Bennett Paula: Social Housing Reform (Flexible Purchasing and Remedial Matters) Bill — First Reading Second Reading In CommitteeText is incorporated into the Bound VolumeBennett Paula: Social Housing Reform (Flexible Purchasing and Remedial Matters) Bill — First Reading Second Reading In Committee[Sitting date: 21 May 2015. Volume:705;Page:3531. Text is incorporated into the Bound Volume.]Hon PAULA BENNETT (Minister for Social Housing): I move That the Social Housing Reform (Flexible Purchasing and Remedial Matters) Bill be now read a first time. This Government has embarked on an ambitious programme to improve social housing and support more vulnerable New Zealanders. This bill will allow the Government to build on the crucial initiatives announced in the social housing reform programme to increase the supply of social housing and support more people in suitable housing that meets their needs while they need it. The Government will spend more than $700 million this year on the income-related rent subsidy and that will increase by $154 million over the next 3 years. The number of social housing places available increases from about 62000 currently to 65000 by 2018.This bill does four things. The first and most important of these is the introduction of the ministerial direction power to allow the Minister of Housing in consultation with other housing Ministers to authorise the Ministry of Social Development to enter into tailored agreements to purchase social housing places. Currently social housing is paid for via the income-related rent subsidy. Income-related rent is paid by the tenant and is no more than 25 percent of their income while the second component the income-related rent subsidy is paid by the Ministry of Social Development and makes up the difference between the market rent and the income-related rent. The Ministry of Social Development is not able to negotiate prices or tailor contracts in any other way that allows social housing provision to be looked at differently and incentivises providers to enter the market. That is stopping the growth of community providers and means tenants are not always getting the best services. This bill retains the income-related rent payment in the Housing Restructuring and Tenancy Matters Act so that providers who want to continue with income-related rent subsidy payments can do so. But it also allows the Ministry of Social Development to enter into tailored agreements so that the terms conditions and price can be negotiated to promote better social housing outcomes and attract organisations into social housing.To be clear nothing in this bill will change tenants’ eligibility for the income-related rent subsidies or how much they will have to pay in rent. What it does do is allow the Ministry of Social Development to explore other arrangements such as long-term fixed-price tenancies that meet the needs of the Crown provider and tenants. Longer-term contracts assure that when a provider has a place available this place will be offered to a person on the social housing register. Providers would have the certainty of a contract with the Government—that they will be paid to house a certain number of people over a certain length of time and they can still be paid for properties when they are vacant for short periods before tenants. This means that if they are looking to finance construction or buy properties they have the guarantee of an income stream that they can use to borrow against. Providers have asked for this certainty so that they can make long-term investment decisions. This will increase the supply of social housing and see more local organisations investing in homes for their communities. Long-term contracts will also guarantee the Ministry of Social Development’s supply so that it knows it can place tenants with providers as their properties become available.Tailored agreements will allow the Government to pay more or less for certain tenants depending on their level of need. Pricing for these sorts of arrangements should be able to focus on the actual costs of supporting people not just some pre-prescribed formula; it will be the ability to negotiate these kinds of deals that can help get the right providers who offer the best services and quality housing for different cohorts of people. For example the Ministry of Social Development may want to enter into an agreement with a provider who specialises in people with disabilities. It will be able to pay more for the extra services that these people might need. This bill is being passed through all stages under urgency so that we can help the community housing sector to increase the supply of social housing places particularly in Auckland as soon as possible.In December the Ministry of Social Development released a registration of interest to providers who are interested in supplying 300 social housing places in Auckland. There was a large response with 19 community housing providers taking part. Their feedback was clear: that they need more flexibility in contracting to provide more places in Auckland. This bill will allow them to do that. This is an opportunity for the Ministry of Social Development to relieve pressure on the social housing register and engage further with the community housing sector about the different types of contracting arrangements it needs. Tailored agreements are not restricted to just community housing providers. Housing New Zealand is the largest player in the market and tailored agreements will be available to it as well.The legislation also makes three minor amendments to other bills. It ensures that payments for residential social housing provision under these agreements are GST-exempt consistent with the current treatment of residential rental payments. It clarifies that Housing New Zealand is no longer required to provide policy advice to Ministers. This role has been undertaken by the Ministry of Business Innovation and Employment and its predecessor the Department of Building and Housing since 2011. Minor amendments are being made to first-home withdrawal rules in the KiwiSaver Act. These ensure that any prior period of membership in a complying superannuation fund should count towards a 3-year eligibility period when the member transfers to KiwiSaver. This means that more KiwiSaver members have access to their savings to assist with the purchase of a first home.This bill is a major step in the Government’s social housing reforms and enables the Ministry of Social Development to be a smarter purchaser of social housing. We are backing tenants by creating a social housing sector that can house more people in housing that suits their needs provide essential support services and assist them back to housing independence where appropriate. I commend this bill to the House.