$16b cost for social housing
For the first time, the future bill of the Government’s social housing programme has a figure - $16.4 billion, and it is projected to increase.
But it is not a bad thing if it does. In fact, an increase to the future liability of New Zealand’s social housing system will mean the Ministry of Social Development is doing its job.
Social Housing Minister Amy Adams has released the first full valuation of the social housing system - predicting everything from the lifetime cost of an average family, time spent in social housing and the factors that drive people to need social housing.
It is an actuarial valuation for the 2014-15 financial year and sets a benchmark to measure exactly how Government initiatives and spending are helping people.
Of the $16.4b total liability, 85 per cent of the cost related to future income-related rent subsidies, and the rest incorporated the costs of paying the accommodation supplement, temporary additional support and other MSD costs, the report said.
Of those already in social housing, and receiving some level of rent subsidy, the average household liability was $230,000. But that incorporated a significant spread across the spectrum. The bottom 10 per cent had a projected lifetime cost of $50,000, while the top 10 per cent reached nearly $500,000.
Households were expected to spend 17 years in social housing on average.
The high cost of living in Auckland was evident, with the report revealing that city accounted for 61 per cent of the total liability. Average household liability for Aucklanders was also 80 per cent higher because of higher income-related rent subsidies, which are based on market rent prices. It meant it was significantly harder for Auckland households to achieve independence from social housing, because the likelihood of them being able to leave the social housing system fell as the the rent subsidy rose.
Pacific people were seven times more likely to need social housing, and Maori five times more likely. But the biggest predictor of whether someone would need to register for social housing, was benefit receipt. People on Jobseeker or Sole Parent Support benefits were about 70 times more likely to apply for social housing than those not on benefits in the past five years.
The welfare system is assessed annually in a different valuation, for which the goal was to reduce the overall liability. Despite that, the two models were intrinsically linked.
‘‘The more we can support our most vulnerable people to become independent the better their lives will be,’’ Adams said.
The report would allow MSD officials to work with social housing tenants, with the goal of graduating those who could achieve independence out of the system. That meant the social housing system would be increasingly looking after only those with the highest needs, which meant rising costs.
‘‘We want to make sure that vulnerable New Zealanders have a safe, secure place to live, and give them a stable base to access support to become more independent and improve their lives.’’
The report for the 2015-16 year was to be released later this year. The deep data valuations were part of the Government’s social investment approach, designed to ultimately tailor investment to the level where reducing welfare liability, focusing social housing on those with the highest needs and targeting other key social areas like health, recidivism and education, would improve outcomes for all New Zealanders.