Opinion: Housing policy now catering for middle-income NZ

''Moments away; a world apart.'' So coos the sugar-encrusted but hollow-sounding real estate-speak intent on seducing home buyers and hard-headed investors into succumbing to the charms of life at Hobsonville Point.

According to the project's advertising bumph, a world-class township for Aucklanders of ''all ages and stages'' is being built on 167ha of Crown land nestled on the Waitemata Harbour in the city's northwest.

Well, not all Aucklanders it seems. In spite of a Cabinet decision in October 2011 confirming longstanding intentions that there should be provision for state housing among the 3000 or so homes in the development, officials from the building and housing section of the Ministry of Business, Innovation and Employment last year deemed the commercial case for the Hobsonville project ''does not envisage'' the building of state houses.

The officials considered their decision was ''appropriate and consistent'' in part because the high land value would make for expensive state houses for which there was not high demand in that part of Auckland.

Housing New Zealand's ''customers'' would have to be ''imported'' into the area. Moreover, Hobsonville's ''peripheral'' location and the lack of local jobs did not square with National's efforts to get beneficiaries back to work.

Whither the welfare state? National has already initiated a slow, but steady shift in the provision of social housing to community-based providers.

At Hobsonville, the real reason why state rental housing was dropped was because of the Government's need to be seen to be doing something about housing affordability further up the income scale while maintaining the development's commercial viability.

The role of the State now is not to replace market mechanisms, but instead be a back-stop when the market fails to deliver.

Both major parties are using the State in different ways to develop policy which helps not so much those on low incomes, but those on low to middle incomes into home ownership. The reason? Housing unaffordability has reached that middle-income band. That is also where the great mass of votes reside.

The linchpin for Labour's plan - on to which the Greens have piggy-backed - is the building of 100,000 affordable homes over 10 years at an average cost of $300,000 each.

National might have succeeded in casting doubt on the likelihood of Labour managing to deliver at that price. especially in Auckland, but the scale of Labour's plan has gone down well with the punters. They are realistic enough to know the $300,000 figure is bound to change.

National will have to find other avenues for attack, such as Labour relying on Government borrowing to kick-start its ambitious housing programme. Labour says its scheme will become self-financing. But the real question is the extent to which the plan is subsidised by the taxpayer.

National, likewise, is keen to avoid any impression its decision to make 10% of the homes at Hobsonville Point ''affordable'' by using different designs and pricing them at less than $400,000 amounts to a subsidy. The relevant Cabinet papers are at pains to avoid admitting there are any ''direct'' subsidies, but there is plenty of evidence of indirect ones.

Along with the construction and revamp of state housing at Glen Innes, the creation of affordable housing at Hobsonville is seen by National as a model for further developments on Crown-owned and other land across Auckland.

National's problem is that Labour has upped the ante in the debate considerably. In announcing the building of a host of less than $400,000 homes at Hobsonville on the eve of last November's Labour Party conference, National must have thought it had trumped anything Mr Shearer could come up with in his leader's speech two days later.

The reverse was the case. The favourable reception accorded to Labour's policy has put the blow-torch on National to get more housing developments under way before next year's election.

That is why National is talking tough and warning local government it will not tolerate inertia when it comes to freeing up land for housing and speeding up approval of building consents.

National has to go for broke. It can rubbish Labour's scheme all it likes, but Labour's advantage is that its plan is not actually in operation, so it is difficult to judge whether it would work or not.

It is much easier to pass verdict on the Greens' new ''rent-to-buy'' housing package. The policy would see low-income families occupy new, Government-built $300,000 dollar homes without having to stump up a deposit or take out a mortgage.

Those families would instead be required to make a $200 weekly payment to the Government to cover the interest cost on the Crown capital used to build the house. The occupiers would have the option of making additional payments to purchase more and more equity in their home.

The Greens won't say how many such houses they want to build. They say the scheme would complement Labour's plan, with the Greens' share of those 100,000 homes being decided during coalition negotiations. The policy is easy to comprehend. Its generosity makes it extremely attractive. It seems to make sense.

Wrong. It is a dog of a policy. The slow repayment of capital by occupiers of the Green's scheme would require the Government going on a continual borrowing binge. There would be huge problems in terms of fairness in terms of cut-off points for eligibility.

There is no incentive or requirement to pay off capital. Occupiers would have the house for life and enjoy cheap rent at $200 a week. It is unclear whether that payment would increase and by how much when interest rates increased. It is unclear who would pay the rates along with general mainten-ance. Labour's scheme at least imposes the discipline on buyers to maintain the value of their properties by requiring them to take out a mortgage.

Labour has officially welcomed the Greens' contribution to the affordable housing debate. Labour should instead quarantine this Nightmare on Struggle Street before it taints its own policy by association.

John Armstrong is The New Zealand Herald political correspondent