Summary of Cabinet papers on Social Housing Reform Programme

The full documents can be found at http://www.msd.govt.nz/about-msd-and-our-work/work-programmes/social-housing/cabinet-papers.html and are must reads for those interested in where the Reforms are heading. The brief summary below provides insights, but is no substitute for the actual documents.

Paper One – Social Housing Reform Programme: Overview

The Overview paper provides the rationale for the government’s reforms, background information, actions taken to date, proposed next steps and the objectives and bottom lines which the Prime Minister announced in his speech. Those objectives and bottom lines are not summarised here.

The role of Community Housing Organisation’s is central to the new social housing system being developed. The Government proposes growing the sector through MSD contracting and transfers of HNZC stock. Several messages CHA has promoted are contained in the paper, these include:

• Recognition that social housing sits within a continuum of housing provision;
• The need to grow the overall supply of housing, especially affordable homes;
• Development of both social and affordable housing;
• Support for more New Zealanders to move into home ownership; and
• Redevelopment transactions carried out by the Establishment Unit, independent from HNZC.

The proposed changes to HNZC stock are to be announced after a strategic review and regional/national consultation is completed in mid-2015. The stock transfers are identified by the nature of demand for social housing into three categories:

• Reduced demand with stock in excess of demand – stock sold to CHOs or tenants with an end result of fewer social houses in these areas;
• Stable demand for social housing – likely to sell stock to CHOs or to a consortium involving a CHO to build capable providers at scale; and
• Increasing demand with a shortage of stock – looking at opportunities for redevelopment to increase overall supply, including social and affordable housing by both HNZC, CHOs and private developers.

Paper Two – Social Housing Reform Programme: Initial steps and future state for purchasing social housing places for clients

This paper focusses on the activities of the Ministry of Social Development as the purchaser of social housing places. It describes activity since last April when MSD took over the needs assessment process and future changes to increase the supply of social housing places.

In the short term, MSD proposes to support more people into independence from social housing and to reduce pressure on the social housing register. This will be done through proposals including:

• Additional staffing for Work-Focused Case Management;
• Conditional grant letters to help people find alternative accommodation;
• An additional 3,000 tenancies reviews to create better flow through the system;
• Supported accommodation for young people on the social housing register:
• Providing information about support available to move from higher to lower demand areas;
• Improve coordination of the emergency housing response in Auckland;
• One-off $500,000 cash injection for emergency housing while a review of funding takes place; and
• Request for Proposals to increase IRRS places in Auckland.

These proposals are somewhat of a mixed bag for social housing tenants and CHOs. The additional staffing for case management, additional accommodation houses for young people and the cash injection for emergency housing can assist with some immediate needs. At the same time, expanding tenancy reviews to an additional 3,000 households and expanding their reach beyond those under 65 without children is likely to increase housing stress for many families and seniors. And while the additional cash for emergency housing is appreciated, it continues a pattern of stop/start funding which CHOs have identified as a barrier to effective operations.

Over the medium term, MSD intends to enhance its effectiveness as a purchaser by:

• Publishing a purchasing strategy, which will use information to drive change in the social housing market; and
• Enabling increased flexibility in how IRRS can be used to purchase social housing.

The purchasing strategy is proposed for release in April 2015 to signal MSD’s funding framework and contractual arrangements, and the volume, type and location of social housing places MSD need to purchase to meet its objectives. The IRRS changes are starting with the Auckland RfP and will likely require legislative changes to fully respond to market requirements.

Important review points include:

• March 2015 report evaluating the assessment functions and associated service delivery of the existing Social Allocation System (SAS) needs assessment model;
• August 2015 advice on the first completed year of the needs assessment transfer; and
• September 2015 MSD report back on the new proposals included in this package.

Paper Three – Social Housing Reform Programme: Redevelopment of social housing and engagement with the Community Housing Sector and Iwi/Māori

The final Cabinet paper outlines the objectives for transfers and redevelopment of HNZC stock and discusses the next steps to be taken to carry forward transactions, including national engagement and regional consultation with iwi and hapū. It describes actions to be taken to increase the supply of social and affordable housing and support CHO and iwi/Māori aspirations for providing social housing.

Regarding the transfers of HNZC properties, the paper discusses:

• Importance of iwi and hapū Rights of First Refusal over properties and ensuring that the transactions occur in a way that appropriately addresses any relevant iwi/hapū rights and interests; especially those of not-yet-settled iwi and hapū;
• Current tenants and existing subsidies will be transferred with the properties;
• Transactions will be run in an open and competitive tender process and only proceed if they will result in better outcomes for tenants and local communities;
• Starting in 2015;
• Receiving a price lower than the book value that is the fair value for the houses as social houses for community providers; which is their true ‘social market’ value.

The stated intent for the initial transfers of HNZC stock are to:

• Grow the capability and scale of CHPs;
• Ensure transaction outcomes are consistent with MSD’s housing demand modeling and social welfare objectives;
• Support tenant pathways to independence, while minimising disruption to social housing clients and protect the most vulnerable clients;
• Create a replicable and scalable process that signals future requirements and enables social housing market participants to provide ongoing innovation;
• Reveal the cost of provision for social housing and related services;
• Maximise the sales price within the context of the other objectives; and
• Identify social housing sector capability requirements to enable the sector to achieve the vision of a sustainable and innovative market.

There is much more included in all of these papers that will be of great interest to CHA members. This high level summary extracted from the papers is meant to provide an indication of the scope of the papers only.