How taxpayers are pumping millions into the motel business to provide emergency housing

Blogger Lindsay Mitchell has used the Official Information Act to flush out data on emergency housing from the Ministry for Social Development.

The results have been posted under the heading Motel charges premium for emergency housing.

At long last MSD has updated OIA requests, Mitchell writes. Responses up to November 2019 are on-line

“ … and always make for interesting reading. For instance payments made to the Olive Tree Motel for emergency housing.”

Clients are granted an amount which is paid directly to the motel, Mitchell explains.

In the June 2019 quarter the motel was receiving $265 a night.

But nightly charges per unit range from $145 to $165 according to their website. Charges reduce for longer stays.

The response to another request reveals that over 600 accommodation providers  received emergency grants in the June 2019 quarter.

Mitchell wonders how many share a similar premium policy?

It’s certainly a booming ‘industry’ with a 49 percent increase in average grant between Sep 17 quarter and June 19 quarter.

The Key Government began funding emergency housing in late 2015 and before long taxpayers’ money was being used to buy motels to provide this housing.

A few months before the 2017 general election, figures showed Government had spent $550 million in the June quarter to house people but the waiting list for houses was growing.

According to an Interest.Com report, Labour slammed this policy as expensive (which implies Labour would be rid of it).

Labour’s housing spokesperson Phil Twyford styled the emergency housing grants figures as “another blow out in spending on putting homeless people up in motels”.

“The Government is renting motel rooms at a rate of $33 million a year. It’s a very expensive band-aid.”

In August 2017, Labour social development spokeswoman Carmel Sepuloni complained in Parliament that motels were being bought in areas where state houses had been sold or demolished.

“Is there a connection between the Government buying a motel in Gisborne, where there has been a loss of 62 state houses, a motel in Hastings, where there has been a loss of 14 state houses, or buying a motel in Napier, where there has been a loss of 137 state houses?”

Labour leader Jacinda Ardern around that time said Labour would build a mix of 240 affordable KiwiBuild starter homes for first home buyers and state homes for families in need in Napier and Hastings.

“Labour will build homes, not buy motels.

“Labour will build 240 houses in Napier and Hastings in our first term, a mix of state houses and modern starter homes, which we’ll sell to first home buyers at cost. The homes will be built on bare land owned by Housing New Zealand in Maraenui, Mahora, Raureka, and other suburbs.

“We expect to be able to deliver terraced three-bedroom starter homes for $270,000, and less than that for one and two bedroom units.”

And:

“In Hawke’s Bay, and all around New Zealand, we’re going to build the houses our families need and give people a fair shot at owning a place of their own. Let’s do this,” says Jacinda Ardern.

In December, after the establishment of the new government and he had become Minister of Housing and Urban Development, Phil Twyford set out the direction of the government’s housing policy.

 “I am going to talk about the future of state housing, and the fight against homelessness.

“My starting point is the importance of a home.

“When people are homeless it strips them of their dignity and hope.

“When families move from place to place because they cannot find somewhere to settle, it takes a terrible toll on them, especially the kids.

“When people find no alternative to living in cold damp rentals the inevitable sickness shortens their lives.

“When housing costs are so high, there isn’t enough to spend on healthy food or pay the power bill.

“When home ownership is out of reach people are denied the opportunity build an asset and build themselves up.

“The housing crisis is quite unacceptable for any New Zealander.

“It offends the sense of fairness and opportunity for all our country was built on.

Central to the new government’s broad housing reform agenda (Twyford brayed) was a reassertion of the role of state housing.

“We are going to put the state back into state housing.

“Our Government rejects the view that state housing is a redundant idea from the 1930s and that modernisation means selling off the houses and getting charities and the private sector to do this work instead.”

Twyford further said the government aimed to complete the roll out of emergency and transitional housing places around the country.

“I don’t want to see people living in cars and in campgrounds.

“And it not satisfactory for the taxpayer to be shelling out $90,000 a day on motels.

“We need immediate solutions.”

So how have things turned out?

In September last year data from Auckland’s Homeless Count estimated approximately 800 people were living without shelter across the Auckland region.

RNZ reported more than $126,000 had been spent on one person’s motel stay while waiting for public housing to become available.

“The stay covered more than 600 nights – despite the fact emergency housing grants are only supposed to cover seven night stays.”

The government by then was spending more than $3 billion a year on housing assistance, more and more of it being spent on motels.

“Figures show it’s big business for some motels, with five providers alone receiving $20m in the last three years to provide shelter for the homeless.”

In a subsequent report, RNZ said motels were reaping record amounts for housing the homeless – tens of millions of dollars every month.

The government spend on motels has nearly tripled over the last year, with each stay costing 20 percent more than a year ago.

With a record 14,000 people on the state house waiting list, the government’s motel bill is showing no sign of slowing down.

And if you happened to own a motel – well, why not make the most of it?