Political Storm Brews Over Auckland Housing

13th December, 2007.

Political Storm Brews Over Auckland Housing

[See also... Syed Kamal: Update on Affordable Housing (14/12/07)]

There is a political storm brewing in the corridors of Auckland City Council over ‘affordable housing’ which Mayor John Banks had publicly issued calls for its scrapping during his election campaign. His contention is that ‘affordable housing’ is the province of Central government and the local councils have no role to play in it.

The mayor, since returning to the office, has been trumpeting on pruning down costs and ending the culture of wasteful expenditure. He has been accused of wasting ratepayer’s money on seeking & running expensive legal bills to terminate and scrap previous council’s agreement.

Based on a single member of public complaint against the signed contract, the Auckland City Council embarked on a legal collision spree spending ratepayers’ money to nail NZ Housing Foundation into agreeing for a $2.5 million renegotiated council contract from $9 million over ‘affordable housing’.

Councillor Paul Goldsmith, Chairman Community Services Committee said the advice was given but never sought to reviewing the contract based on that single complaint.

To a query what amount was spent on that advice, he answered “I am not sure.”

The mayor has stirred a hornet’s nest by choosing to scrap the $9 million council contract with the New Zealand Housing Foundation amid widespread resentment over this sensitive issue. The agreement was culmination of a 3 year effort by the previous Labour led City Vision dominated council and was signed just two weeks before the run-up to local body elections on October 13.

The New Zealand Housing Foundation is obligated to build a minimum of 100 homes within four years, which will be available for purchase by lower income working families. McConnell Property Ltd is one of the supporting partners.
A report to the Auckland City Council Thursday’s meeting will recommend slashing a $9 million council contract with the Foundation to less than $2.5 million.

It’s interesting to note here, the report to Council's Thursday night meeting states "A legal matter has arisen which provides council with the opportunity to renegotiate the programme agreement." When asked over the phone for comments regarding ‘affordable housing’ Mayor John Banks answered “what about affordable housing? We have already taken a decision.”

Initially agreeing to do the interview for “Darpan-The Mirror” a current affairs programme on Stratos, he later asked Councillor Paul Goldsmith, Chairman Community Services Committee to front up for him on camera.

Mr. Goldsmith said the current council was faced with difficult budgetary constraints with the spending zooming to 100 per cent from just half a billion to $1 billion in the last 3 years. He said “the voters evidently didn’t think it was sustainable rate of increase.”

Blaming the previous council for doubling the spending rate he said the present council will concentrate on core activities of focus citing transport & infrastructure and communities & arts as examples. He said the council will reign in spending and curtail wasteful expenditure.

Dismissing the councillors’ accusations he emphasized that ‘affordable housing’ is “not this council’s core activity” but falls under the central government domain.

He said “because of the changes to the trust deed, the council was able to withdraw” from the agreement attracting Housing Foundation’s displeasure.

“We got together, sat down, had a chat and come to an agreement to renegotiate the scheme at a scale back level. “ He stressed that “we live in the real world, they knew where we are coming from, we know where they are coming from; we have no criticisms of the Foundation and we think they are doing good work in the community.”

He pointed out that the council had reached an amicable agreement with the Housing Foundation and that “it’s win-win for all Auckland citizens and ratepayers.”

The project had gone through a laborious consultation process and already had attracted considerable support from Auckland ratepayers. It also passed through two annual plans and the long term council community plan.

The move has prompted six Councillors; Richard Northey, Leila Boyle, Cathy Casey, Graeme Easte, Glenda Fryer and Denise Roche to condemn his style of leadership dubbing ‘here we have the old John Banks back at his game of not listening to reason’.

Directing their outrage at Mayor John Banks, Deputy Mayor David Hay and their Citizens & Ratepayers (C & R) group they say that it is an act of bad faith and denial of the acute affordable housing crisis in Auckland City.

Singling out the mayor Cathy Casey expressed her anger “It’s a major contract that cannot be rescinded and major breach of faith to tamper with the contract.”

She feels the Auckland City Council’s reputation is at stake and wonders what sort of credibility it will have when dealing with hundreds and thousands of other entities. She says the repercussions will be severe if New Zealand Housing Foundation decides to take the matter to court which could entail further legal costs.

“How dare John Banks cut that budget to 1/3 because of his political agenda, it’s a gross breach of trust and good faith,” she fumes.

“In 2002, when he was mayor, his council sold off all our stock of housing, pensioner & residential housing for a paltry price of $83 million; half the airport shares sold off too. It was against the will of the people. 9,000 Aucklanders told this council not to sell.”

She adds “We have the biggest, critical housing shortage here in our city.”

Labour councillor Richard Northey questions "Why on earth have we wasted ratepayers' money challenging a bona fide contract with the New Zealand Housing Foundation, particularly as this could result in court costs and compensation for breach of contract?"

"The reduced funding to the NZ Housing Foundation is simply because this new council is not prepared to play its part in alleviating the current critical housing situation in Auckland City."

The six councillors are angry that Banks has wasted ratepayers' money on lawyers to scrutinise the contract to find a way out of it and calling on him to honour its $9 million commitment to the NZ Housing Foundation and to lower income working families in need of decent housing.

National Party leader John Key said he believes the councils have an important role to play in ‘housing’ sector. He said “I think the local governments have to play a role because they set the district plan and they are partly involved in the process around release of land. They also have administration around building sign-offs.”

When brought to his attention about the Auckland City Council impending plan to get out of the contract with the NZ Housing Foundation, he said ‘with social housing’ it is John Banks call as the chosen mayor of the city.

Auckland Green Party MP and Housing Spokesperson Sue Bradford while expressing her shock said “"I thought John Banks was going to be more socially responsible this time around. If he goes ahead with this decision he is turning his back on any claim to socially or ethically responsible leadership."

"The Green Party believes the Council took a great step forward this year when it formed a partnership with the New Zealand Housing Foundation to build around 100 affordable homes over the next five years,” she added.

She observed "for once Auckland City was taking the lead in an area where it has been notoriously backward, especially after John Banks sold off council housing during his previous administration.”

She urged Mr. Banks and his colleagues “to act in a socially and ethically responsible manner and reverse their apparent decision to break the contract.”

Citing the Parliamentary Select Committee Inquiry into housing affordability, she said the submitters have inundated the MPs with calls to support any initiatives at local, regional and national level that can make housing more available to low and middle income earners and beneficiaries.

In calling for this inquiry she reminded that even the National Party appears concerned about the unaffordability of housing for ordinary people.
Meanwhile, as part of a high-level value-for-money evaluation of council’s activities and culture, a small steering group has been established to guide the review work, made up of Mayor John Banks, Deputy Mayor David Hay, Chair and Deputy Chair of Finance and Strategy, Councillor Doug Armstrong and Councillor Aaron Bhatnagar plus some external input from local government expert Grant Kirby.

Mr. Armstrong says there is no explicit intention to reduce staff numbers.
He says the cost of the review is not confirmed as briefs are being finalised but contends that the costs will be modest and recovered through savings identified as part of the process.

ENDS

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