1 00:00:00,120 --> 00:00:02,239 Speaker 1: To the next stage of the government's social housing approach 2 00:00:02,640 --> 00:00:05,160 Speaker 1: involves providers being able to borrow at discounted rates, with 3 00:00:05,200 --> 00:00:07,480 Speaker 1: the Crown guaranteeing eighty percent of that money. This involves 4 00:00:07,560 --> 00:00:10,039 Speaker 1: nine hundred million in total new lending up eighty million 5 00:00:10,200 --> 00:00:13,520 Speaker 1: or up to eighty million per provider. Chris Bishop is 6 00:00:13,560 --> 00:00:15,280 Speaker 1: Housing Minister, is back with this morning to you. 7 00:00:16,000 --> 00:00:16,560 Speaker 2: Good morning. 8 00:00:16,600 --> 00:00:18,840 Speaker 1: What sort of discount is it interest rate wise for 9 00:00:18,880 --> 00:00:19,720 Speaker 1: these people. 10 00:00:20,560 --> 00:00:22,480 Speaker 2: Can be to one hundred and one hundred and fifty 11 00:00:22,520 --> 00:00:25,040 Speaker 2: basis points. What we're trying to do here is when 12 00:00:25,079 --> 00:00:27,480 Speaker 2: we do social housing through coying or Aura, right, they 13 00:00:27,520 --> 00:00:30,760 Speaker 2: just borrow through us. So they just borrow it the 14 00:00:30,800 --> 00:00:33,360 Speaker 2: low rates that the Crown gets right, that gives coy 15 00:00:33,479 --> 00:00:36,159 Speaker 2: or or a competitive advantage because their cost of borrowing 16 00:00:36,240 --> 00:00:38,519 Speaker 2: is a lot lower than community housing providers like the 17 00:00:38,560 --> 00:00:40,960 Speaker 2: Salvation Army. Right. What I'm trying to do is create 18 00:00:41,000 --> 00:00:44,040 Speaker 2: a housing system where it doesn't matter who owns the house. 19 00:00:44,200 --> 00:00:47,159 Speaker 2: Could be ko by the government, could be the Sallies, 20 00:00:47,520 --> 00:00:49,239 Speaker 2: could be an EWE, could be a whole range of 21 00:00:49,240 --> 00:00:52,440 Speaker 2: different providers. Doesn't actually matter who owns it. The key 22 00:00:52,440 --> 00:00:54,960 Speaker 2: point is we get new, warm, dry social houses for 23 00:00:55,040 --> 00:00:59,240 Speaker 2: vulnerable people. So we've got this loan guarantee working with 24 00:00:59,240 --> 00:01:01,800 Speaker 2: the banks on that. We're standing behind a thing called 25 00:01:01,840 --> 00:01:04,880 Speaker 2: the Community Housing Funding Agency, which is a separate thing 26 00:01:04,920 --> 00:01:07,839 Speaker 2: which is basically a loan aggregator, and we're standing behind 27 00:01:07,880 --> 00:01:09,679 Speaker 2: that as well, and that is lowering the cost of 28 00:01:09,720 --> 00:01:13,520 Speaker 2: borrowing for the community housing sector. The effect of lowering 29 00:01:13,560 --> 00:01:15,800 Speaker 2: the cost of borrowing is actually really good for the 30 00:01:15,800 --> 00:01:18,440 Speaker 2: Crown because ultimately we're the funder of all of this 31 00:01:18,480 --> 00:01:21,679 Speaker 2: stuff in the first place. So we're getting basically cheaper 32 00:01:21,760 --> 00:01:25,520 Speaker 2: social housing, cheaper borrowing and cheaper social housing, which means 33 00:01:25,560 --> 00:01:27,560 Speaker 2: we can do more social housing with the same amount 34 00:01:27,600 --> 00:01:27,880 Speaker 2: of money. 35 00:01:27,880 --> 00:01:30,119 Speaker 1: Where's the risk you carry all of it? Or the banks? 36 00:01:30,120 --> 00:01:31,679 Speaker 1: I mean, the banks don't carry any risks, do they, 37 00:01:31,760 --> 00:01:33,840 Speaker 1: because you'd tick them off before they came to you, 38 00:01:33,880 --> 00:01:35,959 Speaker 1: and therefore they know they're getting the money from you, 39 00:01:36,080 --> 00:01:37,640 Speaker 1: so you carry the can I take it? 40 00:01:38,400 --> 00:01:40,679 Speaker 2: Yeah? I mean. The point that the community housing sector 41 00:01:40,680 --> 00:01:42,800 Speaker 2: has been making to us for a long time. They've 42 00:01:42,840 --> 00:01:45,920 Speaker 2: been complaining about this is that they're basically borrowing on 43 00:01:45,959 --> 00:01:49,760 Speaker 2: commercial terms, when in reality they are far sounder propositions 44 00:01:49,800 --> 00:01:53,680 Speaker 2: than any other sort of commercial lender, and so it's 45 00:01:53,720 --> 00:01:55,960 Speaker 2: taken some time to get the banks around to persuading 46 00:01:56,000 --> 00:01:57,440 Speaker 2: them of that point of view. That's while we're doing. 47 00:01:57,480 --> 00:01:59,520 Speaker 2: The loan guarantee scheme is a short term sort of 48 00:01:59,520 --> 00:02:02,720 Speaker 2: intervention or we sort out the actual funding system. But yeah, 49 00:02:02,760 --> 00:02:04,520 Speaker 2: I mean, basically, you're right, we are taking a little 50 00:02:04,520 --> 00:02:06,080 Speaker 2: bit of risk, but it's a minimum amount. 51 00:02:06,280 --> 00:02:09,160 Speaker 1: Does it sent to buy people to borrow more, build 52 00:02:09,240 --> 00:02:10,320 Speaker 1: more or we don't know. 53 00:02:12,240 --> 00:02:14,480 Speaker 2: It will lower the cost of borrowing for the building 54 00:02:14,560 --> 00:02:16,840 Speaker 2: that they're already doing because we've contracted to you. 55 00:02:17,240 --> 00:02:19,200 Speaker 1: That's my point. Will they borrow less to do what 56 00:02:19,200 --> 00:02:21,360 Speaker 1: they were doing, or will they borrow more to do more? 57 00:02:22,960 --> 00:02:24,840 Speaker 2: If we fund them to do more, then they will. 58 00:02:24,919 --> 00:02:27,440 Speaker 2: And to give you an example in the budget twenty 59 00:02:27,480 --> 00:02:31,640 Speaker 2: twenty four places that we funded that of fifteen hundred 60 00:02:31,720 --> 00:02:34,839 Speaker 2: or so with the lower cost of borrowing. The net 61 00:02:34,880 --> 00:02:37,560 Speaker 2: effect of that is that we can actually turn what 62 00:02:37,720 --> 00:02:39,880 Speaker 2: was we thought was going to be about fifteen hundred 63 00:02:40,280 --> 00:02:44,680 Speaker 2: into about seventeen hundred seventeen fifty. Actually, now there's a 64 00:02:44,680 --> 00:02:46,520 Speaker 2: bit of complexity to that because it's got to wash 65 00:02:46,560 --> 00:02:49,720 Speaker 2: through and its new loans and everything's a little bit different. 66 00:02:49,720 --> 00:02:52,160 Speaker 2: But the short point is by doing this, we can 67 00:02:52,200 --> 00:02:54,880 Speaker 2: actually deliver more social housing for less money. It's great, 68 00:02:54,880 --> 00:02:55,400 Speaker 2: great news. 69 00:02:55,520 --> 00:02:57,840 Speaker 1: Good the Dixon Street Department thing you up on that. 70 00:02:59,440 --> 00:02:59,959 Speaker 2: Yes, yes. 71 00:03:00,160 --> 00:03:03,400 Speaker 1: Explain to me how a state owned agency sells something 72 00:03:03,400 --> 00:03:05,440 Speaker 1: for a million, the people who buy it under a 73 00:03:05,480 --> 00:03:07,919 Speaker 1: first preference deal then flick it for three How does 74 00:03:07,919 --> 00:03:08,320 Speaker 1: that work? 75 00:03:09,240 --> 00:03:12,200 Speaker 2: Well, the land's got a rite of FIRS refusal on it, 76 00:03:12,240 --> 00:03:14,200 Speaker 2: which means they got to offer it to the local EWE. 77 00:03:14,360 --> 00:03:18,520 Speaker 2: They did that and they negotiated them up. They went 78 00:03:18,560 --> 00:03:20,520 Speaker 2: out to the market before that and sort of tested 79 00:03:20,560 --> 00:03:22,519 Speaker 2: it a bit. Yep, it's on the box and I 80 00:03:22,520 --> 00:03:25,000 Speaker 2: think it's about three to four. But there was a 81 00:03:25,080 --> 00:03:28,120 Speaker 2: lot of interest in the market and actually buying it. 82 00:03:28,400 --> 00:03:32,079 Speaker 2: This is an earthquake prone building, it's a heritage listed but. 83 00:03:32,080 --> 00:03:34,320 Speaker 1: The market paid three million dollars for it about three 84 00:03:34,360 --> 00:03:36,280 Speaker 1: minutes up for one. 85 00:03:37,080 --> 00:03:40,960 Speaker 2: That with that, well, I get that, but we ultimately 86 00:03:41,000 --> 00:03:43,840 Speaker 2: don't control what the people who buy properties do with 87 00:03:43,880 --> 00:03:44,760 Speaker 2: it once they bought it. 88 00:03:45,400 --> 00:03:48,480 Speaker 1: But I should. I know it's not your personal fault, 89 00:03:48,520 --> 00:03:50,760 Speaker 1: but I mean this business or first writer of refusal, 90 00:03:50,960 --> 00:03:53,040 Speaker 1: and I understood it to be when it came to 91 00:03:53,040 --> 00:03:57,720 Speaker 1: the Mari that you know, there was something culturally historically significant, sure, 92 00:03:58,240 --> 00:04:00,880 Speaker 1: but a duney old building that you can make a 93 00:04:00,920 --> 00:04:03,280 Speaker 1: couple of million dollars on by Wednesday. Is that part 94 00:04:03,320 --> 00:04:05,640 Speaker 1: of the treaty negotiation settlement process. 95 00:04:05,320 --> 00:04:07,880 Speaker 2: Is it? Yeah? It was negotiated as part of the 96 00:04:08,240 --> 00:04:11,640 Speaker 2: settlement with Portnitkernicke Fano we back in I think it's 97 00:04:11,640 --> 00:04:13,640 Speaker 2: two thousand and seven. So they've got access to a 98 00:04:13,680 --> 00:04:16,840 Speaker 2: whole lot of land in Wellington that you know that 99 00:04:16,880 --> 00:04:19,920 Speaker 2: they that's part of their deal and where it periodically 100 00:04:19,920 --> 00:04:22,160 Speaker 2: comes up, they get offered it and sometimes they say yes, 101 00:04:22,160 --> 00:04:24,039 Speaker 2: sometimes they say no. So in this case they said 102 00:04:24,120 --> 00:04:28,200 Speaker 2: yes KAO negotiated with it. I get people's frustration, but 103 00:04:28,960 --> 00:04:32,560 Speaker 2: at the end of the day, like you're dealing with 104 00:04:32,600 --> 00:04:34,839 Speaker 2: basically an old dunger and you've got someone who wants 105 00:04:34,920 --> 00:04:37,520 Speaker 2: to spend a little bit of money doing it who 106 00:04:37,600 --> 00:04:39,640 Speaker 2: you could potentially do it up and that is ultimately 107 00:04:39,680 --> 00:04:42,039 Speaker 2: a good outcome for Wellington. But I appreciate the frustration 108 00:04:42,080 --> 00:04:42,760 Speaker 2: on the way through it. 109 00:04:42,839 --> 00:04:44,239 Speaker 1: Nice to talk to you. It was always Chris Bishop, 110 00:04:44,279 --> 00:04:45,239 Speaker 1: who's the Housing Minister. 111 00:04:45,760 --> 00:04:48,640 Speaker 2: For more from the Mike asking Breakfast, listen live to 112 00:04:48,760 --> 00:04:51,839 Speaker 2: news talks. It'd be from six am weekdays, or follow 113 00:04:51,880 --> 00:04:53,440 Speaker 2: the podcast on iHeartRadio.