What role should government have in providing affordable housing? The issue has been tossed back and forth between rival political parties for a century now, and with housing becoming less affordable for many, it’s likely to be debated for a while yet. Refugees, such as Nay from Myanmar, are among those who benefit from state housing.
In October 2006, 19-year-old Olivia Maana from Panmure, Auckland, opened a letter from Housing New Zealand Corporation and gasped. It was an eviction notice. Following the recent death of her mother, the lease on the family’s three-bedroom state house was now void. With other families in greater need of the house than her, she, her 14-month-old son Santana and her 13-year-old cousin Jordon would have to pack their belongings and move. Still grieving for her mother, Olivia was left reeling by the news.
Her family had been renting the place for 32 years. She had grown up there. It was the family home. The afterbirths of generations of family members were buried under trees around the house. With such strong emotional attachments to the place, Olivia wanted to take over the lease and stay on.
Her landlord refused. Children of tenants could not inherit state houses, explained Housing New Zealand, the country’s largest social-housing provider. Besides, under the corporation’s rules Olivia and her family were now entitled to only a two-bedroom house; the boys would be able to share a bedroom in a smaller house close by. This cut no ice with Olivia, who promptly got her friends and neighbours on her side. They circulated a petition in support of her staying and organised a picket outside her home. When the media arrived the group were holding placards with “Stop Eviction” and “Help Save Our ‘Home’” emblazoned across them. They were not going to take Olivia’s eviction lying down.
If Olivia was expecting the media to argue her case, she was to be disappointed. In an editorial the next day, the New Zealand Herald acknowledged it was easy to understand people’s emotional attachment to a place, but declared only homeowners had the guarantee of never having to leave their properties. “The timber-clad character of most state housing is a pointer to the fact that, in the case of their tenants, nothing is cast in stone.” And this was the way it should be, the paper proclaimed. “State houses were always meant to be a refuge in a period of need and a stepping stone to home-ownership.”
The country’s first state house—in suburban Miramar, Wellington—had provided the model when its original tenant had bought it, the paper went on. But for some reason some tenants now thought they could live in their state house “for as long as they like”, even when their circumstances improved or they no longer needed the space they once did. This mindset meant that others in greater need of state housing got locked out.
Olivia was “painting herself as martyr and making her removal as difficult a process as possible”. But Olivia was no martyr, asserted the Herald. Reports that she was in rent arrears and had damaged the property (something she denied) meant there could be little public sympathy for her plight. “Indeed,” the paper concluded, “the picture that emerges is of an ungrateful state-house tenant evading her legal and moral responsibilities. She should move out without delay.”
Ironically, Olivia’s idea of entitlement and a secure, longterm tenancy was much closer to the 1930s Labour government’s vision of state housing than was the view outlined by the Herald. Far from being intended to provide a temporary refuge and a stepping stone to an own home, the state-housing scheme Labour established was meant to provide a lifetime alternative to homeownership and a housing choice for all New Zealanders.
How, therefore, did the stepping-stone scenario arise? If state housing was meant for all New Zealanders, why is it now only a residual provision for the country’s poorest and most needy? To answer these questions we must return to the beginning of state housing in New Zealand.
It is a popular misconception—as the Herald editorial highlighted—that New Zealand’s first state house was built in Fife Lane, Miramar, in 1937. The opening of that house—at which Labour Prime Minister Michael Joseph Savage carried furniture through an excited throng and over the threshold—is etched on New Zealand’s collective memory and remains the most potent popular image of state housing. However, the state-housing story began not in bucolic Miramar but 32 years before in industrial Petone. It was here, along nondescript Patrick Street, that a Liberal government erected a collection of workers’ dwellings: New Zealand’s actual first state houses. No flags or bunting marked their opening, and tenants moved into them in dribs and drabs over the spring of 1906. Soon similar dwellings were popping up in each of the four main cities. Yet these early state houses never caught the public imagination, or gained the omnipresence in towns and cities that later state houses did. How come? More to the point, what was the government doing building state houses in the first place? Why in 1905? It’s best to answer the last question first.
The main reason for state housing beginning in 1905 and not before was the free-market approach to building cities in 19th-century New Zealand. City builders claimed regulations inhibited growth. Municipal governments (often the same people) agreed and placed few restrictions on urban land use. But this hands-off approach did not benefit everyone. As cities grew and land became scarcer, lanes and alleys were driven through the backs of properties and lined with flimsy, poky cottages for workers. These soon became over-crowded and squalid. Rubbish and effluent festered in city streets and, despite a rising death toll from diseases such as typhoid, little was done to remedy the situation.
The election of a Liberal government in 1890 led to a more interventionist approach to the issue. The Liberals’ initial solution to the slum problem was to export urban workers to the country, where they would become backblock farmers or small-town merchants. It soon discovered, however, that few city workers wanted to up sticks and head for green pastures—or thick bush and scrub, as was more likely to be the case. A revised plan to relocate workers in suburban hamlets—with room for a house, vegetable garden, chooks and a cow—also drew few takers. As one trade unionist explained: “The urban toiler preferred to live in the immediate vicinity of his work, and resorted to overcrowding when suitable dwellings were not available”.
The failure to entice workers to settle beyond city limits was just one factor that led to the Liberals’ decision to build state houses. Another was the refusal of private enterprise or municipalities to cleanse city slums. After visiting British municipal-housing schemes in 1897, Premier Richard Seddon had given New Zealand municipalities the power to undertake similar projects. None had been built. The final factor was the Liberals’ belief that rising city rents were fuelling inflation and threatening economic well being. Erecting state rental houses in cities would dampen private rentals and stabilise the economy.
In 1905 Seddon introduced the Workers’ Dwelling Bill, providing suburban houses for inner-city workers. The measure passed with little dissent and added to a trophy room of world-firsts for the administration, social housing taking its place alongside old-age pensions and votes for women.
The government wasted little time in building its first houses at Petone, chosen because of its perceived health attributes: clean air, large fertile sections and pre-industrial outlooks. But being nearly an hour’s travel by foot and train from Wellington, it was the back of beyond for most workers. Another turn-off was the expense. The Liberals were determined that their workers’ dwellings would not be slums in the making. As a result, the standard of design and materials was laudably high but expensive. Rents were set on a cost-recovery basis at about a third of the average worker’s wage. This meant tenants would be no better off than if they stayed in the city. Unable to attract the people they had been built for, the dwellings were eventually let to local workers on higher incomes. Similar problems struck workers’ dwellings in other centres.
The poor response to the scheme led the government to rethink its role in the housing market. Seddon had died shortly before the first workers’ dwellings had been completed, and his successor, Joseph Ward, was a reluctant landlord. He looked for other ways to accommodate workers and struck gold with the Advances to Workers Act (1906). This measure enabled eligible workers to obtain cheap state credit to build their own homes, a process administered by a body called the State Advances Corporation (SAC). It was a great success. By 1910 only 126 workers’ dwellings had been built—a far cry from Seddon’s hope of 5000—whereas 1296 loans had been granted under the 1906 legislation.
Hoping to reinvigorate the scheme, in 1910 the government successfully backed a new Workers’ Dwelling Bill, which allowed for workers who wished to own their homes rather than rent them. The state would build a landless urban worker his own house on a mere £10 deposit. This sig‑nalled the end of the Liberals’ state-housing programme. Occupants could still rent or lease their homes, but the state favoured those who were willing to buy. The creeping privatisation of the workers’ dwellings was completed when William Massey’s conservative Reform government sold the remaining state-housing stock.
Despite its collapse, the workers’-dwellings scheme had shown the state’s preparedness to intervene in the housing market. Subsequent debate would centre on the kind of intervention. The Workers’ Dwellings Acts had pointed in one direction: the construction of state rental houses. The Advances to Workers’ Act pointed in another: state sponsorship of private housing. Later interventions by New Zealand governments would oscillate between these two bookends. Generally speaking, left-leaning governments increased state-housing provision, whereas right-leaning governments encouraged homeownership.
Between 1919 and 1935, an emphasis on homeownership held sway. It began with the passing, under the Reform government, of the Housing Act (1919). This aimed to provide more state-built homes for city workers to purchase. With the 1913 Great Strike still a haunting memory, the govern‑ment reasoned homeownership would curb worker militancy and foster self-reliance. To further this vision, Massey introduced 95 per cent state mortgages for new homes, creating a speculative frenzy. City workers leapfrogged each other to buy land in mushrooming suburbs. By the end of the 1920s the state was financing nearly half of all New Zealand houses. But in 1929 the Wall Street Cash ended the supply of easy credit, and as the Great Depression deepened, the mortgage man began knocking at doors, forcing defaulters out of their newly built bungalows. Many shacked up with family and friends; others huddled in miserable rooms in makeshift houses. Overcrowding became acute. By 1935 the Coalition government (of the United and Reform Parties) finally realised it could no longer sit on its hands and do nothing. Finance Minister Gordon Coates established the Mortgage Corporation of New Zealand to issue low-interest home loans. He also announced plans to rebuild slum areas.
It was too little, too late. In November the government was swept from power by Labour, and New Zealand had its first socialist administration. Initially, Labour had no vision for housing beyond extending SAC credit to homebuyers. Yet this offered nothing to those who had little hope of purchasing a home, nor could it possibly reverse the growing housing shortage. (With the economy on the mend, and marriage rates rising, more and more people wanted a place of their own.) In early 1936 the government realised it needed to do more, and instructed Undersecretary of Housing John A. Lee to tackle the problem.
Lee was adamant only the state could solve the crisis: private enterprise was not up to the task. In his words, “Slum landlordism is most profitable and slum landlords never demolish of their own accord.” Several months later, Finance Minister Walter Nash revealed in his Budget the scale of state intervention to come, announcing the construction of 5000 state rental houses at a cost of three million pounds. Further details were soon revealed: the project would be financed through cheap Reserve Bank credit; and houses would be built by private enterprise, overseen by a new Department of Housing Construction and managed by the SAC.
The initiative was part of a wider policy to slash dole queues and prime the economy. Building new homes would help soak up the jobless and give them skills. Further, houses would, as far as possible, be built of local materials. This would stimulate manufacturing, generate economic growth and make New Zealand more self-sufficient. The fundamen‑tal premise of the scheme was that access to high-quality housing was a right of citizenship, “on the same level as the right to education, sanitation, to good and abundant water, to an adequate road system and to a certain amount of medical care”. State houses would, declared the government, raise the standard of New Zealand housing and give tenants a security of tenure equal to homeownership, as was common in Europe. As long as tenants abided by the terms of their lease they would be permitted to stay in their home for life.
One of the first matters for the new housing department to settle was where to build the state houses. The people in greatest need of rehousing were the urban poor living in what Lee called “the rotten core” of New Zealand’s cities. The government, promised Lee, would dig out the rotten core and replant the cities with modern dwellings and buildings. It was soon evident, however, that the rotten core was to remain. When the first state-house plans were publicised, they didn’t show inner-city flats or apartments, but single-unit houses set in distant garden suburbs. After the failure of Seddon’s workers’ dwellings the government might have thought twice about initiating another suburban state-housing scheme. Surely it was better to build workers’ homes closer to central-city workplaces. But the high cost of urban land made rebuilding expensive. Then there was the almost universal belief that city streets were no place for children: safe suburban backyards were. But the main reason for leaving the rotten core alone was the recognition that few inner-city poor would be able to afford state-house rentals and most would have to remain living where they were.
Like the Liberals, Labour wanted to avoid future slums and raise the standard of New Zealand housing. But, as with Seddon’s workers’ dwellings, this desire led to high building costs and rentals. Critics attacked this aspect of the scheme. One calculated that workers would have to earn at least £6 a week—£1 above the weekly living wage—to call a state house home. Lee justified the rentals on the basis that state houses should be available to everyone and that socially mixed statehouse communities were desirable to avoid “streets of people of a uniform income,” a euphemism for ghettos. The poor wouldn’t be forgotten, he assured critics. Houses vacated by new state tenants would trickle down to those unable to afford state housing.
A lack of cash wasn’t the only obstacle facing prospective tenants. Wanting to support the newly rising national birth rate (the Depression had been no time to have children) Labour discriminated in favour of married couples with one or more children. The first beneficiary of the policy was the McGregor family of Wellington.
David and Mary McGregor had migrated from Scotland in the 1920s. David had found work on the trams, and after a period living with Mary’s sister, the family had rented a dank and gloomy flat in the ironically named Happy Valley. With state housing rising on the sunny side of the city, the family had seen the chance for a better life, so had thrown their names into the ballot for one of the completed houses.
It isn’t known how the McGregors came to be picked as Labour’s first state-house family, but if a family were required to front for the cameras, the McGregors fitted the bill handsomely. David had rugged good looks and a beaming smile; Mary was more restrained, but nurturing and pretty; both children were bonnie and photogenic. They were the ideal family to sell the government’s housing scheme.
On moving day, before an expectant crowd of onlookers, the McGregors waited patiently outside their new home for their furniture to arrive. At last the truck carrying their belongings turned the corner into Fife Lane and ground to a stop outside number 12. The removal men began unpacking. But instead of overalls, caps and boots, these men wore suits, felt hats and shiny shoes. The first cast off his jacket and hat and, with a large divan chair perched on his right shoulder, marched up the front steps, swung through the door and deposited the chair in the McGregors’ new living room. Thus did Prime Minister Michael Savage put his personal stamp on the day’s proceedings. Without more ado he declared New Zealand’s first state house officially open, returned to the van and, with the help of Minister of Works Bob Semple, carted a cumbersome dining table along the same route.
Other cabinet ministers were soon following their leader up the path clutching the remaining items of furniture. The best laugh of the day went to the one-armed Lee, who carried in a lightweight birdcage, raising it, as in victory, to an appreciative crowd. The job done, the prime minister handed over the keys of the house to the grateful McGregors and began the first of many speeches.
Mr McGregor was even more grateful when the speeches stopped. As he explained later: “I had a young baby, a twoyear-old, a plump little girl, and I held her up for that whole two hours and she got very, very heavy by the end of it.”
He would always remember the day with affection, but his wife was less taken with all the fuss. In addition to the prime minister and his cabinet colleagues, some 300 people stomped through her home, muddying floors and leaving fingerprints on freshly painted fixtures. Growing impatient at this “home invasion”, she eventually ordered the guests to leave, but for days afterwards the family endured a constant stream of visitors peering through their windows.
The day proved such a promotional success for the government that a party of cabinet ministers repeated the furniture-carrying stunt at the opening of the first state house in each of the main cities. Soon state houses were sprouting across New Zealand’s suburban landscape—from Orakei to Oamaru and grateful tenants were turning them into homes.
By February 1939 state houses were being completed at a rate of 57 per week, with the prospect of the number rising to 70 per week by the end of the year. But with 10,000 applicants already on the waiting list the completion rate fell way short of demand. Then came the WW II, when building all but ceased as resources were redirected to meet the military threat from Japan. With victory eventually in sight, building resumed in 1944. However, the lull in activity had increased the gap between supply and demand, made wider by the government’s decision to allocate 50 per cent of all state houses to returned servicemen.
By the end of the war the state-house waiting list had swollen to 30,000 and showed no signs of diminishing. As a stopgap the government turned recently vacated military camps into temporary accommodation for state-housing applicants. Describing the Western Springs camp, in Auckland, one writer noted the accommodation “is not first class, but infinitely better [than that] from which the tenants have come…[they also] have the satisfaction of knowing that they will be allotted a State house within a brief period”. Stays for some, however, were far from brief, and those who refused to go into the camp were removed from the waiting list.
To some extent the government had only itself to blame for its burgeoning waiting list. Despite escalating building costs, it had refused to raise rents. An increase might have forced some tenants to leave, compromising its security-oftenure promise. In 1944 a building conference had estimated state-house rents were only half what was required to cover the cost of a similar private house. State-housing rents were therefore being subsidised by the taxpayer. One conference delegate expressed the belief that most applicants were already living in satisfactory houses but hoped to get better houses at a cheaper price—no wonder the waiting list was so long. This fuelled bitterness among those who missed out. While most could see the logic of low-wage workers receiving subsidised housing, the sight of middle-income workers setting up home in a state house was harder to stomach.
The conservative press picked up on this sentiment with headlines such as “What it costs you to provide the other fellow’s house”. It also attacked state paternalism. The Evening Post worried about the new fashion among newlyweds of looking to the state, rather than themselves, for a home:
The making of a home develops the qualities of responsibility, self-reliance, and thrift. These qualities are of the utmost importance in successful family life and national strength. They cannot be promoted if the conditions make it evident to the young people that they are not expected to be responsible for their own homes—that they are, in fact, to be discouraged and told to take their place in the queue for State houses.
The paper’s sentiments struck a chord with an electorate growing resentful that war-time economic restrictions still dominated their lives. The opposition National Party exploited this feeling during the 1949 election, promising more freedom from officious regulations and an end to irritating shortages. With regards to state housing, it pledged to continue the programme but offer tenants the opportunity to buy their homes. On the other side, Labour fell back on its record and promised more of the same. It was hardly inspiring stuff and Labour was soundly defeated.
Labour had underestimated New Zealanders’ love affair with homeownership, which, for many, had become a secular rite of passage into adulthood. Governments since the Liberals had done a sterling job in selling the benefits of becoming one’s own landlord, with homeownership rates tracking upwards until the Depression had forced thousands back into rented accommodation. Labour had blamed the housing crisis on market failure and initiated its state-housing scheme to provide decent housing for all. It had wanted to bridge the gap between the uncertainty of tenure in the private rental market and the (perceived) certainty of homeownership by offering a European form of tenure unknown in the New Zealand market: a rental home for life.
To Labour, this model had been both desirable and efficient: desirable because tenants could enjoy all the advantages of homeownership without the hassles of upkeep; efficient because the state could achieve economies of scale, in planning and construction, that were unattainable in the private sector. But the intervention of war had prevented the model from being adopted to an extent that would have undermined the cultural mindset that saw homeownership as best. While most state tenants were grateful for the security of a state house, many also harboured the ambition to own their own home (two-thirds in one unofficial Auckland survey). When National dangled before them the carrot of freehold, it was too tempting a morsel to resist. Having looked to Labour to build them a home, they now turned to National to let them buy it.
In late October 1950 David and Mary McGregor received a letter from the SAC inviting them to buy their home for the modest sum of £2200. The terms were generous: a 40-year loan at four per cent interest with only a five per cent deposit. The McGregors declined the offer. But the National government was reluctant to take no for an answer. In 1952 it tried again. This time the couple were receptive. It was a buyer’s market and they used it to cut a deal £300 lower than the original asking price.
That New Zealand’s “first” state-house family now had a stake in the land would have brought smiles to government faces. For National, homeownership had both economic and social rewards. As Prime Minister Sidney Holland had ex‑plained two years before:
The Government has great faith in the social value of homeownership. An important part of its policy is to encourage people to own their own homes, for it considers home building and homeownership develop initiative, self-reliance, thrift and other good qualities which go to make up the moral strength of the nation. Homeowners too, by building up an equity in their properties, are saving in one of the safest and most effective ways, while they have the incentive to maintain and improve their properties, and so increase the material assets of the community. Above all, homeownership promotes responsible citizenship. To the community it gives stability, and to the homeowner it gives a constant sense of security, pride, and well-being.
It was a return to the housing policies of Massey. National also believed that homeownership was ethically superior to renting. In a society that championed private-property rights, homeowners had higher social status than renters; Labour’s attempt to redress the balance had failed. Nevertheless, National remained committed to state housing, recognising the state had a social responsibility to house those who could not house themselves. However, it wanted to discourage those who could afford market rents yet sought a state house to avoid doing so. These opportunists, National believed, were responsible for the blow-out of the state-housing waiting list, which now stood at 45,000.
National moved quickly to slash the list. First, rents for new tenants were raised to narrow the advantage over private rentals. Second, an income bar of £520 a year was introduced for new applicants to enable state housing to be redirected towards the poor. Last, sitting tenants were encouraged to purchase their homes and become part of the property-owning democracy.
These were radical reforms that were to change the course of state housing. Whereas under Labour state houses were advocated as an alternative form of tenure for all New Zealanders, under National state housing became a residual provision for those locked out of homeownership. In making this change the state both acknowledged the importance of providing decent housing to New Zealand’s poor and made it clear that everyone else should look to their own resources to meet their housing needs.
Having raised rentals and lowered income limits for new tenants, the government turned its attention to the sale of state houses. Initially, sales were sluggish, despite the favourable terms. The SAC set up special sales teams and asked its managers for feedback. The Nelson manager reported better sales in Blenheim than on the West Coast. He didn’t think Greymouth tenants were “the homeowner type” or had the “cash resources to meet necessary deposits”. Location was also important: most of Hokitika’s state houses had been built over an old swamp, while those in Nelson occupied a part of the city “formerly known as ‘Siberia’”. In contrast, Blenheim’s state houses “are built in good localities, are an attractive type and have a ‘tone’ which does not exist on the West Coast or [in] Nelson”.
In August 1951, the SAC hosted a conference aimed at boosting sales. The best results would be obtained, the con-ference was told, by officials who knew “the name of the tenant and the length of time they had been in occupation of the particular house”. Interviewing husbands and wives together, ideally before teatime, was also recommended. The pep talks brought results: more than 3600 houses were sold in the year to March 1952. A survey of buyers identified the main selling points: the low purchase price and the small minimum deposit. Factors inhibiting sales included the current low rents, the difficulty of saving for the deposit, and the higher cost of more recently built homes.
Testimonials from satisfied buyers were used to promote further sales. Among the happy homeowners was F.W. Carr, One Tree Hill, Auckland:
For the first time in my life since I’ve been married, I am independent, and I like it. Buying my state house has been the best thing I’ve done and I can recommend anyone to do the same. Anyone will be a more substantial citizen because of it.
For Carr at least, National’s claim that homeownership encouraged self-reliance, a sense of pride and responsible citizenship rang true. By 1957 about 30 per cent of the state-housing stock (13,300 houses) had been sold. The best-performing region was Invercargill, boasting a 43 per cent sales rate; the worst was Nelson, mustering just 23 per cent. National had hoped to sell many more houses.
Following the 1957 election, the new Labour government banned the promotion of state-house sales. This set the general pattern for the next half-century, with Labour-led governments restricting sales and National-led governments encouraging them. The SAC’s view was that selling state houses enhanced social stability. Research in the 1970s supported National’s claim that owner-occupiers had a greater commitment to their communities and were more house-proud, providing a model for state tenants to imitate.
Selling state houses will probably always be a contentious issue. Views on the matter tend to follow political lines, with those to the left arguing that sales should be restricted to maintain a decent pool of affordable rental housing for the poor, and those to the right believing that tenants who can afford to own their own home should be encouraged to do so. State-house tenants have benefited from both philosophies. They have enjoyed a higher standard of housing than those in the private rental sector; and thousands of people priced out of private housing have been given a chance to realise a basic goal of New Zealand society: homeownership.
Demand for state houses has nearly always outstripped supply, and applicants have invariably had to meet eligibility criteria. Originally, these related to the insecurity of an applicant’s existing tenure, how many dependants they had, their respectability and their ability to pay rent. Eligible applicants were balloted. The perceived unfairness of this system—the most needy often missed out—led to the establishment of allocation committees comprising respected community members. SAC officials investigated applicants’ circumstances, and an allocation committee then weighed the merits of each case and selected the tenants. This eventually led to a nationwide points system, whereby applicants were awarded points out of 100 according to various criteria. In 2000, a new needs-based system, the Social Allocation System, was introduced to ensure state housing was provided to those in greatest need.
As with any selection process there have been charges of unfairness and discrimination. Sometimes the charges have been justified. Until the late 1940s, Maori were excluded from state housing because, as with the inner-city poor, the government thought few could afford it. At the same time it refused to build cheaper dwellings for Maori on the grounds this would compromise its ambition to raise housing standards. It was better to keep Maori and Pakeha apart, it said, not least because the perceived lower living standards and unrefined behaviour of Maori might disturb Pakeha neighbours.
This policy was overturned following a 1944 Department of Native Affairs survey of Maori housing in Panmure. The survey found Maori crowding into tents and shacks made of rusting corrugated iron and discarded packing cases. Cooking was done over open fires, and sanitary conditions were primitive. Sobered by these and similar reports, the government agreed in 1948 to build state houses for Maori, to be jointly managed by the SAC and the (renamed) Department of Maori Affairs.
Forced to back down from its opposition to housing Maori, the SAC decided the best way forward was to “pepperpot” them, i.e. intersperse them among Pakeha. This would help Maori improve themselves by learning to live like Pakeha. As a staff memorandum explaining the policy stated:
In the selection of tenants to occupy the houses set aside for Maoris the Allocation Committee…will, in addition to the over-riding consideration of housing hardship suffered by the applicants, have regard to the ability of the families to fit into the industrial and economic life of the community and to adjust themselves generally to the Pakeha way of living.
Adjustment, promised the SAC, would be made easier by the teaching of “modern home management”, including “instruction in the use of electrical appliances and the care of the home”. To those who had never used an electric stove or laid a lawn the lessons could well have been welcome, but the expectation that Maori would cheerfully give up their modes of living for Pakeha ways was naive.
In the 1970s pepperpotting fell out of favour as politicians recognised that the total assimilation of Maori into Pakeha society was neither desirable nor practical. Maori were now allocated state housing on the same basis as Pakeha, leading to groupings of Maori in the larger state-housing suburbs, such as Mangere, Porirua and Aranui. While these areas have been criticised as ghettos, the concentration has helped to foster—through the construction of urban marae and cultural groups—Maori urban communities.
Aside from the tinkering with rents and the building and selling of more or fewer dwellings, there were few major state-housing policy developments in the 1970s and 1980s. Then came 1991.
In July of that year, the National administration severed the political consensus that governments should directly subsidise state-house rentals for low-income earners and introduced a new policy: full market rents. This meant statehouse rentals would be raised to match private-sector rentals. Henceforth the government would assist with the cost of both public and private housing through an accommodation supplement administered by the Department of Social Welfare. An indirect subsidy available to all low-income households would increase the affordability of housing and provide greater choice. The total amount of funding wouldn’t be cut, it would just be spread further. In addition, the Housing Corporation (successor to the SAC) would be relieved of its social responsibilities and restructured as a commercial enterprise called Housing New Zealand.
The reforms were part of the Bolger government’s wider agenda to reduce the role of government in people’s lives and promote self-reliance. More strongly than previous governments, National believed too many beneficiaries had entered a spiral of welfare dependency that stifled initiative and growth. What they needed was encouragement to reverse the spiral and support themselves. The housing reforms and an across-the-board cut in all welfare payments (excluding superannuation) were intended as a means to this end. Effective from April 1991, the cuts were designed to increase the difference between wages and benefits, encouraging the able-bodied to seek paid work to make ends meet. The government also believed the introduction of market rents would lead to greater competition at the bottom end of the housing market. If it no longer had to compete with subsidised state-house rentals, the private sector would exploit opportunities in low-income housing and force the state to become more efficient.
The changes had strong intellectual and emotional appeal. It was difficult to argue that a solo mother living in a state house should receive a rental subsidy while a solo mother in similar circumstance and with similar needs living in a private house didn’t. The accommodation supplement would ensure the two were treated equally. However, because the total amount of housing assistance was to remain the same, critics charged National with robbing Peter to pay Paul. Until 1991, most state-house tenants had paid 25 per cent of their income in rent, regardless of the size, condition or location of their house. After the reforms most would pay more. Rents would be progressively raised until they reached a “fair market rent”. The accommodation supplement would cover 65 per cent of the increase above the 25 per cent income threshold; tenants would have to pay the rest. If tenants could not afford the increase, they would have to move to a cheaper place.
The theory might have been sound, but the practice developed cracks when applied to the reality of individual lives. Among the early casualties of the reforms was 54-year-old Lillian Gregan of Tawa, north of Wellington. After her husband had left her in the early 1970s, she had struggled to raise five young children in a four-bedroom state house on a domestic-purposes benefit. As her kids had grown older she had entered the paid workforce, eventually fulltime. With just her youngest still at home, she had moved into a more manageable two-bedroom state house. However, in 1990 she had been made redundant. Unable to find a new job, she had reluctantly gone on the dole.
Following the 1991 benefit cuts and the increase in state rents, Lillian faced the prospect of paying $99 a week in rent, leaving her just $30.81 to live on. She found herself in a catch-22. Her new rent was for a two-bedroom unit, and she was now entitled to only a one-bedroom place, but there was a chronic shortage of one-bedroom dwellings, forcing her to pay for the extra room. The situation soon wore her down:
I was sitting there the other morning putting curlers in my hair thinking, “They’re making a good job of the lean, mean machine because people will worry themselves to death.” I wonder if that’s the aim, to get rid of all the deadbeats who take money from the system? I don’t know if I’ve run out of energy or what. Before, I could get angry. Now it doesn’t matter what you do, where you turn. You can’t get out of the terrible cycle and your energy just drains away.
Lillian resigned herself to leaving her home and moving in with her daughter up the coast. Despite the promise of greater choice for state-house tenants, this was her only option.
Lillian wasn’t the only tenant facing diminishing choices. A survey carried out in 1992 by Porirua City Council of 45 state-house households found that 39 of them would be living in poverty once the reforms were fully realised. Survey director, Les Church, expected that most people would continue paying their rent but forgo food, clothing and essential services, such as telephones.
With people going hungry, community agencies established food banks, with five setting up shop in suburban Cannons Creek alone. One food-bank operator, Maise King, described the situation thus: “We’re always short… It’s got much worse since the housing increases. People are desperate out there. Because they’ve got to pay more for their housing they haven’t got money to buy food or clothing. If they don’t pay their rents, they’re out.”
Church found evidence of families sharing houses so they could afford the rent. Twelve households had sought smaller, cheaper houses but been told there was none available. Some Maori had considered returning to ancestral marae in non-urban parts of the country, while some Pacific Islanders had thought about returning to their homelands. For Church the survey highlighted “the fact that poverty is not just the absence of money, but also the absence of choices; of any way out. Most of the 45 people don’t have satisfactory or realistic alternatives to their present state house, but…they can’t afford that either.”
By 1995 further consequences of the reforms were becoming evident. Among these was an increase in empty state houses, most of them vacated by tenants unable to afford market rents. Such was the exodus from Cannons Creek that the roll at the local primary school plummeted. The principal told a press reporter: “Rent increases are the major factor in the decline of the school roll over the past year.” In Auckland, community-housing and welfare groups reported that chronic overcrowding—doubling-and sometimes triplingup—in state-housing areas was leading to an increase in poor health, domestic violence and sexual abuse. The Salvation Army’s housing co-ordinator for south Auckland, Ross Richards, witnessed the detrimental effects of long-term overcrowding: “There is no doubt when you get a crowded house you have more chance of anger and violence and you certainly have more chance of abuse. We are noticing more frequently those sort of occurrences.”
Despite pleas from churches and other social agencies for the government to reverse the reforms, National was unrepentant, maintaining that they treated all low-income people equally. Critics retorted acidly that it was “an equalisation of poverty”. But by 1996 the government was aware it was losing the public-relations battle over the reforms and adopted a more pragmatic approach. For example, objections from politically powerful superannuitant groups led it to subsidise and protect the tenure of state-house tenants over the age of 55. It also increased the accommodation supplement from 65 to 70 per cent, an acknowledgement that housing had become less affordable. Finally, it replaced the profit focus of Housing New Zealand with a new brief: “To meet the Crown’s social objectives in a business-like manner”. This was a belated recognition that state housing and social policy were inextricably linked.
In 1996 the government also introduced a scheme to help state tenants buy their homes. If an eligible buyer put up a 5 per cent deposit, the Crown would lend 85 per cent of the house price and throw in a 10 per cent suspensory loan. During the three-year life of the scheme close to 1800 houses were bought in this way; but in the same period nearly 10,000 other state houses were sold outside the scheme. Critics called this privatisation of state housing by stealth, but the government argued sales were necessary to manage stock prudently. Funds from the sale of surplus stock would be used to build new houses in areas of growing demand, principally Auckland. It also defended the sale of houses in (now) affluent areas, such as Orakei, explaining that selling a valuable property provided enough money to purchase two or more cheaper houses elsewhere. (This issue arose again in 2007, when it was revealed there were more than 100 state houses in Orakei valued at more than one million dollars each. However, this time the (Labour-led) government refused to sell any of them.)
Certainly investors could be onto a winner. One buyer Graham McCready bought two flats in Linden, Wellington, for $87,500. He spruced them up a bit and let them out for $150 a week each—an annual return of 18 per cent. “We got a hell of a good deal,” he told the press.
In 1999 Housing New Zealand announced it would sell a further 10,000 houses by 2002 and acquire 2450. This would have brought the total state-housing stock to just over 50,000, down from 70,000 in 1993. But this target was never reached. At the end of the year the National government was defeated in a landslide election, and one of the first acts of the new Labour/Alliance coalition government was to place a moratorium on all state-houses sales and reinstate income-related rents. The most radical experiment in the history of state housing was at an end.
Present opinion regarding the effectiveness of the 1990s housing reforms is unflattering. They were meant to make housing more affordable for all low-income people; however, research suggests the reverse happened. As housing re‑searcher Charles Waldegrave notes:
Prior to the reforms, at least those in state houses on a benefit, paid an affordable rent and kept 75% of their residual after tax income, while those in the private sector rentals struggled with market rents. It appears as though the reformed housing policy simply equalised everyone downwards to the insecure level of those in private sector rentals.
Waldegrave thinks a fairer system would have been to increase state assistance to private renters to bring them into line with state-house renters. Rather than spreading the existing cake more widely, National should have baked a bigger cake—presumably paid for by higher taxes.
An inherent tension in the reforms was the brief for Housing New Zealand to meet both business and social objectives. Greg Orchard, a manager in the organisation in the 1990s, believes that the business targets took precedence over the social ones:
The social aspect of state rental housing was farmed off to the Department of Social Welfare. And there was an assumption that Social Welfare support would be enough. If people chose to live in overcrowded conditions, then so be it.
National’s reforms had also been designed to address a perceived anomaly that has dogged state housing from the beginning: that it creates a class of privileged state tenants. This compromised the strong New Zealand ethic of fairness. We have seen how National successfully exploited this grievance during the 1949 election campaign. Forty years on National raised it again. But in trying to create greater fairness at the bottom end of the housing market, it discovered that housing problems were not solely an issue of affordability. The situation was much more complex. People were in state houses not only because they were poor, but also because they faced discrimination in the private sector or needed housing and support services that the market didn’t always provide, such as accommodation for ex-psychiatric patients. Giving these people more money didn’t necessarily solve their housing problems, but giving them less (as the benefit cuts showed) often made them worse.
Since 1999, Labour-led governments have constructed 6000 new state houses, mostly in Auckland, where, in mid-2007, there are 11,000 people on the state-housing waiting list. With homeownership rates falling—between 1991 and 2006 the number of Aucklanders owning their homes dropped from 72 to 62 per cent—demand for social housing is only going to increase. While the most needy will continue to be catered for through state-housing provision, the question remains as to who is going to house all those ineligible for state housing but unable to afford market rents. Too often this group finds itself having to accept substandard accommodation in undesirable areas, moving from one dive to the next in much the same way as their inner-city forebears did in the 19th century.
The experience of both the 1890s and the 1990s was that New Zealand’s private sector was either unable or unwilling to deliver decent and affordable housing to the poor, necessitating state intervention. In the 21st century, this will mean the state forging stronger partnerships with housing trusts, community housing groups (see New Zealand Geographic, Issue 83, p. 8) and other “third sector” providers—something that is already beginning to happen. With fewer and fewer people able to move from renting to homeownership—National’s vision of a property-owning democracy is fading fast—it may also mean revisiting the first Labour government’s state-housing ideal: rental dwellings with the security of tenure of homeownership.
If this happens, it may become easier for people like Olivia Maana from Panmure to stay in their state-house homes and retain their community roots. Olivia’s friend Joanne Rama stressed the importance of local community when announcing to waiting media that Olivia had agreed to move house after receiving a better offer of a Housing New Zealand home nearby.
“It was not about staying there for the sake of staying there,” she said. “It was about staying in the area…because Olivia is an orphan now and needs her community for support.”