National's housing spokeswoman Judith Collins says Housing NZ's move to allow drug-users to remain in Housing NZ homes is "a step too far" and sends the wrong message.
It follows comments by HNZ's chief executive Andrew McKenzie that it had moved to a 'zero eviction' policy.
Instead of referring tenants to police and evicting them for drug use, the corporation now seeks to refer tenants to addiction services to get their lives back on track, he told the Herald.
Collins said she agreed with HNZ's decision to adopt the new meth contamination standard identified by Sir Peter Gluckman after he found there was no health risk to others from third-hand meth contamination at a property.
"But allowing illegal drug users to keep living in taxpayer-funded housing while others are on the waiting list is a step too far."
Collins said drug users did need access to services to get off drugs but many were not interested in doing so.
"It should be that they get help, or they get out.
"It's not fair to taxpayers, to those on the waiting list, or to those living next door to these drug users - some of whom are children. This will send completely the wrong signal to them."
In complete turnaround in policy, HNZ is now not only tolerating illegal drug use in its properties, it is referring tenants to addiction services and other agencies that will help them get their lives back on track.
Today, McKenzie confirmed that where illegal drug use took place in its properties, the tenants would not be evicted or referred to police, it would instead help them to access the help they needed.
"At the end of last year we've moved to a no-eviction policy. The circumstances in which we will tell people they can't live in a house are very rare."
Housing Minister Phil Twyford flagged the change in policy in December and it was now being finalised.
"Housing New Zealand has stopped ending tenancies for methamphetamine contamination and not initiated any new action since November 2017 or ended a tenancy since January 2018," McKenzie said.
"It's a dramatically different approach. We're a social housing landlord. Success for us is keeping somebody in a house and supporting all those other agencies who are trying to help people, that's the change.
"These tenants are part of society and the best thing that society can do is embrace them and work out how it can help them to be stable."
All the experts HNZ had consulted on the issue had said a stable home was critical to helping people with issues such as mental health and drug problems.
"We'll find the agencies that can support you to try to help you cope with it and move away from those issues if possible rather than put you out with nowhere to live," McKenzie said.
HNZ was working with agencies such as the Ministry of Social Development, district health boards, addiction services, Oranga Tamariki, Corrections, Police and Women's Refuge.
HNZ would still not tolerate drug manufacture. "We'd obviously refer that to police," McKenzie said.
Drug Foundation executive director Ross Bell called the new approach a "huge breakthrough".
"[McKenzie] has been able to return Housing New Zealand back to the philosophy of being a proper social housing landlord where they wrap support in place.
"We were just really pleased that he recognised the role that Housing New Zealand has, the kind of tenants that they've got and their responsibility of actually looking after those quite vulnerable people," Bell said.
Housing New Zealand has been in the spotlight since Chief Science Advisor Sir Peter Gluckman released a report last week which showed meth residue in homes was not a danger to health.
HNZ's previous zero tolerance approach resulted in about 300 state housing tenants being evicted in three years for meth-related reasons, with some forced to repay costs for meth-testing and remediation.
McKenzie today apologised for that.
He said HNZ had immediately adopted the new higher meth residue levels recommended in the Gluckman report.
"We're going to adopt it now. The organisation has to use the best possible advice it has available to it. In the case of methamphetamine contamination it's been a bit of a moving goal post. But this is the latest advice and we're happy to accept that."