Housing New Zealand will spend $2 billion to build and buy more than 4000 new state houses after an apparent Government backtrack.
At least 3200 of those properties will be in Auckland, the state housing corporation confirmed today.
It comes as the Government decides to forego its dividend from Housing New Zealand, which would have be worth $92 million over the next two years.
The dividends were included in the May Budget, but ministers revealed yesterday that they would no longer be paid.
Finance Minister Bill English told Radio New Zealand this morning that a dividend was less important than the corporation expanding its housing stock.
"That's the bit that matters. If we are going to have over $1 billion in investment, the $50m dividend is neither here nor there.
"When they've got a big capital investment programme, you don't take the dividend because they keep those earnings and use them, in this case, to build more houses."
In the past financial year, HNZ built or bought 871 state houses.
Its rate of construction will now be ramped up to around 1300 state houses this financial year, 1500 the following year, and around 2000 the year after.
Around $1.8 billion will be spent on new houses, and another $200m to $300m will be spent on buying existing properties.
Over the next two years, Housing New Zealand will also build another 800 affordable houses to be sold on the open market.
The corporation's massive investment plan is still in draft form, but is expected to be signed off soon.
It came to light yesterday when Associate Finance Minister Steven Joyce tweeted that Housing New Zealand would not be giving a dividend to the Government.
Labour's finance spokesman Grant Robertson said the new building programme was a concession that the Government's state housing policy had failed.
"They've tried to work on projects to sell off houses, to get other providers to do the building.
"All of that has failed, and now they're facing this enormous deficit, which requires a major building programme."
He urged the Government to abandon its policy to sell thousands of state houses.
The Government is transferring up to 2000 Housing New Zealand properties to non-government providers, beginning in Tauranga.
State houses in Invercargill were also set to be sold, but that plan was put on hold after the sole provider pulled out.
New state houses:
• 2015/16: 871
• 2016/17: 1300
• 2017/18: 1500
• 2018/19: 2000