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The strip mining of Housing Corp is accelerated

Written By: - Date published: 10:16 am, September 17th, 2015 - 33 comments
Categories: class war, john key, national, national/act government, poverty, same old national, slippery - Tags:

housing is a right

Eight days ago I posted about how National was strip mining Housing Corporation by being paid $118 million in dividends when the need for social housing was so great.  Well hang onto your hats because this news is so much worse.

From the Labour website:

The Prime Minister must explain why Housing New Zealand is set to pay the Government $454 million in dividends in the next financial year – four times more than expected, Opposition Leader Andrew Little says.

“Housing NZ’s Statement of Performance Expectations features a single reference to a new item called “capital contributions to the Crown” (page 15).

“The $336 million the Government will receive in 2016 is in addition to the $118 million annual dividend it takes out of the Crown agency.

“This appears to be tricky accounting to hide the fact National is asset stripping Housing NZ.

“It is obscene for the Government to be pumping nearly half a billion dollars out of Housing NZ when there is a desperate shortage of housing, and kids are dying in cold, damp, mouldy state houses.

“Ministers Bill English, Paula Bennett and Nick Smith have been caught in a web of lies over their deeply unpopular and flawed policy.

“John Key needs must tell the public where this $336 million comes from.

“Instead of selling off state houses to third party providers who don’t seem to want them, the Government should be repairing the ones they own and building more to house thousands of vulnerable families who need homes,” Andrew Little says.

Here is the table.

Housing Corp Statement of performance expectations

Notice the new line “Capital contributions to the Crown”.  Basically the Government is stripping increases in value as a further dividend.

There is no fanfare accompanied with what is a significant contribution to the Crown’s books.  Obviously the Government is looking everywhere in its attempt to post a budget surplus.

John Key was asked about the further payment in Parliament this week.

The exchange went like this:

Andrew Little : Does it help Housing New Zealand to do the best it can when he is already taking $118 million out of Housing New Zealand, and is he planning on taking any more out this financial year?

Rt Hon JOHN KEY : If the member is talking about the dividends that are paid, then under the Crown Entities Act all surpluses have to be returned to the Government. That is the law. We have never requested more than that. That has been in the order of, in recent times, about $100 million off an asset base of $20 billion. Last year alone we spent $398 million on maintenance and upgrades—40 percent more than the highest year under Labour.

Andrew Little : In light of that answer, why does Housing New Zealand’s statement of performance expectations show the Government taking another $336 million out in this financial year than capital contributions to the Crown?

Rt Hon JOHN KEY : The member would need to direct that to the Minister responsible for HNZC.

Looks like another entry for BLiP’s list.

National has tried to construct this argument that the increasing dividends have to be paid and are nothing more than a sign of increased efficiency.  But this new capital grab belies this excuse.  And the claims of huge maintenance spends are nothing more than tenants money being used to maintain the homes they are living in.

33 comments on “The strip mining of Housing Corp is accelerated”

  1. Commonly known as ‘colourful accountancy practicing’ and rightfully so concerned citizens are waking up to the charades this Government plays.

  2. Lily 2

    0.1% dividend? Hardly asset stripping! Especially as the government takes this dividend and will spend it elsewhere on the likes of benefits etc.

    • Brendon Harre -Left wing Liberal 2.1

      State housing is not a business it is a public service -it provides affordable housing for those who the market fails to provide for.

      Should all public services return a dividend? Lily if we followed your argument their would be no public services -everything the State owned would be considered a business needing to return a dividend.

      Think about it -Courts, police stations, hospitals, schools….. all paying a dividend -pretending to be a stand alone businesses, instead of focusing on their core public duty. It would be a nonsense.

      • dukeofurl 2.1.1

        Why is the government required to get a dividend from State housing but explicitly prevents municipal water operations from paying extactly the same sort of dividend to their council owners
        Auckland Watercare Services Statement of Intent

        http://www.aucklandcouncil.govt.nz/EN/AboutCouncil/representativesbodies/CCO/Documents/watercaresoi2012-2015.pdf

        “Watercare is prohibited by legislation from paying a dividend.
        Watercare annually reviews any water and wastewater surpluses and
        considers if the return of such surpluses to the customers is commercially
        prudent.

        One organisation is only housing the nations vulnerable but is expected to make a profit from it.
        The other is providing a general service for all ( not just needy who would be a small part) including business but cant profit from it.

        What logic is there in that? Except you can see business getting an important service ‘at cost’

      • dv 2.1.2

        Think about it -Courts, police stations, hospitals, schools….. all paying a dividend -pretending to be a stand alone businesses, instead of focusing on their core public duty. It would be a nonsense.

        Don’t give them ideas Brendon

      • Sacha 2.1.3

        It’s the only way that shallow fools like English, Joyce and Key know to get ‘accountability’ and ‘performance’ from organisations. Other aspects of governance are beyond them.

    • Tracey 2.2

      are you sure they are going to spend it on benefits Lily?

    • Grace Miller 2.3

      Yeah, hair straighteners, signs, cafes, bars. Benefits all right – to THEM.

      You’re deluded.

  3. dukeofurl 3

    Isnt this money from ‘selling state houses’?

    Looks like a big lie about money made from the sell off will be used to build more new houses !

    And the Minster for HNZC ?…… that would be Bill English

    • Treetop 3.1

      “big lie” is an understatement, deluded (false belief) is the word that I would have used.

    • mickysavage 3.2

      It is hard to say because of the way the accounts are set out but the cash has to come from somewhere.

      • Treetop 3.2.1

        Do you know if Key included the cost of insulation in the 398 million spend in the highest year?

        I thought that there was a seperate budget for insulation.

        And what about the cost of heaters and drapes which Labour would also have done?

        Due to the increase of the cost of electricity and the mold war, drapes and a heater are not a proper fix.

  4. Treetop 4

    I have a married friend (both work) who pay market rent, they have to vacate their HNZ home. I am disappointed that after letting HNZ know that their daughter with a young baby lives with them (she is on sole parent) they still have to leave.

    This is mean spirited and the ones being mostly affected are the mother and young baby. The least the HNZ policy could do, would be to not cause a housing problem until the child was age 3. Were the daughter able to live independently I know that she would. I think that the house is a 3 bedroom so the daughter would not be eligible. Excuse, upon excuse, upon excuse……………… from the government.

    I am not surprised at all how the government have pillaged HNZ and they have NO VISION for housing the least well off.

    It is not hard to see why children live in poverty. The government is so impoverished toward children that I am nauseated due to the inadequate spending on children e.g. housing, PPL until 26 weeks, lunches in school and education costs being covered.

  5. Brendon Harre -Left wing Liberal 5

    Thanks Micky Savage this is typical National behaviour of under-handedly destroying state owned institutions providing a public good in a way that avoids legislation, policy announcements and public debate. Their mission seems to be to turn public ethos institutions into privatised ones in preparation for sale.

    National true to form hate publicly spirited organisations. Under Key they have learnt how to act on this whilst carefully concealing their hatred.

    I hope at the political level (Little and co) and at a community level (protests, demonstrations…..) there is a backlash against this.

  6. Pat 6

    As Key and his advisors well know this will not be pressed in any manner by the MSM if at all …..what solution?

  7. DH 7

    It’s good to see evidence Labour are looking at these annual reports & forecasts, they can be a bit of a goldmine for the opposition.

    It looks like the Nat looters have discovered depreciation which is viewed as an expense for accounting & tax purposes but is really a repayment of shareholder capital.

    Depreciation cash usually goes back in the capital pool for reinvestment but this time they look to be withdrawing it, the projected balance sheets shows a $336 million draw-down of shareholder capital. That makes up $229 million of it, haven’t found the rest yet.

    This is interesting….

    “Payments to the Crown totalling $357 million in 2015/16 will consist of income tax of $143 million, interest costs of $96 million, and the 2014/15 dividend of $118 million.”

    Their interest is paid to the Crown? That needs following up to check if it’s a typo or true.

    • tc 7.1

      Depreciation is not cash it’s a write down of assets to reflect wear and tear and added back off any bottom line along with other non cash entries (amortisation, provisions, accruals, goodwill etc) to determine how a business is actually funding itself.

      What they should do is a funds statement across both balance dates, this is how enron was undone, basic cash accounting.

      • DH 7.1.1

        Actually it is cash, at least for any business with an operating surplus and HNZ runs a healthy surplus. It gets deducted from operating income in the profit & loss statement.

        It’s not at all a write-down, it’s a transfer from one part of the asset register to another.

  8. Treetop 8

    I’d like to know the average spend of maintenance and upgrades in a 7 year period between Labour and National?

    Also how much of the dividend both governments put back into housing?

    As for the waiting list people are waiting for far too long.

    • dukeofurl 8.1

      Thats impossible to find as National lumps ‘maintenance’ together with ‘redevelopment’ to hide the decline in basic existing house maintenance.

      • Sacha 8.1.1

        Just like they lump public transport operations with PT capital lately to hide the lack of investment in basic infrastructure like stations.

  9. Sacha 9

    Could they be taking this capital from Housing NZ to hand over as part of the sales process to financiers/NGOs or private developers? These guys love sweetinging those deals at public expense.

  10. Lara 10

    So essentially the government is now the biggest slum lord in New Zealand.

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