Cross-Examination: Motels Replacing State Homes?

BY SABRINA SACHS

Housing has reached crisis point in this country. New Zealand and its people stand at a crossroads; do we continue business as usual (with a few minor adjustments), or do we take a stand against the blatant disregard for our rights to shelter and housing? The situation is one where housing prices are increasingly rising, wages are stagnating and home ownership is being pushed further and further out of reach. The question lies in where this crisis began and what steps can and should be taken to combat a continually escalating problem that is devastating our country.

The situation

The housing crisis is not a new one, and Auckland in particular has seen nothing but its escalation. So far this year, the government has already spent over $8 million on housing homeless people in emergency shelters in the form of motel rooms. A great deal of those placed in emergency housing have dependents and a growing proportion are employed in waged work.[1]

The 2013 Census revealed that 203,817 people in New Zealand were living in overcrowded housing, while a further 41,705 were experiencing severe “housing deprivation” (an alternative descriptor to “homeless” in an attempt to break the stigma associated with the term homelessness).[2][3] New Zealand institutions, including Statistics New Zealand and Housing New Zealand, have gone about defining homelessness in four terms:

  1. Going without shelter: no shelter or makeshift shelter. Examples include living on the street and inhabiting improvised dwellings, such as shacks or cars.
  2. Temporary accommodation: overnight shelter or 24-hour accommodation in a non-private dwelling not intended for long-term living. These include hostels for the homeless, transitional supported accommodation for the homeless, and women’s refuges. Also in this category are people staying long-term in motor camps and boarding houses.
  3. Sharing accommodation: temporary accommodation for people through sharing someone else’s private dwelling. The usual residents of the dwelling are not considered homeless.
  4. Uninhabitable housing: dilapidated dwellings where people reside.[4]

A University of Otago study has found that there is an upwards trend of housing deprivation in New Zealand, with this trend particularly accelerating in the period of 2006-2013 as compared to the period of 2001 – 2006. This also does not take into account overcrowded housing.[5]

This is largely unsurprising, given the state of the housing market in New Zealand, and Auckland in particular. The IMF reports that over the last 25 years, New Zealand’s house prices have increased strongly, with wages and disposable income largely falling behind.[6] This no doubt is a global trend that is seen in comparable countries, yet house prices in New Zealand have risen faster than in these countries. Concurrently household debt as percent of disposable income has increased by nearly 100% since 1990. It is hardly any surprise that a massive increase in rent (26.9% over the last five years) has accompanied rising house prices.[7]

How we got here

With homeownership becoming more and more out of reach to the average New Zealander, people are forced to turn to renting and are then left subject to the whims of private landlords. With the price of housing drastically increasing, the price of renting also goes up as the market allows. 56% of private wealth is held in housing, making housing a key source of wealth accumulation and alienating them from their use as homes to become a source of investment.[8]

This is a problem. The purpose of investing is to a make a large return on any capital put into into a commodity. So with increasing investments in housing capital, it is no surprise that the price of housing has increased. This has acted in conjunction with a scarcity of residential housing as Auckland has grown. The combined effect is homeownership being restricted to a smaller and smaller subsection of the population who are then allowed to charge monopoly rents due a restriction of houses available on the market.[9]

The financialisation of housing is an issue that needs to be talked about, as so often it is taken for granted as a common-sense reality of the modern world. Increasing global deregulation of markets in general has leeched into the housing market. This was notably seen in the global financial crisis in 2008, which was at its heart involved with the subprime mortgage sector. The OECD claimed in 2011 that 30% of house price increases can be linked inextricably to financial deregulation. With banks offering artificially low interest rates, house prices are pushed up and large amounts of debt are created.[10]

Tangential to this deregulation of the housing market is the lack of alternative in the form of state housing. State housing is incredibly important as a form of welfare. Yet, in New Zealand it has been relegated to a symbol of deprivation. Housing New Zealand, which manages New Zealand state houses, evaluates rent through a system of market rent, where the company follows the market in its rent setting procedures. This means that even so called ‘affordable’ state housing has become subject to the logic of the housing market.[11]

Solutions?

This is a problem that needs a solution. Housing is a human right codified in the United Nations Universal Declaration of Human Rights in article 25 which states:

Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.[12]

The Human Rights Commission takes a similar stance:

“As a State party to the international human rights treaties that protect the human right to adequate housing, the New Zealand Government (both local and central) has a duty to respect, protect and fulfil this right… It must do that or it will be in breach of its obligations.”[13]

The question stands is how we go about fulfilling these obligations. It is an incredibly complex issue and one that requires substantive steps to be taken. Homelessness is not an issue that will simply go away with the luck of an economic miracle.

The problem largely lies in the financialisation of homes, coupled with the restricted availability of housing. Measures that the government has currently been implementing will not help. Reform of the Resource Management Act 1991, as has been suggested by the government, will allow for an increased number of available homes, but will do very little to make homes more affordable as the financial mechanisms causing high prices would still be in place. The key element to affordable housing market and lower rents lies in having an effective state housing scheme that would act to undercut the private market.[14]

State housing in New Zealand currently is highly ineffective as it matches market rent, rather than being based upon income and need. It therefore fails to provide an alternative to private landlords who are then free to set monopoly rent and maximize their own incomes. Thus the true solution to this crisis we find ourselves in is to increase the number of state homes and reestablish social housing as a right every New Zealander should have access to should they find themselves in a position of deprivation.[15] If the government establishes state housing with income-oriented rent rather than maximized market rent, the monopoly of private landlords will be broken and housing will return to its position as a social good.

We as a country need to choose between housing as a social good fulfilling a fundamental human need, or as a financial asset restricted to only the well-off. Homelessness and overcrowding can only well and truly be tackled once we look toward housing as a home rather than an investment.

The views expressed in the posts and comments of this blog do not necessarily reflect those of the Equal Justice Project. They should be understood as the personal opinions of the author. No information on this blog will be understood as official. The Equal Justice Project makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The Equal Justice Project will not be liable for any errors or omissions in this information nor for the availability of this information.

[1] Jenna Lynch “Homeless Crisis Costing Govt 100,000 a Day” (20 June 2017) Stuff < http://www.newshub.co.nz/home/politics/2017/04/homeless-crisis-costing-govt-100-000-a-day.html>.

[2] Shane Malva “The Imminent Ruin of the Auckland Housing Crisis: Social Resistance Against the financialisation of Housing” (2016) 31 New Zealand Sociology 10 at 10.

[4] Paul Bellamy Homelessness in New Zealand (Parliamentary Library, 14/02, July 2014).

[5] R. Goodyear and A Fabian “Housing in Auckland: Trends in Housing from the census of population and dwellings 1991 to 2013” (17 December 2015) StatsNZ < http://www.stats.govt.nz/browse_for_stats/people_and_communities/housing/auckland-housing-1991-2013.aspx>

[6] International Monetary Fund “New Zealand: Selected Issues” (February 2016) IMF Publishing Services < https://www.imf.org/external/pubs/ft/scr/2016/cr1640.pdf> at 15.

[7] Shane Malva, above n 2, at 12.

[8] At 13.

[9] At 20.

[10] At 22

[11] At 23

[12] The Universal Declaration of Human Rights, art 25.

[13] “The Human Right to Adequate Housing in New Zealand Human Rights Commission < https://www.hrc.co.nz/files/1214/2681/4255/Right_to_Housing_Flyer_FINAL__2.pdf>.

[14] Shane Malva, above n 2, at 24.

[15] Above 27.