Finance Minister Bill English has gone offshore in his quest to sell some state houses to providers of "social housing". The term covers state-paid accommodation for people with disabilities and other high needs along with those who have difficulty affording or being entrusted with tenancies in the private sector. The fact that he is inviting interest from Australian and British providers indicates he no longer entertains much hope that charitable organisations in this country might rise to his challenge.

Some of them already provide emergency housing. Mr English has tried to entice them to operate on a much larger scale, partnering with commercial investors if necessary to buy state houses and compete for Government contracts. The one he cited most was the Salvation Army. It has decided to stay as it is, as has the Methodist Mission Aotearoa. If there were any local organisations lining up for large-scale social housing we would not now be hearing about the likes of Horizon Housing from Queensland.

If there is anything more politically contentious than a state asset sale, it is a foreign buyer. As if the Government did not face enough criticism over the suspected level of foreign investment in private housing, it is now prepared to sell state houses offshore and see any profits from its funding contracts go overseas.

The Labour Party is aghast. It does not share Mr English's dim view of Housing NZ's performance in this area of need and can see no reason to sell any state houses, let alone to foreign interests. Public opinion is probably with Labour on this. The whole scheme has the ring of a theory dreamed up by officials in the Treasury. But if Mr English can make it work, no harm will be done. Social welfare schemes have been provided for many years now by non-government bodies that compete for public funding. No obvious principle precludes social housing being provided the same way.


Competitive contracts enable the Government to stipulate terms and targets that have to be met if the organisation wants to survive. Those are much harder to impose on a government department or agency such as Housing NZ where state service job protection tends to prevail. Competitive contracting for publicly funded programmes is probably the least secure of all employment since the business has just one customer and that customer is prone to sudden, capricious changes of policy.

That risk is probably the reason the Salvation Army and other charities have told Mr English they are not interested. They would be taking on responsibility for a great deal of property with no certainty of income beyond the term of the contract. The dice is loaded in favour of the Government, which is to say, it favours the public interest.

If Mr English can find foreign social housing providers accustomed to operating this way and keen to tender for contracts in this country, he should invite them to do so. There should be no resentment of public money going offshore if New Zealand is receiving a good service for it. If he makes this scheme work, our most vulnerable citizens could be better housed.