A call for income-related rent subsidies to be extended to local councils has been rejected by the government as too expensive.
Photo: RNZ / Alexander Robertson
Wellington City Councillor Paul Eagle said it was not fair that councils, which provided 11,000 social houses, were not eligible for the subsidies.
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Income-related rents meant the government paid the difference between social housing rentals - which are fixed at one-quarter of tenants' incomes - and market rents.
At present, the subsidies were only available to Housing New Zealand and community housing providers.
Mr Eagle said that was creating inequities in communities.
"Under a $350-a-week rent, if you're in a state house, the tenant will pay $82. Now, that same situation with council, the tenant is only eligible for an accommodation supplement of $95, so they'll end up paying $151."
Mr Eagle said the subsidy would allow his council to invest substantially more in social housing.
But the government said it was not looking at extending the subsidies to councils, because it would be too expensive.
Social Housing Minister Paula Bennett said the subsidies were already costing the government more than $700 million a year.
"We're not looking at extending it to council at this time, but only because that would be incredibly expensive and not actually house one extra person."
Ms Bennett said as the supply of social housing grew, the government may be able to revisit the policy.