By Geoff Simmons*

There’s been discussion lately about the Labour Government slipping through a loophole in its self-imposed debt target. Rather than borrow $2.9 billion itself to build new state homes, it’s instructed Housing NZ to borrow the money on its own.

It’s a clever trick, to be sure, because it puts the money on Housing NZ’s books instead of the Government’s. Never mind that the markets will see through it and their borrowing costs will be higher, the Government is only concerned with sticking to its net debt target. But here’s a better idea: why don’t we get rid of Housing NZ entirely?

Personally, I’m less concerned with whose books the debt sits on and more concerned with the outcomes it delivers. I think we can give our low-income residents a much fairer deal by replacing Housing NZ with not-for-profit, community-owned housing associations. This is a common policy overseas.

Here’s how it would work. We’d split Housing NZ up into regions. Each region would become a housing association, charged with delivering affordable housing in that region.

The first advantage of this approach is much more flexibility. It’s easier to react to things and get things done when you’re a smaller, regional association than when you’re beholden to Wellington bosses.

They’d also enjoy more trust than Housing NZ, because they’d be community owned. This doesn’t make them any cheaper to run but it does give them distance from Government. Overseas that means they often end up doing a better job.

Yes servicing debt would be more expensive for community housing than the Government. But there are ways around that. For example, during the set up phase Government could offer to underwrite the community housing sector borrowing from the private and philanthropic sector. That would really get the housing sector cracking.