Politicians wade into supplement debate

Debate over the Government’s accommodation supplement is heating up.

Wednesday, July 18th 2012, 12:00AM

by Susan Edmunds

Labour’s housing spokeswoman Annette King says the supplement artificially props up rents and has suggested the money - which she terms a $1.2 billion subsidy for landlords – could be better spent building more houses.

She is lobbying for more information from the Government over its plans for the supplement.

Waitakere MP Paula Bennett said it was unfair to say the supplement was simply lining landlords’ pockets.

But she said vulnerable people would often pay whatever rent was necessary to find a place to live – pointing to a “substandard” caravan park in her electorate. She described it as “very expensive for what I’m sure most New Zealanders would see as quite substandard living”.

She said situations like that were becoming more common.

The Government indicated in the budget that it would be looking at ways to make the $15 billion spent on social housing and the $2 billion in annual subsidies, such as the accommodation supplement, more efficient.

But ACT leader John Banks said King’s claim that the subsidy had not led to more, or better. houses available for rent, showed a lack of understanding of the real issues.

“The real problem is not the subsidy, it is a result of a lack of land supply for residential housing which is pushing up house prices and therefore pushing up rents for all tenants,” Banks said.

He said as houses became more expensive, owners had less money to spend on improving them.

“Rather than beating up on landlords, Labour would be better to focus on improving the overall supply of housing. ACT has long argued that the biggest roadblock to increasing housing supply is the regulations that control the supply of land.

“In its report on Housing Affordability, the Productivity Commission found that over the past 20 years, the cost of a section has grown far more quickly than house prices, which indicates that ‘appreciating land prices have been a key driver of house price inflation in New Zealand.’

“This problem has been exacerbated in Auckland, with the price of land now accounting for 60 per cent of the total house price as compared to 40 per cent for the rest of the country."

He said a dramatic reform of legislation such as the Resource Management Act was needed to make it less expensive to build new housing.

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