Labour to recycle housing funds 25 times in a decade

 The Labour Party expects to recycle the funds employed in its mass affordable home-building scheme up to 25 times within a decade to achieve its goal of building 100,000 new homes while committing just $2 billion to achieving that goal.

Economic Development Minister Steven Joyce sought today to ridicule the scheme, details of which were announced over the weekend at Labour's centenary celebrations, saying the plan was "simply fanciful" because the $2 billion revolving fund to build the homes would need to be spent 25 times over to achieve its targets.

However, Labour's housing spokesman told BusinessDesk that was exactly the intention and that Labour had carefully modelled the way the scheme would work.

"The money does get spent 25 times over 10 years, and is fiscally neutral by the end of that time," said Phil Twyford. "We've done all the modelling, and the policy was extensively consulted with the construction and development industries."

Labour intends building houses that would then be sold to their owners, targeting a cost for Auckland houses of $500,000 to $600,000 and around $350,000 in other parts of the country, with an Affordable Housing Authority charged with cutting through red tape to get mass construction under way and a skills policy to increase the size of the construction workforce to help meet demand.

The funds released by the sales would then be recycled into new affordable houses, with Labour expecting it to take three years to get to the point where it was building 10,000 new homes a year.

Labour's package was a major advance on National's "piecemeal and grudging half-measures," Mr Twyford said. It combined the new AHA, infrastructure financing through local government bonds and targeted rates, and replacement of the current urban growth boundary that artificially elevates the value of Auckland residential land with a "smarter" way of managing urban fringe growth, along with the revolving fund.

In a statement, Steven Joyce said: "The Labour Party needs to tell New Zealanders how they would build 100,000 houses in 10 years when they have allocated only enough money to build fewer than 4000".

"They would have to buy the land, get the consents, build the infrastructure, design 4000 houses, build 4000 houses, and sell 4000 houses all in five months. Not just once but 25 times. Tell 'em they're dreaming."

Labour's policy also includes a ban on foreign buyers of existing homes and a tax on gains from houses sold within five years of purchase, to crack down on speculators "flicking" houses quickly. The rule would not apply to homes sold by owner-occupiers or inherited properties.

(BusinessDesk)