City council brushes off criticism over $400m social housing gap

Tuesday, 13 April 2021

Wellington’s rental market is the most expensive in the country, leading to an emergency underclass of dungeon-like apartments.

Wellington City Council has brushed off criticism about its forecast $403 million funding gap for social housing, following an Audit NZ report that raised alarms about the “unreasonable” shortfall.

The gap was highlighted in the council’s draft 10-year plan, which allocated less than 10 per cent of the forecast $446m required to upgrade the city’s social housing stock over the next decade.

The council has allocated just $43 million of the $446m required for social housing upgrades over the next 10 years. (File photo)

Audit NZ said it was “unreasonable to omit these costs and associated funding” from the plan, and that the council should address how the costs would be met.

It comes as the council continues to buckle under financial pressure, with councillors recently voting to increase rates by 13.5 per cent and increase its borrowing cap so it can fund major infrastructure repairs.

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Massey University senior lecturer Dr Andy Asquith says the budget gap reflects the wider problem of council funding nationwide. (File photo)

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Local government and public management specialist Dr Andy Asquith, a senior lecturer at Massey University, said the gaping hole in the council's budget meant public consultation on the plan was effectively pointless.

City councillor Fleur Fitzsimons says an “element of council failure” has contributed to the current problems. (File photo)

“You might as well have asked them to get their comments on Harry Potter or something,” Asquith said. “It’s a pointless exercise.”

The council has budgeted for operating costs for the full 10 years, but has allocated just $42.8m for capital upgrades – enough for only the first three years of the programme.

Council chief financial officer Sara Hay said the three-year capital fund would cover Healthy Homes requirements, regular maintenance, and some upgrade work.

Funding for the remaining seven years would be addressed during this time, with possible funding options including seeking central Government support, setting up a community housing provider, or further rates or debt increases, Hay said.

The council was “actively working on a solution to meet this cost”, she said.

Asquith said the council’s struggles highlighted the wider problem of inadequate funding among councils nationwide.

“They haven’t got the revenue streams to fund everything that they want to do, and in some cases what they are required to do.”

City councillor Fleur Fitzsimons, who holds the council’s social housing portfolio, said the council should have budgeted more for social housing beyond the first three years of the plan.

She said there was “an element” of council failure in the current quandary, with insufficient work done in the past to resolve the problem.

“Up until recently, [central] Government was not even aware of the looming problems the council is facing.”

The council has an obligation to upgrade its housing portfolio as part of a Deed of Grant signed with the Government in 2007.

Fitzsimons said the council supported an income-related rent subsidy scheme for social housing tenants, which would help to keep rents affordable and help the council manage its operating costs.

Audit NZ said it could not prevent a council from releasing a long-term plan for public feedback.

“It is the council’s responsibility to address the funding shortfall, and it is also the council’s decision on how and when to issue the consultation document,” it said.

Mayor Andy Foster said he did not want to comment because the council was in negotiations with the Government about funding options.