Labour's Healthy Homes Guarantee Bill passes first reading with Dunne's support; would force landlords to improve insulation and pay for heat pumps; Landlords and Govt opposed, saying it would increase rents

By Bernard Hickey

Labour's Healthy Homes Guarantee Bill passed its first hurdle towards becoming legislation in Parliament last night, winning the support of Peter Dunne to pass the first reading and be sent for consideration by a select committee.

The private member's bill sponsored by Labour Leader Andrew Little would set minimum standards for insulation and heating of rental properties within six years, which would force many landlords to invest in extra insulation, heat pumps and heaters. Little has said the insulation standards, which would be set in detail by the Ministry of Business, Innovation and Employment, would be at least as good as the 2008 standards for new homes and apply to all rental properties.

Little's private member's bill, the Healthy Homes Guarantee Bill (No 2), passed its first reading in Parliament by 61 votes to 60 last night with the qualified support of United Future Leader Peter Dunne.

The bill is a re-run of Phil Twyford's Healthy Homes Guarantee Bill last year, which stalled at 60-60 and did not progress past the first reading.. Last night's result was different given the extra vote for New Zealand First, which voted for the bill, in the wake of the Northland by-election. Dunne also voted at the first reading in favour of Twyford's bill. National MPs and ACT's David Seymour voted against Little's bill.

The bill aims to set minimum standards for heating and insulation for rental properties, although it does not set the exact standards. Landlords and the Government opposed it on the grounds it would force landlords to install expensive heating systems and insulate all rentals to 2008 standards, which they said would be passed on as a cost to tenants in the form of higher rents.

"When the Children’s Commissioner Russell Wills was making his submission on the Government’s legislation that merely requires rental housing to have the 1978 insulation standard complied with within 4 years’ time, he said that right now 42,000 New Zealand children a year are going to hospital for respiratory infections, bronchial problems, asthma, and things associated with unhealthy homes—unhealthy homes that are unhealthy because of dampness and lack of ventilation that allows mould spores to proliferate," Little told Parliament (see the video above from 1 minute 20 secs)

"That is the problem that we are trying to fix. It is a reasonable demand to have in the 21st century that New Zealanders in rental accommodation have a minimum standard that at least keeps them healthy," he said.

The Government is in the final stages of passing its own Residential Tenancies Act amendments to improve insulation standards and force the installation of smoke alarms from 2019. But tenants groups, the Children's Commissioner and child poverty campaigners say it does not go far enough and have supported Labour's members bills. The Government's bill does not force those houses built before 1978 to insulate if there is not enough crawl space in ceilings and under floors to do so, which includes about 100,000 houses to be exempted from the tougher rules. It also does not force landlords to install heating options.

It followed an announcement in July last year by Building and Housing Minister Nick Smith that rejected the idea of a Warrant of Fitness for houses and allowed exemptions from insulation standards for landlords unable to install underfloor or ceiling insulation because of a lack of crawl space. See our previous stories on that here and here.

The debate followed the death of two year old Emma-Lita Bourne in 2014 from a respiratory illness caused by living in a cold, damp state house in Otara. The house was insulated in the ceiling, but had wooden floors without carpets and Bourne's family could not afford to use the heater provided for them by Housing NZ. The coroner's report is available here.

Dunne's support qualified

Peter Dunne's vote was the deciding vote to send the bill to Government Administration Committee, although he said late last night in a statement this support for the bill was qualified, given he did not see mandated minimum standards as the best way to improve housing quality.

"It’s all very well to require a method of heating, but that doesn’t mean much if you can’t afford the increased cost of electricity," he said, adding he would like to see the Government set aside funding for tenants and landlords to improve standards.

“This Bill must do more to address how to provide support to those most in need to ensure them a healthy home that is also an affordable one. This now puts the ball firmly in the Government’s court to respond with detailed policy of its own in this area. United Future’s position on this Bill is dependent on the Government’s response and nothing should be taken for granted at this stage."

Dunne's qualification raises doubts about whether the bill will pass through the second and third readings needed to become law.

Smith says rents will rise

Smith told Parliament Little's bill was impractical and was a poor substitute for the Government's measures.  (See Smith's speech on the bill below).

The Government is changing tenancy laws to make sure rental properties that can be insulated must be insulated by July 1, 2019, although around 100,000 homes will be exempted because there is not enough under-floor or ceiling space to insulate them. Smith said last year the insulation retrofitting of an estimated 180,000 rental properties was expected to cost landlords NZ$600 million, while the requirements for smoke alarms was expected to cost them NZ$7 million. Officials estimated these extra costs were expected to increase rents by around $3.20 per week.

"The first irony in this bill is that for all the rhetoric of caring more about healthy homes, it will take 4 years longer than the Government’s approach to getting uninsulated homes upgraded," he said.

"We are requiring all uninsulated rental housing to be done to the latest 2008 standard by July 2019. The debate is whether homes insulated under an older standard should be upgraded. This does not make economic sense," he said.

"Those built after 1978 have insulation that reduces heat loss by 84 percent and those after 2001 by 87 percent. The cost of upgrading this insulation to the 2008 standard of 92 percent is not justified, because the cost would exceed the benefits. The idea that you are going to have tens of thousands of children not going to hospital because of a few percentage points reduction in terms of insulation and heat loss does not withstand scrutiny."

Smith said Government had been influenced by cost-benefit analysis when setting its standards.

"This is important because every cost that we impose on the rental sector is ultimately passed on in rents. Insulating an uninsulated property provides NZ$1.80 of benefit for every NZ$1 that is spent and makes good sense. But to gain a few percentage points of extra insulation by requiring those properties that are insulated but not right up to those last few percentage points of the current standard actually imposes more costs on the very families who we are trying to help than there are benefits," he said.

'Don't make us pay for heat pumps'

New Zealand Property Investors Federation Executive Office Andrew King said compulsory heat pumps were not the answer.

"Some families cannot afford to pay for electricity and the cost of compulsory heat pumps will only push up rental prices and make it even harder for them to use their heaters," King said.

"Rather than making them compulsory, the NZPIF believes that allowing them to be tax deductible or providing subsidies for them would be a better strategy," he said, adding that poor families should be given electricity vouchers during winter to pay for heating.