In a major $3.8b programme, the Government plans to build 6400 more state houses by 2022 but Housing NZ Corp will have to borrow much of the money needed which an Opposition spokesperson described as "disappointing".

Phil Twyford, Housing and Urban Development Minister and associate Jenny Salesa, said 6400 extra state houses would be provided in the next four years, to be funded by HNZC borrowing up to $2.9b from third parties and $234.4m operating funding coming from the Budget.

"The new public housing will be built through a combination of $234.4m in operating funding from Budget 2018 and Housing NZ borrowing up to $2.9b from third parties and investing a further $900m from its operations," Twyford and Salesa announced.

But Opposition Housing spokesperson Judith Collins said the Government would not even match the previous Government's state housing provision and she was worried about Housing NZ borrowing most of the funding which would be expensive.

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"A promise of 6400 state houses over four years - that's disappointing when compared to the 6500 we were building over three years. Housing NZ will need to borrow money from third parties to pay for it. The Budget gives a contribution of $234.4m which is only a drop in the bucket. The bulk of the money - $2.9b - will be borrowed from third parties, presumably overseas banks.

"Housing NZ will have to spend $900m from its operation. So after all the talk about how the Government shouldn't take dividends from Housing NZ, this Budget is going to force Housing NZ to pay interest to overseas banks. Worse than that, Housing NZ will be competing with the private sector for funds. This Budget will deliver fewer state houses and force HNZC to add to debt levels while competing with the private developers for private funding," Collins said.

But she did support the Government's continuation of the Tamaki state house redevelopment project, "particularly since in Opposition Labour had argued against it," she noted.