Māori Housing Policy Round-up: National

Finally – the National Party. This election, National has the advantage when it comes to policy, with the benefit of being able to apply learnings from the past three terms in government. With many of the wins made over the past three years attributed to the coalition partner, what will National do to improve Māori housing outcomes? Te Matapihi provides a perspective.

 

This election, National (like any incumbent government) is at a distinct advantage when it comes to policy development, having the engine of public service at its disposal and the critical learnings of the past three terms to draw on. National have supported Māori initiatives in budget decisions and the development of new legislation, and their election policies highlight the value they see in maintaining pragmatic working relationships with the Māori Party and the Iwi Chairs Forum.

 

The housing policy announcements made this election year have focused on major structural changes to the planning system and new approaches to funding infrastructure to increase housing supply in our urban areas, and supporting first home buyers to enter the current market. National has also produced a Māori Development policy, which pledges to ensure Te Ture Whenua legislation is enacted, Māori trade training promoted, and Treaty settlements progressed.

 

Table 1. National’s Housing Policies – Summary

Outcome

Policy

Driver

Type of intervention

Availability

Build 200,000 houses nationwide in partnership with the private sector over the next six years

Supply

Direct provision, regulation, subsidies

 

Build over 34,000 social, affordable and market houses on Crown land in Auckland over the next 10 years. Between 20% and 50% will be affordable.

Supply

Direct provision

 

New urban planning legislation to encourage more responsive planning, faster development and better protection for the environment. It will also facilitate the use of urban development authorities to develop new housing in cities.

Supply

Regulation

 

Loan Councils $1b through the Housing Infrastructure Fund to help build roads, waterways and other infrastructure needed to increase housing supply

Supply

Direct investment

 

Increase Māori and Pasifika Trades Training

delivery to 5,000 learners by 2019

Supply

Subsidies, better information

 

Ensure Te Ture Whenua legislation is enacted

in 2018

Supply

Regulation

Affordability

Supporting first home buyers through changes to HomeStart that will increase grants to a maximum of $20,000 for an existing home and $30,000 for a new build

Demand

Subsidies

Quality

Tenancies reform to address issues related to liability for damage to rental premises caused by a tenant, methamphetamine contamination in rental premises, and tenancies over rental premises that are unlawful for residential use

Demand

Regulation

 

Encouraging more Pacific groups to become

Community Housing Providers so they can work for

and represent their communities

Demand

Subsidies, better information

 

Continue to provide grants for insulation through the Warm Up New Zealand Healthy Homes programme (until June 2018)

Demand

Subsidies

Security

Continue to fund community-based housing initiatives to prevent homelessness, such as Housing First and Emergency Housing

Demand

Investment

 

We’ve chosen to focus our analysis on policies announced on the National Party website, which includes 2017 Election Policy announcements (press releases) and Fact Sheets (policies by portfolio). We’ll be limiting our discussion to three policies. These are:

1.      HomeStart changes

2.      New urban planning legislation

3.      Housing Infrastructure Fund

For each of the selected policies, Te Matapihi have asked ourselves – will it work? And will it make a difference for Māori?

HomeStart

HomeStart is a grant for first home buyers and one of a suite of home ownership products administered by Housing New Zealand, including the KiwiSaver first-home withdrawal programme (which allows first home buyers to access their KiwiSaver funds to put towards a deposit), the Welcome Home Loan (a low deposit loan for first home buyers), FirstHome (a grant towards purchasing Housing New Zealand properties), and Kāinga Whenua (a no-deposit loan for buying and building houses on Māori land).

This policy proposes to increase grants from a maximum of $10,000 for existing homes to $20,000 (for a couple), and from $20,000 to $30,000 for a new build. The policy also proposes to simplify the existing Welcome Home loans (currently underwritten and administered by Housing New Zealand) to allow banks to approve 10% deposit government-backed loans without the need to seek approval from Housing New Zealand. The scheme has also been increased to support 80,000 households into home ownership over the next four years.

Will it work?

HomeStart works alongside the KiwiSaver first-home withdrawal programme, requiring aspiring home buyers to be enrolled in Kiwisaver and have contributed consistently to the scheme for three consecutive years. Based on the number of HomeStart Grants made in the 2016/17 year, and the number of active KiwiSaver members by region as at June 2017, it appears to be working better in regional areas with lower house prices and more stable housing markets.

Figure 1. Active Kiwisaver members by region vs HomeStart Grants by region 2016/17 (as a percentage of totals)

image001.png

The changes are primarily targeted to benefit Auckland home buyers, who due to large deposit requirements (even at 10% under the Welcome Home loan scheme) are likely to have the most difficulty entering the housing market. By increasing the subsidy, lifting the house and income caps, and by combining with the Kiwisaver first home withdrawal and the WelcomeHome loan, Ministry of Business, Innovation & Employment modelling suggests the changes will see an additional 40,000+ households will be assisted into home ownership over the next four years, with approximately 25% of these in Auckland.

HomeStart Plus (for new builds) was supported by officials as a mechanism to modestly increase supply, however modelling suggests that the price paid for new builds by first home buyers was, on average, 23% higher than the price paid for existing homes, which may make this a less attractive option. The number of additional new builds under the changes are projected to be approximately 3,500 (over four years), or less than 10% of the total number of HomeStart grants.

By opening an already supply-constrained market up to more first home buyers, the expansion of the HomeStart programme is likely to increase demand – without significantly increasing supply. Increasing deposit subsidies will also likely see house prices increase, thereby undermining housing affordability in supply-constrained markets (such as Auckland).

Will it make a difference for Māori?

HomeStart requires prospective home buyers to be enrolled in Kiwisaver, and to have been consistently contributing to the scheme for the past three years. Results from the Retirement Commission survey in 2016 indicate that Māori are disengaged with Kiwisaver, and less likely to participate than other demographic groups. Additionally, Māori unemployment rates are higher than for the general population.

The changes made through the Taxation (KiwiSaver HomeStart and Remedial Matters) Act 2015 to extend the KiwiSaver first home withdrawal and HomeStart grant to enable Māori to purchase and build homes on Māori land was a positive step in the right direction (a narrow interpretation of KiwiSaver rules has previously excluded Māori land owners). The changes were made to specifically recognise interests in Māori land to align with the original policy intent of KiwiSaver, and the policy intent of the Kāinga Whenua funding programmes. However, like Kāinga Whenua, it would appear that uptake has been low (for a variety of reasons).

This policy as it stands is unlikely to make much of a difference for Māori, although it will certainly assist some whānau and individuals into home ownership. Increasing subsidies for new builds and decreasing or eliminating subsidies for existing homes is likely to make some difference if combined with other strategies to increase supply. Better publicising the opportunities for Māori land owners as part of a comprehensive reform of Māori housing finance is also recommended.

New urban planning legislation

National are proposing to separate planning and environmental regulations by developing new urban planning legislation to encourage more responsive planning, faster development and better protection for the environment.

The proposed legislation will replace some parts of the Resource Management Act and incorporate some rules which are now in the Local Government Act and the Land Transport Management Act. It will also facilitate the use of urban development authorities to develop new housing in cities.

Will it work?

The Productivity Commission completed its inquiry into New Zealand's urban planning system in March 2017. The final report - Better urban planning – recommended a future planning system that provided clearer distinctions between the built and natural environment, more responsive infrastructure provision, a more restrained approach to land use regulation, and greater coordination between local and central government. The Commission's recommendations aim for a system that is better able to respond to the pressures of growth – such as escalating house prices and inadequate infrastructure – whilst affording more effective protection of the natural environment.

The Better urban planning inquiry was a direct outcome of the recommendations made by the Productivity Commission in its 2012 Housing affordability report. The Commission recommended the Government "consider the case for a review of planning-related legislation to reduce the costs, complexity and uncertainty associated with the interaction of planning processes under the Local Government Act, the Resource Management Act and the Land Transport Management Act." Working between multiple pieces of legislation is an ongoing challenge (for developers, Council planners and iwi/hapū), and consolidation makes sense.

The productivity commission’s Better urban planning report was produced through a reasonably comprehensive process of consultation and engagement. More will be required moving forward; however, the results of the inquiry have provided a clear evidence base for change, and a solid foundation for developing any new urban planning legislation, which once enacted will be most comprehensive and radical reform of the planning system since the Resource Management Act was introduced in 1991.

As part of these reforms, urban development authorities are being considered, largely in response to the inability of housing development and infrastructure to keep pace with population growth in Auckland. Given the coordinated approach and extensive powers proposed, there is huge potential for urban development authorities to address housing supply and affordability, nationwide and particularly in Auckland.

 

Will it make a difference for Māori?

The proposed legislation is hugely significant to us as Māori, as we have a broad range of interests in both urban development and the protection of the natural environment. In response to the Productivity Commission’s Better Urban Planning Draft Report, Papa Pounamu (Māori Planners Caucus) and Ngā Aho (the Society of Māori Design Professionals) produced a review entitled Māori Planning Futures (October 2016). The review recommended that any future planning system must:

·       Centre the fundamental relevance of Te Tiriti o Waitangi;

·       Recognise and provide for the ongoing relationship Māori have with their lands, waters, wāhi tapu, wāhi taonga, mahinga kai, papa-kāinga and other taonga;

·       Enhance, express and enable Māori values, rights and interests in urban environments;

·       Recognise and provide for the rights and responsibilities that Mana Whenua have in managing the urban environment within their tribal takiwā

The report identified that the current “effects based” approach to planning focuses on ‘avoiding, remedying, and mitigating’ adverse effects on resources and the environment has led to the cumulative degradation of core Māori values, rights and interests (e.g. water quality) as decision makers and developers have only ever been required to mitigate their adverse effects. To support “desirable cultural, economic, environmental and social outcomes”, the report recommended that any future planning system should instead adopt a “values and outcomes” based approach to decision-making and development.

Demand for housing – particularly in supply-constrained markets such as Auckland – means there is a lot of pressure to develop land on the edge of cities that may be significant to Māori communities. Proposals to fast-track urban planning processes by minimising consultation and notification requirements (such as special housing areas and urban development authorities) must prioritise Mana Whenua participation in decision-making. Without these opportunities, fast-tracked processes will continue to minimise Māori values, marginalize Māori rights and destroy Māori interests. Fast- tracked processes may also undermine carefully negotiated redress for settlement of breaches of Te Tiriti o Waitangi.

The new urban planning legislation should support iwi to proactively participate in and/or lead large-scale urban development projects in their rohe. Potential roles include; governance roles within the urban development authority, as lead development entity, or participating in development consortia. This would enable iwi to participate at whatever level aligns with their interest and capacity – some may wish to be kaitiaki of the vision for their wider area, setting the strategic direction and spatial plan; others will wish to have more influence over environmental outcomes, or the social and tenure mix of housing; others still will wish to take advantage of the commercial development opportunities presented.

 

Finally, one key piece of mana whenua feedback from the Auckland Unitary Plan engagement was –why develop so intensely in Auckland? Accommodating for natural growth is one thing but actively encouraging growth in Auckland when it wasn’t ready is impractical. Auckland’s growth problems present an opportunity to work in with the aspirations of other regions, including specifically identifying industries that could prosper in the other regions. Done properly, this could help build the well-being in smaller regions that need the population and wealth, whilst lessening the rate at which Auckland needs to intensify.

Housing Infrastructure Fund

On 3 July 2016, the government announced a new $1b housing infrastructure fund to accelerate the supply of new housing. The contestable fund was open to applications from Councils in the high growth areas of Christchurch, Queenstown, Tauranga, Hamilton and Auckland. The Housing Infrastructure Fund is a one-off – basically this enables central government to lend money to Councils in high growth areas over the short-medium term to fund infrastructure for housing.

Five Councils submitted final proposals and on July 2017 the following allocations were announced in July 2017:

Council

Development Area

Est No. of Houses

Value

Auckland

Redhills-Whenuapai

10,500

$300 Million

Waikato

Te Kauwhata

2,600

$37 Million

Hamilton

Peacockes

8,100

$272 Million

Tauranga

Te Tumu (Eastern Papamoa)

35,000

$230 Million

Queenstown-Lakes

Kingston, Ladies Mile and Quail Rise (Frankton)

3,200

$50 Million

Contingency allowance

 

 

$111 Million


Will it work?

In New Zealand, Central government is responsible for key infrastructure provision, including; energy (such as electricity and gas), communications infrastructure (such as ultra-fast broadband), and transport infrastructure (such as state highways, rail, and air transport). Local government is responsible for the three waters (drinking water, productive water – such as irrigation, waste water and storm water), local and regional transport networks, community-owned buildings, and social infrastructure.

There are several ways to fund new infrastructure:

·       Public-private partnerships (cooperation between local government and developers)

·       Debt lending from central government (such as the Housing Infrastructure Fund)

·       Development rights tied to infrastructure delivery

·       Contributions from central government and/or private sources

·       Value-capture strategies

·       Targeted rates and/or increased general rates

·       User charges or fees (demand pricing)

The Housing Infrastructure Fund is a loan rather than a grant, which may make this approach less attractive to Councils than other forms of infrastructure funding. Auckland Council in particular is already approaching its debt ceiling, and has significant projected demand for infrastructure.

An alternative approach to funding bulk infrastructure in the longer-term is through special purpose vehicles. The government’s urban development authorities proposal is one such example. Powers currently held by the Crown would be vested in a publicly-owned entity that could be used to streamline and speed up large scale projects, such as suburb-wide regeneration. These powers include the ability to plan and build new – and reroute existing – infrastructure such as roads, water pipes and reserves. The urban development authority would therefore be able to access private or central government funds to build local and connecting bulk infrastructure – without requiring Councils to take on additional debt.

The costs of that infrastructure could be recouped by the developer through either the developed land sale price, or though targeted rates on that developed land. A more sophisticated approach might involve capturing value uplift, which basically means putting mechanisms in place to ensure that future windfall gains predicted because of urban development (and the associated infrastructure investment) accrue to both private individuals and Council.

Another way to delay or minimise the need for new infrastructure is to simply manage demand – either through demand pricing (through user charges or fees such as congestion charges), or by investing more heavily in lower growth areas (thus relieving pressure on higher growth ones).

Will it make a difference for Māori?

The Thirty Year New Zealand Infrastructure Plan 2015 recognised the importance of appropriately and fully engaging iwi in planning for future infrastructure provision. This is both a Treaty obligation and a rational economic response, given the growing and significant role of the Māori contribution to the New Zealand economy.

With many iwi (particularly in urban areas) at the critical point of achieving or negotiating settlement, they are increasingly seeking to develop their land returned or purchased through settlement for housing, and play a leading role in housing development within their rohe in partnership with Crown and/or the private sector.

The funding approach for the $1bn Housing Infrastructure Fund has already been determined and the funds allocated – however how infrastructure for housing development is funded in the future will be of interest to iwi, particularly in the context of the urban development authorities proposal.

This is the sixth article in Te Matapihi’s Māori housing election year series. Each of the previous articles have tackled a political parties housing policy, under the sub-headings of availability, affordability, quality and security, with a focus on what these all mean for Māori. The seventh article will conclude the series with a ‘scorecard’ comparison of what works, what doesn’t, and what’s likely to make a difference for Māori.