KEY POINTS:
The Government is planning a new state agency based on an Australian model to oversee the development of large-scale private housing developments and boost the supply of cheaper housing.
It will also make an audit of publicly owned land - it has started in Auckland - to identify
land that could be used for new urban housing.
Prime Minister Helen Clark says the move will require enthusiasm from developers and local authorities.
And she warned against expectations of an instant fix.
Housing was the biggest item in Helen Clark's formal statement to Parliament yesterday.
The other big-ticket announcement was that the hundreds of voluntary sector organisations, such as Barnardos, which perform social services on contract to the Government will be fully funded.
They are now paid for 60 per cent of the job.
That policy will cost $192 million for four years.
Helen Clark told the Herald last night that the plan to increase private supply at the lower end of the housing market will not contribute to a further drop in the housing market for current home-owners.
"Not as long as you've got growing demand for homes."
The net population growth this century had been quite significant and she did not see it decreasing.
"The huge pent-up demand is at the starter end of the market."
The policy was aimed at increasing supply at that end of the market, she said.
Asked when she hoped to see the effects of the new policies, she said: "It's going to be a question of moving fairly fast on exciting local government and the private sector about models such as urban development authorities, identifying land that can be used."
But she added: "These are not short-fix issues."
She said the pause in the rise in house prices was very welcome, but now was the time to work on increasing the supply of housing.
Officials had advised her that 18,000 too few housing units a year were being built.
They had also warned the Government to be very careful that any intervention did not increase demand and contribute to house price rises.
The Government's shared equity scheme will start in July.
It will effectively give qualifying first-home owners a no-interest loan up to 30 per cent of the value of the house. Helen Clark said Labour had no qualms about using private-public partnerships in housing, or in being associated with private property developers.
The Hobsonville and Tamaki redevelopments announced last week were private sector-public partnerships.
Labour had a history of working with the private sector going back to Fletcher Construction's involvement in the first state houses.
Helen Clark said she had wanted to convey through her speech that Labour was "a safe pair of hands but we are not boring".
But National leader John Key said her speech was "vacuous" and that New Zealanders had stopped listening to the rhetoric.
All people could say after the Labour Government was that they had greater debt and that more of their friends lived in Australia.
New Zealand First leader Winston Peters flourished a large picture of Mr Key having a hongi at Waitangi with Tame Iti and said that was National's idea of "tough love".
Greens co-leader Jeanette Fitzsimons said election year had started with an old political recipe, appealing to greed and fear - "greed for tax cuts, and fear of violent youth".