Refusal to back down on social housing policy provides ammunition for Opposition to harass Finance Minister.

Bill English's willingness to allow an Australian housing provider to buy up to 500 New Zealand state houses veers perilously close to allowing blind ideology to get the better of political common sense.

It is irrefutable evidence that the Finance Minister's radical experiment in creating a market in the provision of "social" housing to the poor and less well-off is simply not working, despite he and his advisers from the Treasury punting it would - at least in theory.

Their model - designed with the specific purpose of ending the monopoly on the provision of state housing enjoyed by state-owned Housing New Zealand - has relied on a high take-up by not-for-profit social agencies acting as community housing providers in place of that government corporation.

However, organisations like the Salvation Army have been cool on expanding their role in providing such accommodation.

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That has left English with two choices. He could accept that the policy is seemingly unworkable and drop it. That would be embarrassing for someone who has been trying to get the new model up and running for the best part of four years.

He has, instead, decided to press on regardless and allow foreign interests to buy houses to help create a "market". That he is refusing to give up suggests that he believes he has too much political capital invested in the project to allow it to fail.

English's reluctance to quit the whole idea is also driven by strong ideological motives on his part. The reform of state housing is part of what he last week acknowledged was "incremental radicalism" as against another approach to centre-right reform which he called "crash or crash through" and which involved initiating rapid change.

So far, the incremental approach has partly blunted Opposition charges that state housing reform is all about privatising social assistance.

Allowing a foreign element to buy part of the taxpayer-funded state housing stock on the cheap, however, not only permits opponents to milk the privatisation argument to far more effect. It also enables them to push political buttons on an equally emotive issue - foreign ownership.

Combine the two and the Opposition has a lethal combination with which to ping National big-time.

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