Opinion: Government's pragmatism trumps principle in Budget

One of the reasons why governments slowly decay and die is that the longer they are in office the more prone they become to ugly pragmatism and compromise of principle.

As idealism evaporates in the day-to-day struggle ministers increasingly face to keep their heads above water, the voting public begins to wonder whether the governing party really believes in anything beyond maintaining its grip on power and accordingly start looking for a fresher, unsullied alternative.

It is premature to diagnose the National minority Government as being so afflicted - and too early to suggest Labour is near conveying the authority of a government-in-waiting.

But National displayed some such symptoms in Thursday's Budget, most noticeably in housing policy, the document's most crucial component, and in its minister and his complex personality.

The emphasis on housing saw National mix unrelenting pragmatism with ideological fundamentalism - which not coincidentally pretty much describes Nick Smith's belief system.

National's attempt to play catch-up with Labour on housing affordability is becoming ever more interventionist.

The negotiation of ''housing accords'' between central and local government and subsequent designation of ''special housing areas'' where resource consents for new housing developments will be ''streamlined'' - in other words approved without fail within 60 working days - certainly sounds like something out of the Muldoon era.

More so given that where an accord cannot be reached, central government will have the right to exercise these more permissive consent powers anyway.

It all has the ring of desperation about it. Having lost faith in market forces to deal with the problem of affordability, National's problem is that its latest plan still lacks the simplicity of Labour's promise to build 100,000 homes over 10 years - a policy which is popular because people want to believe it can happen.

That is a bridge too far for National. The party has anyway devoted considerable effort to trying to shoot down Labour's claim to be able to build such homes for around $300,000 in Auckland. National would look silly if it now tried to replicate Labour's plan.

National's stance on affordable housing is in marked contrast to the one it has taken on the provision of state-funded social housing where it seems to be driven instead by ideological forces towards reducing the role of the State.

National and state housing have always been uncomfortable bedfellows. National opposed the state house construction programme initiated by the post-Depression Savage government of the 1930s, arguing it marked the first step towards the ''nationalisation of property''.

As part of Ruth Richardson's onslaught against welfarism, the party introduced a more commercial approach to the management of state housing in the 1990s, setting up Housing New Zealand as a state-owned enterprise and introducing the accommodation supplement and market rents.

The current National Administration has moved more cautiously, but the direction in which it seems to be heading appears to be taking it towards quite a radical shift in the delivery of public housing, including establishing a new regulatory agency.

National's current thrust is to contribute more and more taxpayer funding in favour of community housing groups and voluntary organisations. The latest step is the extension of income-related rent subsidies to community housing providers.

Dr Smith has described such moves as a ''substantive shift'' in direction. Labour and other opponents are calling it ''backdoor privatisation'' or ''privatisation by stealth''.

Housing New Zealand has been increasingly shorn of a policy role with its social housing unit having been shifted to the Department of Building and Housing on the grounds that policy and operational functions should be clearly separated from one another.

The Budget deprives Housing New Zealand of another function by shifting the assessment of people's housing needs to the Ministry of Social Development.

Labour agrees this makes sense, given the ministry's operational arm, Work and Income, already assesses people's other assistance.

However, the suspicion remains that Housing New Zealand is being progressively shed of functions and will be left with the sole task of managing the State's housing stock - a job which ultimately could be farmed out to the private sector.

At the same time, National has taken a tougher stance on eligibility for state housing, firstly, by culling the waiting list, and second, by reviewing tenancies to check whether the occupants can afford to shift to private sector-provided rented homes. This originally applied to new tenancies signed after July 2011.

The reality is that the community sector is not able to take full advantage of the extra funding National has made available in this and other recent Budgets.

National's advantage over its opponents is that - with things like reviewable tenancies - it can argue that its policy is helping those in need rather than feathering those who would otherwise enjoy a state house for life when they do not need such assistance.

It all makes National look rather schizoid. The party's differing approaches to housing affordability and the provision of social housing could be seen as horses for courses. It also suggests when the pressure goes on to deliver - the case with the former and not the latter - principle rapidly goes out of the window.

- John Armstrong is The New Zealand Herald political correspondent.

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