Housing crisis, Covid-19 see Government budget for transitional housing balloon $200 million

Aotearoa’s housing crisis has been laid bare with transitional housing costs more than doubling the amount budgeted in 2020 – a blowout of nearly $200 million.

And the Hardship Fund, from which social support including emergency accommodation grants and accommodation supplements are drawn, spent nearly $535m – over $200m more than the year prior.

The Government has put the extra transitional housing costs down to increased demand and pressures from Covid-19, while the Opposition says it highlights the “out of control” housing crisis.

Meanwhile iwi and community housing providers say more effort needs to go into long-term solutions and are calling on the Government to give them a chance to help build more houses.

The 2020 Budget allocated $150m for delivering transitional housing – temporary accommodation and support for individuals or families who are in urgent need of housing.

That fund had to be topped up by a further $194m, and this year’s Budget added another $272m.

It also followed a blowout of $60m for Budget 2019 over the $139m allocated.

Housing Minister Megan Woods said the funding decisions reflected the Covid-19 response, which included providing suitable accommodation for rough sleepers and those living in overcrowded situations during the lockdown, and prioritising more transitional housing places.

The $194m supplementary spending included $123.6m for the Immediate Housing Response Programme, $58m for the Government Housing Build Programme, and a transfer from the year prior of $13.6m for Te Puea Memorial Marae to provide transitional housing.

“The intention of transitional housing is to provide warm, dry short-term accommodation and support for people in urgent need of housing,” Woods said.

“It is a key element of our approach to public housing, whereby people who need more support through social and health services.”

Her Government had increased transitional housing places from 1718 to 4115 places as of May, she said.

The past year also saw a large increase in the Hardship Fund, administered by the Ministry of Social Development and which includes emergency accommodation grants and accommodation supplements.

In 2019/2020 there was $346m budgeted for the fund. Last year it nearly doubled to $623m, with $88m less spent due to uncertainties around Covid-19.

In the second half of 2020, $165.5m was spent on Emergency Housing Special Needs Grants.

National Party housing spokeswoman Nicola Willis said while transitional housing provided much better support to those without a home than emergency motels, the Budget blow-out highlighted the scale of the housing shortage.

As of February there were 23,259 applicants on the social housing register – a fourfold increase since September 2017, around the time Labour came into Government after National.

Willis put this increase down to increasing pressure on the private rental market “blowing out across the board” into temporary living situations.

The fact the previous Budget had also substantially underestimated the transitional housing spend, and fact it was to increase further next Budget, was “ultimate proof” Labour’s housing priorities were not designed to fix the shortage, Willis said.

National was calling for emergency legislation that would free up more land quickly for development.

“After the Canterbury earthquakes, we built thousands of houses at pace, at a scale like we need in New Zealand now.

“Every indicator tells us it is dire. It is an extreme situation and we need significant steps to address it.”

Willis said she also supported calls to provide more financial assistance to community housing providers to build social housing alongside Kāinga Ora.

Community Housing Aotearoa CEO Scott Figenshow said the increase in transitional housing spending highlighted the need for more permanent solutions.

He said he was pleased by Budget 2021 allocations of $380m for Māori housing – including affordable rentals through to papakāinga and ownership models – and other funds to spread the load away from Kāinga Ora.

Māori made up about half of the applicants on the social housing register.

Kāinga Ora was adding about 2000 net social homes a year from a base of around 68,000, Figenshow said. But this was well behind demand and would take over a decade to even catch up if demand stalled.

“We need to get the total figure up over 80,000, and I think having by Māori, for Māori, and then by Pasifika, for Pasifika, and community providers involved as well, will lead to a real, permanent solution.”

Woods said the Government had “inherited a housing crisis”, that would take more time to fix.

An extra 18,000 public and transitional housing places announced in 2020 would be finished by 2024, she said.

Other measures to increase supply included planning rules to allow intensification in urban areas, the $3.8 billion Housing Acceleration Fund, and Kāinga Ora being able to borrow $2b for strategic land purchases to enable more housing.

“Increasing the supply of affordable housing – whether to buy or rent – will ease demand, including on public housing,” Woods said.

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