A community housing leader says there is a direct link between growing homelessness and the government's decision to tighten emergency housing eligibility.

However, the responsible minister says the stricter criteria were implemented along with increased support for those in need.

In recent times, about a third of emergency housing applications to the Ministry of Social Development are being declined each month, according to the agency's latest figures released to RNZ under the Official Information Act.

Before August 2024 - when stricter rules about getting into and staying in emergency housing came into force - decline rates were in the single digits.

That came a few months after the Government set a target to reduce the number of households in emergency housing by 75 percent, saying motels weren't appropriate for families, especially children.

Community Housing Aotearoa chief executive Paul Gilberd said the data spoke for itself.

"One can clearly see the policy direction, the moment in time when the policy direction to the MSD staff was changed, the steep and significant decline in emergency and special needs grants, and the corresponding increase in rough sleeping around the country."

Gilberd said while there was "a lot of debate" about exact homelessness figures, data gathered by community groups showed "it's at the highest level it has ever been".

He said there was consensus that children should not grow up in emergency housing motels, but reducing their use had left some without alternatives.

"It's a lose-lose scenario for everybody who is involved. It's not great for the staff at MSD. It's definitely not a great outcome for our rough sleeping and homeless communities, and it's not a really good outcome for taxpayers because where they're ending up is in the emergency departments and in Corrections."

MSD figures from June show the most common reason for declining emergency housing applications is "the need can be met another way" (about 27 percent of 729 rejections), followed by "you have caused or contributed to your immediate need" (about 19 percent).

The latter category was among several new criteria introduced in mid-2024, intended to "tighten the gateway" to emergency housing.

MSD officials told ministers at the time the changes risked increasing homelessness, particularly for children, Māori, and people with complex needs.

However, unlike other criteria, Ministers decided MSD staff should have discretion about whether to apply the "caused or contributed to your immediate need" test to an applicant.

"An option considered was making 'contribution to immediate EH [emergency housing] need' a compulsory consideration. However, this determination is a subjective assessment, and can risk excluding people with an immediate EH need, exacerbating support needs and therefore creating a long-term fiscal cost," the report read.

Gilberd described determining whether someone contributed to their homelessness as "deeply problematic", as it required frontline staff to make subjective decisions with imperfect information.

"We know that our rough sleepers and homeless, who have typically had quite a bad experience of life and of agencies, are deeply reluctant to be fully clear and transparent and share all of their personal information when they walk into an MSD office and meet a case manager."

In March, an Auditor-General report into housing needs recommended MSD staff guidance be updated to ensure assessments about "contributing" to one's need for emergency housing be clarified - something the agency had since done.

Gilberd said the core issue was the lack of affordable housing due to underinvestment by successive governments.

He said he was agnostic about who would supply that housing - be it Kāinga Ora, community housing providers, iwi, or churches.

"Until we decide as a society and give the signals to our politicians that it's going to be safe for them to get re-elected by having a policy which invests significant additional new money into this supply, this problem is not going to go away."

Potaka: Emergency housing changes appropriate

Associate Housing Minister Tama Potaka said the government's tightening of emergency housing grants in 2024 "restored emergency housing to its purpose as a last resort".

He said the changes came alongside increased support for people with housing needs, as well as more public and transitional housing.

"Our Government has always wanted, and continues to want, people to have a safe and secure roof over their heads, not to be left living in a hotel room," Potaka said in a statement.

"Emergency housing was never intended to become a long-term home for thousands of families. We set a target to reduce the number of households in emergency housing by 75 percent by 2030, and achieved it five years early."

He said about 70 percent of those not granted emergency housing were offered alternative support, such as transitional housing, help to remain in their current home, or assistance securing a private rental.

As for the remaining 30 percent, Potaka told the Herald in June: "Some of those people may well be in housing now, some of them may not be."

Meanwhile, MSD told RNZ last month people were under no obligation to tell the agency where they were living.

Karen Hocking, MSD's enablement group general manager, said emergency housing applications were most often declined when applicants had other options available, such as staying with family or friends.

"We may also decline someone's application if their situation is a result of their own actions, or actions of people they are responsible for, and they were reasonably able to predict and prevent it," she said in a statement.

"For example, people are generally expected to organise somewhere new to live before they leave their existing accommodation. If someone chooses to give up their tenancy without a good reason and without making other arrangements, they are likely to have unreasonably caused or contributed to their immediate need."

Hocking said people leaving their homes due to family violence would not be considered to have contributed to their need.

With the government's emergency housing targets met, she said MSD would focus on maintaining performance and supporting people in emergency housing to transition to longer-term solutions.