Government to Review Accommodation Supplement

The Government is reviewing the accommodation supplement.

Housing Minister Phil Heatley told TV3’s “The Nation” this weekend that the Government was seriously concerned about the $1.2 billion a year cost of the supplement along with the $600 million that went on state house rental subsidies.

“We are reviewing it because we think it probably can be targeted better>” he said.

“ For example you know when you’ve got someone in a state house getting a really cheap rent, you know 80 bucks a week, and then they have boarders who get the accommodation supplement, you know that household could be getting that state house almost for free.

“We're looking at this at the moment.

“I’d say by the back end of the year Ministers will get a good feel of where we're going to head with this.”

But he said the Government had no intention of returning to the market related rents introduced by the previous National Government in 1991.

And he indicated the Government wanted to see changes in planning regulations covering housing in cities like Auckland to provide more sections in a bid improve the affordability of new housing.

“Essentially we need more supplies so we need more houses and we need more sections,” he said.

“First of all release more new land for housing, so greenfields.

“Most cities have you know some low unproductive land that they could release for housing.” Extending city limits to provide for more sections should be done in combination with subdividing large properties within existing city limits.

He said consent costs for subdivisions of existing sections were too high “and that’s crazy”.

Resource Consents for Mining to be Speeded Up

Resources consents for mining projects may be streamlined.

Energy and Resources Minister. Phil; Heatley, told TV3’s “The Nation” this weekend that the Cabinet was looking at having “regionally significant” projects being eligible to be called in for a simplified consent process as projects of national significance are now.

His comments came on the eve of Bathurst Mining facing an appeal in the High Court from the Royal Forest and Bird Society and west coast environmentalists arguing that the consents for its Denniston coking coal project should have taken global warming into account.

Bathurst shares have lost two-thirds of their value in the past 12 months.

Investors in the Western Australian-based, dual-listed company have expressed frustration at the length of time it is taking to obtain consents to expand its New Zealand operations.

Mr Heatley sympathises with Bathurst.

“I only met with them last week actually, and they are tremendously frustrated. 

“The reality at the moment is we've got a court system where people can continue to oppose, and what we're saying is well maybe we need to bring in a consenting system where it essentially goes – you know you have a first chance, last chance in court, it's only appealable on point of law, and then the answer is either yes or no, and you can get on with it.

 “For nationally significant projects like the Waterview connector in Auckland we've used the national consenting process where we call it in and with a nine months sort of turnaround time consent it.

“What we're considering at the moment is when you’ve got very significant projects sort of a regional level whether we can have a similar system.

“It might be a turnaround time of something like six months, and it's only challengeable on points or law.

He said that Environment Minister Amy Adams was looking at legislation to provide for this approach.

'THE NATION'

PHIL HEATLEY MEETS THE PRESS

with ALEX TARRANT & JOHN HARTEVELT

hosted by RACHEL SMALLEY

Rachel Oil and gas exploration, it's critical to the country's economic growth, or so says National. But there is huge opposition to it. So how does the government overcome red tape and public opposition to mining. The Minister in charge is here to meet the Press. Let's welcome first our journalist, Alex Tarrant from Interest.co.nz, and John Hartevelt, Fairfax Medic Political Journalist. Welcome to you both, and Energy and Resources Minister, Phil Heatley. Thanks for coming in this morning.

I'd like to start with a quote if I could from Cameron Bagley, Economist from the ANZ National Bank. He quoted a World Bank study which said that New Zealand had the eight highest in the world per capita, or was the eighth highest in the world per capita in terms of resources. That figure does include water but nonetheless there's this extraordinary level of natural minerals here. At the same time we really push our 100% pure approach. How do you balance those two?

Phil Heatley – Energy & Resources Minister

Now that’s right. So we've got for example 18 explorable basins in New Zealand in terms of oil and gas, exploration basins, and we only produce out of one of them, and that’s in the Taranaki. So Taranaki has quietly over the last 50 to 100 years actually – Maui's been going for 50, successfully had an oil and gas industry tucked alongside the dairy industry and a tourism industry, and no one in New Zealand's heard a peep out of them, you know there's never been any problem, they’ve worked together beautifully. The average salary in Taranaki is about $75,000 and it's pulled up because of oil and gas. And what we're saying to New Zealanders is look if Taranaki can do it so quietly so successfully without any hassle for all these decades, why can't these other 17 basins across New Zealand do it, particularly in the East Coast, you know where there's a lot of poverty. The South Island, Northland, I mean it's crazy, and every time the Greens point to some international example of something that’s happened, I say well wait a minute in the Taranaki in our own backyard, Maui Gas, New Zealand made, we can do more of that stuff.

John Hartevelt – Fairfax Media Political Reporter

Maui Gas is only about 100 metres deep though isn't it? What we're talking about, and if you really want to scale up here, you are talking about over 1000 metres. What's our practical capability to deal with a worst case scenario?

Phil Yeah well I've opened up 23 areas across New Zealand where we're going to do exploration, most of it's in Taranaki, and other parts of the country, but much of it's on land, and some is at sea. So not all of it's deep sea. The reality is that international oil companies do it in the deep see all over the world, like the North Sea for example. Now you couldn’t imagine a more cleaner and greener country besides New Zealand than Norway. Norway is built off the back of oil and gas exploration in the North Sea, rough waters deep, and never had an incident in terms of oil spills, and I'm just saying these are the same companies that can do it in New Zealand. We've just gotta make sure that our regulations, environmental regulations are fit for purpose and keep them to account.

John Regulation's fine, but what about practical ability to deal with the worst case scenario. So what about for instance a relief well. We know the closest relief well – capability to dig for one is in Perth, that that’s clearly going to take a heck of a long time to get over to New Zealand if the worst happens.

Phil Yeah, so I mean the first thing is to make sure nothing happens, and you know oil companies have got to do that and they do it internationally and we'd expect them to do that in the regimes there. In terms of if any does go wrong we've had a review of our capability yin New Zealand and are confident that we've got the equipment in New Zealand and offshore and we can bring it in but we're currently actually talking to the Australians at the moment about working even more closely with the capping device which is now in Singapore, and which could be brought over in a matter of days. We've gotta work out how that’s going to work for New Zealand. So we're a long way, you know these conversations are happening a long way before any deep sea drilling will occur. So consents now the drilling may not occur for five years, we've got a lot of lead in time to work through these things.

Alex Is it going to be a case of the oil companies having to contribute to this as well through fees and payments and stuff, or is it generally just a government response to spills. How are you going to approach it as we look to well these 17 wells offshore?

Phil One of the things we're doing in the law change which I'll be announcing in the next few weeks in the Crown Minerals Act will be making operators accountable for the design for the installation and for the monitoring of their wells, and have a regulation around that. So they will need to put up a safety case scenario, of exactly what they do in every single circumstance. Now a good example of that is Marsden Point Oil Refinery. Now it's not drilling but they have a tanker come in and out every week, an oil tanker, they have for 50 years, that’s two and a half thousand oil tankers, have come out of Marsden Point for 50 years while the people of Whangarei have been sleeping and going to work. Now the reason why it's been so successful is they’ve planned it, they’ve got a safety case around it, anything goes wrong they're on to it, and we're saying when it comes to deep sea oil and gas exploration, they need the same plans in place, they need to operate just like Marsden Point does, very carefully. There's a plan for every scenario.

Rachel Let's move on to fracking if we can Minister. The Dunedin City Council this week has announced a moratorium it. We know when it came to Solid Energy seeking resource consent to environment, Waikato wasn't too concerned about it. There's real inconsistencies across the regions here, why is that.

Phil Well Taranaki Regional Council is the main council that’s had to deal with hydraulic fracking historically. So they’ve dealt with it for two or three decades. So it's been going on in Taranaki, no one's had any particular concerns and when I talk to the Regional Council.

Rachel It's been pretty difficult to regulate it hasn’t it though?

Phil Well they're saying they’ve been regulating and monitoring it and I guess they're the independent body and I take their word and their paperwork for that, but what we need to do is to make sure that other that other regions when they start getting into the space that Taranaki's been in for decades, have the expertise not just from industry in Taranaki to other areas, but from the Regional Council part there, and the monitoring bodies. We've actually also found that Iwi in some areas of New Zealand are taking much more interest in oil and gas because they’ve been talking to the Iwi in Taranaki.

Rachel But what's the National policy though on this?

Phil Yeah well the Parliamentary Commissioner for the Environment's looking at hydraulic fracturing at the moment about how if it needs to be regulated differently or companies need to do more and that type of thing. So she's going to report back at the end of the year, and she takes her job pretty seriously. So her recommendation's I'm going to be taking very very seriously, she may ask for the regulations to be changed, and I'm open to that.

John Would that be fairer for miners, to know that there's a national approach?

Phil Yeah I think that is an argument that’s certainly put to me, that’s said look we've done it in Taranaki forvever, there's never been a problem, why should it be any different for the rest of New Zealand.

John Do you agree with that argument?

Phil Well I do. I understand why they might want consistency across the country, but the reality is the rock types and the soil types, and even the communities have a different view. So you’ve gotta be a bit careful when you have a one size fits all.

Alex But they want the power taken away from local government and given to central government.

Phil Yeah I understand that and you can't go that far entirely because the reality is local communities should have a say.

Rachel Okay let's look at the issues of Bathurst as well, this is the coke and coal project. They’ve spent millions trying to get set up on the Denniston Plateau. It just keeps going back and back to court and I think it's going back to court on Monday when the environmentalists are arguing that you have to take into account global warming I think. It's pretty extraordinary. Does the Resource Management Act essentially allow environmentalists to delay delay delay, something like this going forward?

Phil Yeah well we're getting similar frustrations from the oil and gas and mining industries, that we're getting from you know large property developers and people who want to consent wind farms, and that is that when you’ve got a regionally significant project, it's just crazy that you just get taken back to court time and time again, which is what's happened to them.

Alex What's the fix?

Phil Well we've been for nationally significant projects like Waterview, you know the road. We've used the national consenting process where we call it in and with a nine months sort of turnaround time. What we're considering at the moment is when you’ve got very significant projects sort of a regional level whether we can have a similar system, and I might be a turnaround time of something like six months, and it's only challengeable on points or law.

John Well what have you got for Bathurst, I mean these people are losing millions of dollars in the two years that they’ve been waiting to get this up and running, and the government's out here waiting for the Prime Minister to open the offices for them. What have you got from this?

Phil Well they're obviously hanging in there, I only met with them last week actually, and they are tremendously frustrated. The reality at the moment is we've got a court system where people can continue to oppose, and what we're saying is well maybe we need to bring in a consenting system where it essentially goes – you know you have a first chance, last chance in court, it's only appealable on point of law, and then the answer is either yes or no, and you can get on with it.

John Never again, there will never again, as far as a National government is in power, there will never again be a case of a two year delay?

Phil I simply couldn’t guarantee that, because we can't control the courts, and we don’t want to control the courts.

Alex But you're looking at legislation to try and ,,,

Phil That’s correct yes, Amy Adams the Environment Minister's looking at legislation on – well I'm gonna call it loosely regionally significant projects. I don’t think she'd use that turn of phrase but where they're substantial, they're regionally sort of significant, my turn of phrase, and we're looking at a way in where we can make the decision making a lot cleaner and simpler. No I must stress that we're not about the decision being yes. The decision might be no, but at least there's certainty.

Alex Than speech. But surely Bathurst and mining decisions, your government has put a huge emphasis on mining, surely these are decisions of national significance if we were to follow the National Party's 120 point plan, this is quite high up there. So why can't you do what you did with Waterview, with cases like Bathurst?

Phil Well some are and some aren’t and I mean it depends how large scale property development or the mining venture is, and the reality is we don’t think that many of them cut the sort of national test but they might cut some sort of you know regionally significant test.

Alex But adding them all together they're supposed to be nationally significant, you expect royalties to rise from 3 billion to 12 billion. How is that gonna happen if you just pussyfoot around with environmental groups?

Phil Well that’s correct, but the reality is, each of these development projects come on at a different time, they're unrelated, one might be after gold, one might be after oil and gas. So you can't sort of lump them in all together, so what we're saying is look if it's a really significant project in a region, you know huge amount of jobs, you know environmental concerns are significant, it might be something that shouldn’t go through councils and all the rest of it.

John You’ve mentioned legislation coming in the next couple of weeks. Is that going to have something in it that we can get more royalties from minerals.

Phil Yeah. So what I'm going to be reporting back in the next few weeks is what our decisions are in terms of the Crown Minerals Act, I'm hoping legislation will actually hit the debating chamber in the next couple of months. Now with that we're going to be releasing a discussion paper on raising or changing the royalties around gold and silver and those types of minerals. We've already said that in terms of oil and gas the industry already pays 42% both company and tax and royalties. It's already high enough, so oil and gas is pretty much off the table, it's gold and silver and those other minerals.

John We really underdone on those aren’t we really?

Phil Yeah well our view is – well we get to do the review obviously and go out to consultation and get a sort of – you know do the real number crunching, but my sense is oil and gas, in terms of we're quite isolated in New Zealand, so we've gotta be a bit careful to attract the companies here, you can't have it too high. So oil and gas …

Alex The oil's not moving is it?

Phil The oil and gas is pitched about right but gold and silver, you know the gold price has changed since it was last set, you know some of those other minerals iron sand. So no no look we think there’ll be changes.

Alex So what kind of rises are we gonna see, it's gonna be up?

Phil Yeah well I can't pick it but it is going up. The reality is we're not going out to New Zealanders and saying look here's a big opportunity we've done it properly in the past, we can do it in other parts of the country and then be concerned about that without getting the gains from royalties. You know we simply have to get the gains. So that’s the argument really, if we're gonna do this stuff there has to be a return.

Rachel How determined are you to essentially tap into the country's mineral welfare, because are we going to see a u-turn at all or is this going to happen?

Phil No, we're very very determined, we've already made a decision that we're not going to be mining on schedule four land, you know which is high value national parks and that type of thing, but the reality is everyone's screaming out for jobs, we want new schools and hospitals. Here's an opportunity, we've done it well in Taranaki and other places, let's do it elsewhere.

Rachel Okay we have to pause there. We will return to our interview with Phil Heatley after the break where we'll ask him about his other big portfolio, housing. Should the government intervene in a market and make housing more affordable for all New Zealanders?

Rachel We're back with The Nation and Housing Minister Phil Heatley, we're going to move on to look at the issue of housing in New Zealand. Minister I'd like to raise a quote that Bill English said earlier this week. He said that the most unfair aspect in relation to affordable housing is that there's no housing being built for people in the lowest quartile of income. So how do you fix that problem? What do you have to do?

Phil Heatley - HHHousing Minister

Look if you asked me if there as one fundamental issue that's driving that it would be simply this. Is that the cost of land, the cost of sections is so high that when a builder comes along and buys a bare section and has to build a house on it, because he's paying so much for the land, he has to build a flash big house to make any money, and so if you get land prices down at a reasonable level you can start building you know less expensive houses, you know houses that don’t necessarily have two or three bathrooms, you know all that type of thing. So get the land price under control, and land size under control, and I think you're a long way there. Look it's not the silver bullet, but I'd say it would be top of the list.

John How?

Phil Oh look we've been talking to Auckland Council about this quite a bit because I know Mayor Brown's concerned about it as well. It's a combination of – well essentially we need more supplies so we need more houses and we need more sections, and there's two ways you can do it, and as a National Party we think you should do both. First of all release more new land for housing, so greenfields, I mean most cities have you know some low unproductive land that they could release for housing.

Rachel Extending city limits?

Phil That’s right, which we've always done, you know for a century we've extended city limits. So keep doing that in a sensible way, but do it in combination with subdividing large properties inside town. So if you’ve got an elderly couple in Auckland, and I tell you what there's thousands in this situation, they're in a quarter acre or a half acre section, they'd love to cut it in half, build a new house for them on one half and sell the other bit off, and make you know three or four hundred thousand dollars for their retirement. They don’t do it because it costs them $40,000 two years and they may not even be consented. So that’s crazy.

Alex When are we gonna see the changes then? The problem's existing now.

Phil So Auckland Council if I can go to that example, they’ve already said that they're going to have 60 or 70% of new housing within city limits, and then they're going to increase the expansion of Auckland in sort of a sensible stage manner. So that’s good you know the balance is really good.

Rachel What does that mean? Up? Out?

Phil I think both. So up and out. But what we're doing with them is for example in Tamaki in Auckland the Council and the government have just formed a company in Tamaki where there's 6,000 houses up there. We own 3,000 of them, they're state houses, they're on half acre and quarter acre sections most of them. We're going to go through those houses and we're going to subdivide properties. We're going to rebuild state housing, we're going to put new insulated housing in, not you know 1950s cold ones, and we're going to go through and increase the housing supply. Now if we could do that as an example of in Tamaki, and we're not talking hundreds, thousands, we think other areas of the country can look on that as an example.

John So that’s state housing playing a big part. Local government often say we can't consent these large projects cos the risk is too high. So is central government doing its own building, removing that risk, is that a real viable solution here? Shouldn’t you be doing more of these? Government actually spending more of its own money on building more housing stock?

Phil Well we're doing it in Tamaki cos we are in 57% of the houses, so one out of every two houses up in Glen Innes and Point England and that area is you know the taxpayer, I mean it's just amazing. So the reason why we're targeting that area is the concentration of government investment is so much and there is so much wasted land, and those people are living in old houses and they should be living in decent ones. There are other examples across the country where we could do that sort of stuff, but that’s our first cab off the rank. But I've gotta say you know historically in New Zealand and it's worked well for us, it's not up to the State to provide housing for nine out of ten people, they want to buy their own home and be independent.

Alex Who's gonna pay for the new houses being built in Tamaki?

Phil Oh well it's a selling off of land, reinvesting the money and building, that type of thing.

Alex Are you selling it to developers or NGOs?

Phil Oh well we're going to be putting out eventually, I mean they're working through this over the next 12 months but they’ll be putting out requests for proposals to developers who'll work with community housing organisations and others, and what we'll have is in the end we'll have a state house, we'll have a house owned by a first home buyer, maybe a larger house on a smaller section, a community housing organisation. The idea is to have a really mixed development.

Alex What's stopping these houses being really expensive then? Building nice big tall houses on a small section and putting up the prices?

Phil Well look some of them might be sort of at the higher end but the idea up there, because it's a neighbourhood where you’ve got large sections at the moment, the reality is you know subdivision, smaller houses, that type of thing is where were heading. So look there’ll be a combination.

Rachel If it's so important why is there less capital available for this in the latest budget, that’s dropped by about two and a half million?

Phil No, the social housing budget is more a fund for social housing providers to apply for, to build their own houses elsewhere, so they might add you know 30 houses to their stock or just ten or you know 50 or whatever it is. So that’s what we're doing there, but that’s just a sort of a cash grant system. What we're also looking at is the transfer of state houses which might be surplus to Housing New Zealand, to some of these organisations. Cos what'll happen is say if we transferred 200 houses to an organisation and they said look in ten years maybe we could double that number, the reality is the government's in no position to double that number, but they might be. And so we're looking at those sorts of opportunities.

John That social housing fund is massively over subscribed isn't it? It shows the level of demand there. And the Productivity Commissioner said that the fund is not up to it, the unit that you’ve set up is not up to it, so it's a sticking plaster on a weeping wound.

Phil Well the thing is that’s just part of the strategy, I mean that social housing fund doesn’t include Tamaki of course, it doesn’t include Hobsonville, it doesn’t include a whole lot of other things we do. I mean we've got 70,000 state houses, it doesn’t include that 15 billion dollar investment. So that’s just a small part of it, but remember that Unit 2 has only been open for one year, all it's doing at the moment is distributing that 37 million dollar funding, it's also getting into state house transfers, the better use of Crown land. So it's just early days for that unit. I understand the criticism but look we've just gotta take you know baby steps for the moment.

John That’s the government's approach to this though for the most part isn't it, social housing, those NGOs, that’s your approach.

Phil Yeah well what we've said is look we've got 15 billion dollars' worth of state housing, 70,000 state houses just under, that’s our biggest asset, it leaves the energy companies for dead. That’s our biggest state asset is Housing New Zealand, state housing. That’s a huge investment by New Zealanders. We're in no position to build more and more state houses you know, we're just not in that position. So what we're saying is look, we want to insulate all our state houses, cos they're not, we want to upgrade them, we want to do work like we are in Tamaki, but in terms of the growth of social housing in New Zealand, we would rather other organisations who are really skilled at it, do that work.

Rachel In the short term if you look at the government's housing policy, pretty central to that has been this accommodation supplement. Surely that is going to blow out when you have rents going up, less houses available. That’s going to become a massive cost isn't it?

Phil Yeah well it is a concern to us, that accommodation supplement costs about 1.2 billion dollars a year, and state housing rent subsidies cost about 600 million so you know you're close to the sort of 2 billion mark, and that is of a serious concern to us. We're a bit like the Labour Party actually who came out recently and asked the question, is it a good spend for that you know 1.8 billion.

Alex So you're reviewing it?

Phil Yes so we are reviewing it cos we don’t think so, we think it probably can be targeted better. For example you know when you’ve got someone in a state house getting a really cheap rent, you know 80 bucks a week, and then they have boarders who get the accommodation supplement, you know that household could be getting that state house almost for free, and we've gotta be careful…

Alex Are you saying the system is being wroughted?

Phil Oh look in the welfare system you know you get these things from time to time. If it's the rules then we've gotta change the rules. Clearly if someone's being dishonest well we'll catch them out.

Alex When will we see changes?

Phil Well we're looking at this at the moment, I'd say by the back end of the year Ministers will get a good feel of where we're going to head with this. It's a big piece of work for Paula Bennett, cos the accommodation supplement's under her purview, and of course income related rents in state housing is under mine and the Minister of Finance is also taking an interest.

Alex Are you committed to income related rents?

Phil Yeah we're not going back to market rents for state housing, we've made that very very clear. We see a place for state housing, but what we're saying is you know in terms of income related rents, accommodation supplement, the relationship between them, you know what levels they are, who gets them, you know we're like the Labour Party, we're questioning that.

Alex You’ve dropped Gateway and you're talking about changes to the accommodation supplement. Basically what we're seeing here aren’t we is a big change from the demand side, helping people get into the existing homes, in the supply side isn't it? It's a big wholesale change to how the government's approaching it and when will we see the big package?

Phil Okay, so what we're doing is we're answering the problem head on, and the problem is we're not building enough houses, okay, and we're not building enough houses that are affordable. So the release of land, making sure that Council processes are much more streamlined.

Alex That’s still months away though so what's happening now though?

Phil  Well the reality is for builders, I mean they’ve downed tools for two or three years because of the recession, they haven’t had the capital, once they start picking up those tools and we've started seeing that happening now, we just want to make sure they’ve got the land to build on, and the consenting processes to work with.

Rachel Alright Housing Minister Phil Heatley, we do have to leave it there, thank you.

ENDS

© Scoop Media