capping rents at 25 percent of weekly incomes helps prevent homelessness by ensuring social housing tenants can afford a decent standard of living stay in their homes and put down roots in their community and if so does she believe it is important to enable this for local government housing tenants as well? Hon Dr MEGAN WOODS: Of course the Government's public housing provider Kāinga Ora does have an income-related rent subsidy. It caps at 25 percent and this is afforded to a number of "CHiPS" that qualify for IRRS funding. When it comes to councils I think it's worth remembering that it is only since 2015-16 when the National Government readied the public housing network for sell-off that councils became eligible to receive IRRS funding. Previously they did that by setting their own affordable housing rents and utilised the accommodation supplement. I would point the member to the fact that PricewaterhouseCoopers actually did a review of the proportion of income that council tenants around the country were paying. Some were in fact paying less than 25 percent; some were paying substantially more. It's really down to individual councils for them to take responsibility around the provision of affordable housing for their communities. Ricardo Menéndez March: Does she agree with her former colleague Annette King's wish for councils to have had access to income-related rent subsidies during the previous National Government and with the current Labour Party Wellington City councillor Rebecca Matthews who is calling on this Government to "help us out here with income related rent subsidies."?Hon Dr MEGAN WOODS: We have been working with the Wellington City Council for around a year now. It is a complicated issue. There is the matter of the $220 million loan that was given to the Wellington City Council that needs to be delivered on its obligations under that loan by I think it's 2036—so we're working around progress around the terms of that loan—and also the level at which Wellington City makes its own contribution and what the city is contributing. I compare this to some other councils around the country who are setting much lower and much more affordable rents for their citizens. Ricardo Menéndez March: What recent advice if any has she received on the potential capacity for local councils community providers and iwi to build new affordable rental housing if the Government underwrote the financing or provided capital grants and provided rent subsidies on an ongoing basis?Hon Dr MEGAN WOODS: I think if the member were to look closely at what our Government is doing in the area of the provision of community housing he would see that we are doing just what he talks about. If we look here in this city at Arlington this is of course a long-term contract with Wellington City Council and we are doing this around the country with upfront funding which the "CHiPS" are able to capitalise or councils are able to capitalise in order to build housing. If he has a look at the number of houses being provided by "CHiPs" under the settings our Government is providing he will see that it is vastly increased than it was under the previous Government. And one of the reasons for that is because in order to provide public housing you've got to have an annual and ongoing commitment to the income-related rent subsidy. It's not just the capital funding it's also the operating funding.Ricardo Menéndez March: How would she respond to Wellington resident Debbie Port who pays 59 percent of her income in rent on a Wellington council flat and said at the income-related rent subsidy petition handover "How am I meant to pay for food? How am I meant to pay for power? How am I meant to do everything I need to do for my health if it all goes on rent?"Hon Dr MEGAN WOODS: Of course for anybody who is struggling with their household expenses I would say to them that I understand that things are tough. But I would also say to that resident that she should also talk to her city council. The Wellington City Council sets its rents for its tenants. Other councils around the country set them at lower limits. If we are going to solve a housing crisis we need all of our community working together. Central government has a critical part to play and we are partnering with "CHiPs" we are partnering with iwi and we are partnering with councils but we also need those who have traditionally provided affordable houses in the community to continue to do so.Ricardo Menéndez March: What role does she believe local government should have in providing social housing and helping reduce the public housing waiting list and does she believe current financing arrangements for local government enable them to meet their aspirations as social housing providers?Hon Dr MEGAN WOODS: In answer to the first part of the question I think that local government has an absolutely critical part to play in solving this housing crisis that local government since the 1930s has been at the forefront of the provision of affordable housing for their communities and that is a long and historic tradition that we want to see continue. I think the member should note it is only since 2015 and 2016—under the corporatisation that the National Government put in place to ready houses for sell off that required the transfer to community housing provider models—that what he is calling for came to exist. I want to see us have far more sustainable less corporatised models of housing that put people first."