Apr 1, 2011

Ngati Awa move in the right direction

It is good to see an iwi come out in support of a socially beneficial enterprise. From the NZ Herald:

Te Runanga o Ngati Awa in Whakatane has become one of the first iwi to put its hand up publicly to buy state houses, which the Government wants to sell

But iwi chief executive Jeremy Gardiner… told a Community Housing Association conference in Henderson he would buy them only if he could pay a price based on their current rental income, not their book value.
"If we go to the Government and say we want to buy them, they will say they are worth $80 million. No one is going to pay that because they don't generate a return to justify that.
"They are worth $19 million based on the current rentals. That is a reasonable purchase price. That gives us some flexibility."

Although, in principle, I disagree with the sale of state homes, it is a welcome change to see iwi swing behind a government initiative other than private prisons and mining. This is ultimately the privatisation of an essential government service, a remission of responsibility on the government’s part. Selling sate homes will reduce government bureaucracy, eliminate on-going costs and provide a one off cash injection. It is a short term exercise aimed at cost cutting.

In any society housing is an essential utility and when housing is, for one reason or another, unattainable, the government should provide a safety net. The private sector is not bound or influenced by any social imperative, unless you consider profit motive a social imperative, and must consider profit above all else. This conflict between social imperative and profit suggests that the private sector is unsuited to providing housing for those who cannot pay market price.

I think Jeremy Gardiner’s comments are reasonable. Given that Ngati Awa is not seeking a return, or at least it appears that way, it would be irrational to demand payment reflecting book value. Furthermore, Ngati Awa already lack the capital required to renovate derelict state homes. Certainly an allowance should be made to accommodate the fact that some houses will need significant attention to bring them up to standard.

So it is reassuring to see at least one iwi move in a positive direction, commercially speaking. I hope a few more follow suit.


  1. Long time reader, first time poster...

    Morgan, tell me:

    If and when TRoNA buy these house from the government, will they:

    1) Continue to ensure that existing tenants have security of tenancy ie not kick them out
    2) Increase rents, either for new or existing tenants, or both
    3) Introduce limits on tenancy

    State houses give one thing that private rentals cannot. Security (and stablity).


  2. I share those concerns, Millsy.

    I cannot say whether the runanga is launching into this in a purely business sense or whether they are considering their people, or possibly somewhere in between.

    As I said, the social imperative is lost when state housing is devolved to the private sector. However, if the government is intent on selling state homes, then I would rather see iwi take up responsibility than some wholly corporate vehicle.

  3. We should look at the example of Ngati Whatua who bought quite a few state houses in Orakei. Until recently there has been little money for upgrading this stock, they are managed by Housing NZ who will not give any preference to Whatua beneficiaries And in practice have used these and other Orakei state houses to provide for their "hard to house" beneficiaries. The result has been a further "ghettoization" of Orakei, no solution to scarcity of housing for Whatua members, especially young working Whatua families who want to be home In their community but can't afford the rent . Iwi housing has to provide for everyone not just those on a benefit



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