Part 1: Introduction

Inquiry into the Ministry of Social Development’s funding of private rental properties for emergency housing.

1.1
In this Part, we discuss:

1.2
In 2016, the Government responded to an increasing problem of homelessness by introducing the Emergency Housing Special Needs Grant (the emergency housing grant). The emergency housing grant pays for emergency housing while people look for longer-term housing. The Ministry of Social Development (the Ministry) is responsible for administering the emergency housing grant.

1.3
Statistics New Zealand defines homelessness as people living without shelter, in temporary accommodation, sharing accommodation with a household, or living in uninhabitable housing.1

1.4
Researchers analysed the 2018 Census data for the Ministry of Housing and Urban Development.2 The analysis counted 18,157 homeless people in Auckland. Most of these were living in overcrowded houses.3

1.5
Both the Census and Ira Mata, Ira Tangata: Auckland's Homeless Count report by Housing First identified Māori and Pacific peoples as disproportionately represented in homelessness statistics.4,5

1.6
Housing First also identified that disabled people are over-represented in the number of Auckland's homeless people who were "sleeping rough" compared to the general population.

1.7
In 2020, the Ministry of Housing and Urban Development, along with other agencies, including the Ministry, published the Aotearoa/New Zealand Homelessness Action Plan 2019.6 The plan identified that, as well as poverty and low incomes, housing shortages and increasing rents contributed to the significant increase in homelessness in some places, including Auckland.7

1.8
Initially, the emergency housing grant could be used only to pay for commercial accommodation such as motels or hostels. However, between November 2017 and the end of June 2020, the emergency housing grant was paid to private landlords and property management companies in Auckland.8

1.9
During this period, the Ministry paid more than $37 million in emergency housing grants to fund private rental properties as emergency housing.

Why we were interested in this matter

1.10
We received a complaint about the Ministry's practice of paying suppliers of private rental accommodation for emergency housing. There were also media reports alleging that people were living in "marginal to uninhabitable" private rental properties that the emergency housing grant paid for. It was reported that the Ministry paid some landlords $3000 or more a week for a property.

1.11
These reports also alleged that suppliers of private rental properties were taking their properties from the long-term rental market because of the higher rates paid through the emergency housing grant.9

1.12
It is important that public organisations have robust processes to ensure that they are buying a good or service at a reasonable price and receiving value for money. Public organisations should use evidence and analysis to inform their decisions about how to spend public money. Without robust processes, public trust and confidence in a public organisation can be damaged.

1.13
The quality of the private rental properties and the amount of public money spent has raised questions about the Ministry's internal processes. We wanted to understand the Ministry's decision-making processes that led it to start, then stop, paying to use private rental properties as emergency housing.

Scope of our work

1.14
We looked at how the Ministry made decisions and what mechanisms it had to account for the money it spent. We focused on how the Ministry decided to use private rental properties as emergency housing in Auckland between November 2017 and June 2020.

1.15
We looked at:

  • how the Ministry decided to enter into arrangements with housing suppliers;
  • the Ministry's processes for deciding to pay to use private rental properties as emergency housing, including how it assessed the quality of the housing, how it determined how much to pay, and how it ensured that it was getting what it paid for; and
  • the Ministry's decision to stop paying to use private rental properties.

1.16
We did not consider policy decisions about emergency housing that the Ministry made, including the decision to use private rental properties. Policy decisions are outside the Auditor-General's mandate.

1.17
In carrying out our work, we:

  • obtained and considered documents that the Ministry provided in response to our questions;
  • visited a Work and Income site in Auckland and met with frontline staff who deal with applications for the emergency housing grant;
  • spoke with staff from the Ministry's national office about decision-making and the emergency housing grant processes;
  • spoke with staff from the Ministry of Housing and Urban Development;
  • spoke with non-government agencies and advocates about their experience with people living in private rental properties that the emergency housing grant paid for;
  • spoke with two suppliers of private rental properties for emergency housing; and
  • reviewed reports into homelessness, particularly in Auckland, between November 2017 and June 2020.

Structure of this report

1.18
In Part 2, we describe how the Ministry views its relationship with emergency housing suppliers, how it pays for emergency housing, and how it pays for emergency housing through the emergency housing grant. We also describe how the use of private rental properties for emergency housing in Auckland increased and what happened when the Ministry stopped using them.

1.19
In Part 3, we discuss our findings, including the way the Ministry made decisions and its accountability for spending public money, and points for the Ministry to consider to improve its processes and controls.

1: See Statistics New Zealand, "New Zealand definition of homelessness: 2015 update", at stats.govt.nz.

2: See Amore, K, Howden-Chapman, P, and Viggers, H (2018), Severe housing deprivation in Aotearoa New Zealand, 2018, He Kāinga Oranga/Housing and Health Research Programme. The report found that, of the 18,157 people in the Auckland region meeting the definition of being severely housing deprived, 15,210 were sharing overcrowded housing.

3: See Statistics New Zealand, "New Zealand definition of homelessness: 2015 update", at stats.govt.nz.

4: Housing First (2018), Ira Mata, Ira Tangata: Auckland's Homeless Count report, at aucklandshomelesscount.org.nz.

5: Auckland's Homeless Count found 43% of people living in temporary accommodation in Auckland were Māori, 39% were Pacific peoples, and 20% were European/Pākehā. Ministry of Housing and Urban Development (2019), Aotearoa/New Zealand Homelessness Action Plan, pages 21 and 22. Other groups also disproportionately affected by homelessness include the rainbow community/takatāpui, women, young people, and people with mental health and addiction needs.

6: The other agencies that developed and jointly own the plan are the Ministry of Social Development, Kāinga Ora – Homes and Communities, the Ministry of Health, Te Puni Kōkiri, the Ministry for Pacific Peoples, Ara Poutama Aotearoa/Department of Corrections, the New Zealand Police, and Oranga Tamariki – Ministry for Children, with support from other government agencies.

7: Ministry of Housing and Urban Development (2019), Aotearoa/New Zealand Homelessness Action Plan, pages 21 and 22.

8: Although the practice of funding private rental properties was not exclusively used in Auckland, it was much more common there than in other parts of New Zealand.

9: In this report, suppliers include property owners and property management companies.