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Welfare for whom?

Written By: - Date published: 9:28 am, September 11th, 2009 - 61 comments
Categories: housing - Tags:

Remember the iconic photos of the first Labour Prime Minister Michael Joseph Savage and his cabinet celebrating the introduction of State Housing by carrying furniture into the first home at 12 Fife Lane, Miramar?

State housing in New Zealand was set up to provide relief for low income tenants, from insecurity and rack renting by private, profit driven landlords, during the original housing crisis of the Thirties. (The principle being, to remove the profit motive from housing, and provide decent housing at a low prices as a basic human right).

How things change!

ad for HNZ landlords

Who knew that over the decades it would morph into an organisation that provides relief for private landlords, suffering from falling private profits and tenancy rates due to the housing crisis of the Noughties? (The principle being to protect the profit making in housing, and keep prices up).

Housing New Zealand, in a perversion of its founding principles, now provides Social Welfare for private landlords, and wealthy private realtors.

[the story of 12 Fife Lane, as told here, is a microcosm of the history of state housing and social welfare]

61 comments on “Welfare for whom? ”

  1. Remember the iconic photos of the first Labour Prime Minister Michael Joseph Savage and his cabinet celebrating the introduction of State Housing by carrying furniture into the first home at 12 Fife Lane, Miramar?

    No, but what a clever PR stunt.

    • Bright Red 1.1

      God you’re a bore Danyl. Some people do things because they believe in them. Of course the PM is going to show up at the opening of the first State House, a project he believed in passioanately, and as he was there why wouldn’t he help the people move into to a house they had thanks to his party?

      Clark and Neilson 50 years later – that was pure PR.

  2. BLiP 2

    Housing is just one area – look what’s happening in health: money set aside to assist the poor is being used to subsidise a multinational. Corporate welfare is this government’s “New Deal”.

    Thanks National Ltd, I’m lovin’ it.

    • Tim Ellis 2.1

      As opposed to those very small locally owned New Zealand companies, Labtests and Diagnostic Medlabs, who have and had laboratory testing functions.

      Thanks Labour.

      • Bright Red 2.1.1

        The whole shebang should just be state-owned. Why are state-run medical providers permanently buying part of the service they provide from a private, profit-driven company?

        • burt

          Probably because the state ideology refuses to pay internationally competitive salaries (because it is an obscene amount of meney..) so the state can not retain the resources to provide the service.

  3. ieuan 3

    Interesting that the first state house was actually purchased by the first tenants.

    It seems to me that the writers at ‘the Standard’ have an aversion to anything being in private ownership.

    • burt 3.1

      When people are dependent on the state for everything they vote for a state that owns everything.

      • burt 3.1.1

        Wake up call, shortage of state houses will not be solved by ideology. (repeat for hospital waiting lists and educations standards)

    • Bright Red 3.2

      That was a National Party programme in the 1950s to run down the number of state houses.

      Think about this: why is Housing NZ leasing from private landlords now? Because in the 1990s, National sold thousands of its houses and now it doesn’t own enough to provide housing for those in need.

      • Swampy 3.2.1

        No, it was National Party policy to give people a helping hand into their first own home, at the same time it changed the social balance in the housing estates and that was a very good idea because home owners make a much bigger contribution long term into their communities than tenants do.

        I have known over the years, innumerable people living in former state houses that they own, surrounded cheek by jowl with numerous still-state-owned rentals, long term having people living in their own houses that they own is vastly beneficial to these neighbourhoods.

  4. burt 4

    Wake up call, the current shortage of state houses will not be solved by ideology. (repeat for hospital waiting lists and educations standards)

    • Draco T Bastard 4.1

      No, it will be solved by practical work that pretty much precludes anything done by NACT because everything they do involves giving even more money to those who don’t need it and didn’t do anything to earn it.

    • burt 4.2


      9 years of Labour didn’t solve the probelm of housing waiting lists (or hospital waiting lists) and to be honest if private owners profit saving lives in hospitals or getting people into houses then that is the price we pay today for Labour’s inaction.

      • Bright Red 4.2.1

        labour wasn’t inactive, it did a lot but no it didn’t solve the problems. Social problems aren’t like that you don’t suddenly solve them once and for all, you make incremental steps to reduce and minimise them and it’s always a contest fight just to sustain the stats quo.

        is this really the height of rightwing argument, burt’s bollocks?

        • burt

          So creating more available properties by encouraging more landlords to offer them up for state tennants is an incremental step….

          The problem Bright Red is that the lovers of big govt have got ideological issues with anyone making a profit from provision of social services. They would rather see people on waiting lists than see public money used to provide services through non state providers. It’s not about the people who need the services is it – it’s about the ideology.

          State funding and state provision need not be one in the same. Personally I’m proud to be called a twat by people who would rather see overcrowded state housing than see a few private landlords lease their houses to the state.

          Disclaimer: I have no plans to rent houses to the state and have no vested interest in this – only an interest in seeing waiting lists diminish.

          • Draco T Bastard

            They would diminish faster burt if those private profits weren’t taking up resources that could be used to build more houses/hospitals etc etc.

            Profit is a dead weight loss.

            • Swampy

              The cost of capital is a major consideration, through this policy the government is not made to stump up that cost in advance.

              For every scenario in which the government could save money by building the houses itself and owning them for decades, there is a corollary of the government being left with houses that no one wants to live in, in out of the way places where the industry has closed up and left town. All those electricity towns served their purpose, and then the state either paid to move the houses somewhere else or sold them off at rock bottom prices.

          • burt


            And profit is a motivator.

            • Draco T Bastard

              But not one that’s good for society.

            • Maynard J

              Yes – for cheap service, and a prepetuation of a problem that needs a (paid) solution.

              I have no problem with private ownership, unless it is touted as an ideal but in reality means that a service is being provided at a greater cost than it could otherwise be.

              I have no doubt that with proper investement, the government could contract the construction of state houses to preculde the necessity for private investors to make money out of them – and this would be cheaper in the long run. So my problem is not with the private investors, but them making money when it could be better used – like bringing down hospital wait lists.

    • Bright Red 4.3

      burt, the shortage of state houses can only be solved by a government that commits to building more, that is an ideological policy (indeed all policies are ideological)

      • burt 4.3.1

        Bright Red

        Building more is a long term plan, that is unless the state wants to get all 1930’s and employ all the builders available today so it can corner the market and ultimately create a bigger shortage of builders and push build prices through the roof for themselves and everyone else.

        But hey – keep the waiting lists if you think it is better than having more houses available because hell we wouldn’t want a single person to profit from providing social serices would we.

        • Maynard J

          burt, that is a false dichotomy. There is no choice between the two apart from in your head. The chioce is not a black and white one between wait lists or private landownders providing the capital. That is what is happening now, but would you not say the entire point of this post is to agitate for change on the issue?

          I.e. agitating for a future when there is no wait list (or at least a more reasonable one) and decent state owned stocks of state houses (built by anyone – will not bother justifying that petty strawman with a response, and you know full well why) that cost less to maintain since the government does ot have to fork out profits to owners.

          • burt

            It is not a strawman at all. An ideology that private landlords should not profit from leasing houses to the state is the same issues as private building companies building for the state. Either the state funds and provides or there is a funder/provider split. As soon as we have a split between the funder and the provider we have made a mockery of the ideology that says private landlords must not profit from provision of state housing. Or is it OK for private enterprise to profit when on the surface it looks like the ideology is still intact ?

            But if you want a strawman – Next someone will say the state can only use state owned land because private land owners must not profit from selling land for state house development . Change a few laws and we could build state houses in National parks and on DOC land to make sure no private land owners profit from provision of state housing.

            Yes I would rather my tax payers money we spent as frugally as possible providing social services. However IMHO the first priority is that they (social services) are delivered and the second priority is the ideology of how we split funding and provision.

            • Maynard J

              Yes it is. The difference between people using spare capital to make a buck off the government and people using their labour to earn a living escapes you?

              If so, then I can see why you would say that it looks like it is ok only “on the surface”.

            • burt


              The difference between a building company (EG: Fletcher Construction, Lockwood Homes) and a Builder escapes you.

              Let me explain, one is a person who sells their labour and the other is a company that profits from the labour of people they employ.

              Was it where I said ‘building companies’ that I confused you !!!!


            • Maynard J

              Whatever burt. We are talking about the ownership of the capital, not about the construction thereof, but if you want to conceed or abandon the argument about ownership to try and score petty points on the finges, be my guest.

              G’Weekend t’ya…

            • burt


      • burt 4.3.2

        Bright Red

        And that is employ the builders not contract them. Can’t have private building comntractors profiting from state house building contracts because that would be the same as private landlords profiting.

        Bright…. I wonder.

        • felix

          Not sure why you have a problem with the state employing/contracting builders.

          Plenty of builders needing work. Plenty of homes needing building. Why does it matter if it’s the state employing them or someone else?

          Also, the distinction between employing/contracting is pretty vague in the building industry. Many are technically contractors when it comes to being responsible for their own administration, holiday pay, tax, acc, gst etc but are essentially just employees in terms of self-determination, decision making, actual workplace autonomy. Probably wouldn’t hurt to have a few more people with steady full time work in the industry IMHO.

          • burt


            Contracting a building firm will provide profit to the shareholders of that firm, the only way to avoid this is for the state to employ the builders directly.

            I’m simply pointing out that allowing private landlords to lease houses to the state thereby providing profit via provision of social services is the same (but different) to contracting a building company to build houses.

            • felix

              I suppose you’re just trying to be consistent, and fair enough.

              What’s wrong though with the state directly employing builders and owning houses?

            • Draco T Bastard

              the only way to avoid this is for the state to employ the builders directly.

              Nothing stopping them doing that and it would be cheaper – no worthless shareholders to pay off.

              I’m simply pointing out that allowing private landlords to lease houses to the state thereby providing profit via provision of social services is the same (but different) to contracting a building company to build houses.

              No need to contract a building company either. Directly employ the project managers and builders and all the dead weight loss of profit is removed.

            • burt


              There is nothing stopping the govt from directly hiring builders if they want to be in the business of building houses. Just like there is nothing stopping the govt from owing all means of production. Hell some people even think this is efficient. Ask a person in a communist country what they think, plenty of time to talk to them while they stand in bread queues, but hell at least the capitalist pig dog bakers are not making profits from peoples need to eat.

            • felix


              It seems you are taking a principle (broadly, people investing money to make a profit tend to run things more efficiently than the state) and trying to apply it evenly to every possible situation, and therefore you assume that others are equally trying to apply an opposing principle to every situation.

              This makes it a bit difficult to have any kind of discussion with you. Suddenly we’re talking about making bread in communist countries – I thought we were talking about building houses in capitalist ones.

              I’m a bit like John Key in a way – I just like things that work.

              There’s no reason I can see that because the state might arguably have an interest in being involved in one sector of the economy (i.e. building, where they could use a labour surplus to build some much needed infrastructure) that they automatically have to get involved in the breadmaking industry.

              Perhaps you could explain why the state, if involved in one industry, must involve itself in another. To me that seems like an absurd subservience to principle, a triumph of theory over practicality.

              Anyway, have a good weekend.

            • burt


              IMHO the state should be involved in governance. This thread is about how the state renting houses from private landlords is wrong and I have pointed out that if that is wrong (on principle – which is what this thread is about) then using private construction firms would also be wrong (on principle). Some people clearly didn’t want to hear that.

              As I questioned earlier – is an ideology (private enterprise must not profit from state provision) only bad when it is obvious that is happening ?

              If you just like things that work, then surely you would think the state leasing existing properties to provide houses for people on state house waiting lists is a good idea?

          • felix

            Yes I do, as a short term measure.

            I think that if the state is to provide low-cost housing then it’s better that the state owns the houses, but if leasing some is necessary for the time being, then so be it.

            I don’t subscribe to the idea that every action must adhere to the same principle. Do you?

            • burt


              No I don’t think every action should adhere to the same principle.

              But on a thread premised on the idea that it is wrong for private enterprise to profit from state funding of social services then the principle is that private enterprise must not profit from the state funding social services.

            • felix

              And I’m suggesting that in principle it’s generally not desirable for the state to be paying out extra money (as profit) for services it could provide itself.

              In practice you do what you have to do, with what you have available, to achieve what you want to achieve.

              I don’t have any problem with the state leasing houses if that’s what’s needed – I do have a problem though if there’s no long term goal to build or buy more houses and we’re expected to keep paying out those profits indefinitely.

            • burt


              That’s fair.

  5. Chris 5

    To be pedantic, this advertisement started making its appearance about 3 – 4 years ago – under a Labour Government.

    The intention behind the ad is obtain leasehold property for state housing tenants, which is no bad thing.

    • burt 5.1


      Bugger – I was getting to that once I had enough of the lovers of waiting lists calling me all the names under the sun.

    • Draco T Bastard 5.2

      You can be as pedantic as you like. The fact that it happened under Labour still doesn’t make it right or cost effective. Labour themselves are still under the delusion that capitalism works.

      • Swampy 5.2.1

        Labour are the democratic reflection of the electorate, the people that vote for them who all believe the same. Why is it necessary in c_mm_n_st countries that there is a one party state, no free and fair elections in any of them. You are on a hiding to nothing here.

    • burt 5.3


      Providing houses as a social service is either good or bad. How it is achieved is secondary to the desire/requirement to do so.

      • Maynard J 5.3.1

        Have you just nuremburged your defence?

        • burt

          I was following orders and killing a failing ideology was a cost of delivering a service your honour.

          • Maynard J


            BTW, shall I read your 1:01 comment as a demand that The State nationalise those houses owned privately…or did you mean it otherwise?

          • burt

            If the state wants to buy existing houses rather then lease them then fine. But wait for *some* people to complain that private owners got market value by selling them to the state….

      • Draco T Bastard 5.3.2

        How it is achieved is of primary importance because that determines if it can be afforded. The addition of profit means we can afford less.

        • burt

          So would you suggest that the state should not house public servants in building not owned by the state ? Would you be happy if state employees were on waiting lists for office space while the state pontificated about what to do rather than lease private buildings for them ?

          • Draco T Bastard

            If it can be done economically then sure, lease them from private owners. But it can’t be maintained because it costs too much reducing the amount that can be provided by those same government employees. It’s cheaper to own the building by the amount of profit the private owner would take.

          • Swampy

            Better still, the State doesn’t employ any more bureacrats until they have spent years planning and constructing the buildings they will work in.

            This ideology I could agree with, if it acted as a proper check on the growth of the public sector.

          • burt


            I’m with you all the way on that one.

            captcha: hopes

  6. George D 6

    It doesn’t even make economic sense. The Govt can build and own houses more cheaply by doing so on a large scale, than private landlords. The Government also has much much cheaper access to capital raising than do private investors.

    It can only be seen as a method of preventing the Government’s increased ownership of state housing. And that way they have less to privatise when that comes around.

  7. Pete 7

    FWIW I used to work in this area in the last government and have a few facts for the debate.

    HNZC has a stock of around 86,000 properties but a waiting list of close to 10,000. A good third of these are people already in HZNC properties and awaiting transfer to a more appropriate accommodation however it does leave a large number of people seeking HNZC accommodation especially those in the A and B category signifying urgent housing need.

    The last government did indeed utilise the leasing of private rentals on a long term basis for the simple reason that the waiting list was growing faster than HNZC could acquire properties. Problem was in the housing boom years it was very hard for the Corporation to get builders at a decent price to make it economically viable in relation to the build/acquisition budget HNZC had per year, verses the governments five year acquisition targets as specified in the Statement of Intent. Aside from a shortage of builders, another problem with HNZC constructing their own dwellings was planning permission and the time it took to get consent.

    So that leaves two other methods of meeting the ambitious acquisition target as set by the govt securing leases on a long term basis from private landlords, or purchasing already constructed homes. HNZC did a mix of all these three to try and achieve the acquisition targets and still fell short.

    I guess one could say in this period of a housing build slump there is a ready availability of builders and the government through HNZC could embark on building programme which would have the twin benefit of boosting the stock, whilst having the associated economic and employment spin offs.

    However a further point of consideration is that HNZC no longer constructs on mass large housing estates of cookie cutter housing we have learnt the lessons of Tamaki and Cannons Creek. So the economic virtues of large scale building, like the first estates, that some people have cited in this thread is somewhat dissipated.

    One of the big advantages of leasing or buying existing properties is that it fulfils HNZC’s and successive government’s policy of “pepper potting’ I.e integrating state housing with private housing creating mixed neighbourhoods thus avoiding the social and economic problems that arise from mass housing estates.

    I’m not arguing for or against any of these methods of acquisition, I’m just pointing out all have their benefits and drawbacks and personally I’d be more concerned with solutions that get vulnerable people into housing as quick and as efficiently as possible than debates about the purity of method.

    • burt 7.1

      Well said Pete.

    • Swampy 7.2

      Good call, I have lived more than thirty years close to several different large estates with dubious reputations.and right now I live in a HNZC property. It is just a pragmatic decision to have taken the policy that Labour did in their last term of office.

  8. Swampy 8

    You guys are really stooping low on this one. The Labour Government of the 1930s bought the land and everything they needed to get the houses built, on the market, paying people a profitable return of course. As did they with the private construction firms that built the houses.

    The lease policy is about HCNZ getting houses right now, where they are needed, according to where the demand is. It means they don’t have empty houses in out of the way places that no one wants to live in, which is a waste of funds. Think all those ex railway and electricity towns as examples. It means they can cater to the waiting list by getting houses for people who need them, right now, not years away. At the end of the day it gets people who need the houses the most, into a house that they can afford, right now, and that must be what matters the most, you can’t eat ideology.

    This present policy was introduced by the Clark Labour government. Since you guys won’t identify a party affiliation most of the time I’ve got no idea whether you have waited for Labour to lose the election so as to try embarrassing National or tried to marginalise Labour for this pragmatic decision – the tenants will not care as they find rhetoric doesn’t pay the bills.

  9. Jasper 9

    This policy was implemented by the 5th Labour Government as a way of reducing the waiting lists for state house tenants.

    Nothing to do with National.

    IMHO – it’s actually a good policy as HNZ have a set criteria for the standard of the properties they rent to tenants. So shite landlords with crap housing won’t get the HNZ lease until their property is up to scratch.

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