26 May 2017

About 100,000 will still be under housing stress - Joyce

10:36 am on 26 May 2017

Finance Minister Steven Joyce has admitted about 100,000 people will still be under severe housing stress despite the accommodation supplement boost in yesterday's Budget.

Watch Steven Joyce speak to Morning Report's Guyon Espiner, and former ACT MP and minister Heather Roy, who currently chairs the Advertising Standards Authority and Medicines New Zealand, Newsroom financial journalist Bernard Hickey and political commentator and satirist David Slack analyse the budget here:

Mr Joyce's first budget offered a $2 billion a year boost for Working for Families and the accommodation supplement, which helps beneficiaries and low-income working families, and increased the two lowest tax thresholds.

He said that would lift 20,000 people out of being under severe housing stress - which the OECD defines as having less than $180 a week left over after housing costs.

Finance Minister Steven Joyce

Finance Minister Steven Joyce speaks to Guyon Espiner. Photo: RNZ / Cole Eastham-Farelly

Speaking on Morning Report, he acknowledged a "significant number ... around about the 100,000 mark" would still be under pressure. But he argued that as time went by and the supply of housing grew, the market would even out.

"Unfortunately, one of the biggest challenges we've got is [low] interest rates, which people like when it's their mortgage, but of course what happens is that interest rates drive high asset prices.

"All the signs are that interest rates will come up and the supply response will grow and that means the housing market will correct over time, but I agree it's not in balance at the moment."

Mr Joyce said changes in the Budget, including to Working for Families and tax thresholds, would push family incomes for 50,000 children above half the median income - lifting them out of poverty, by that measure.

He said while the number of children in poverty was still too high under that yardstick - at about 90,000 - there would be opportunities to do more.

"Of course, you'll never get everybody above 50 percent of the median income because it keeps moving up," he said.

"I think there's more things that we should do in a couple of years time when we've got more opportunity, so it's certainly not the end of the story. It goes to show what you can do if you get a strong economy that's delivering that sort of tax base."

Get the RNZ app

for ad-free news and current affairs