English hounds housing whipping boy

Power Play - Auckland Council has been the government's 'housing' whipping boy for some time.

But this week the rhetoric ramped up a notch with the Finance Minister putting the council "on notice".

Even though Labour wants the same thing - more housing built beyond the current boundaries, and height and density restrictions loosened - its language is still much more careful: "we are going to help them (Auckland Council) overcome the barriers that they seem to have currently".

Ask a government minister about the problem with the Auckland housing market and the default answer is Auckland Council's inability or unwillingness to free up more land to build new houses.

A simplistic approach, but one intended to divert the blame from central to local government.

It also fits with the government's mantra that the solution to housing unaffordability is to increase supply, rather than dampen demand, but Aucklanders in particular would hardly view that approach as having been a roaring success.

The government has dabbled here and there with policies: allowing first home owners access to KiwiSaver funds for a home deposit, proposed changes to the Resource Management Act, and the 'bright-line test', or a tax on capital gains from some houses bought and sold within two years.

The Reserve Bank also deployed loan to value ratios in 2013 that slowed the growth of house prices for about a year, particularly in the market for houses costing less than $400,000. Those restrictions have been eased around the country but remain in Auckland, alongside specific lending restrictions for investors.

The Reserve Bank is currently gathering more information about a possible loan to income ratio, under which people could only borrow a certain amount in proportion to their income, and like loan to value ratios, would need approval from the government.

Prime Minister John Key said this week increasing supply cannot be "solved through more Budget funding" so the government's focus would be "squarely on continuing to work with councils to get more houses built."

His deputy Bill English was more blunt - warning Auckland Council the government had a clear expectation it would allow for adequate supply in its Unitary Plan, which Mr English said would not be possible with the 1993 boundaries still in place.

In the next breath he said the government was prepared to step in if needed and the council should consider itself "on notice".

And in a rare outbreak of unity with Labour, Mr English said the fact Labour agreed the council needed to make changes was a show of political will from Wellington.

The 'piggy in the middle' is Labour MP for Mount Roskill Phil Goff, who is also an Auckland mayoral candidate.

He is treading a fine line between not appearing to be at odds with his caucus colleagues, and alienating Auckland ratepayers who may not welcome the bolshy talk from central government politicians.

Mr Goff is no stranger to tricky politics, and has been at pains not to specifically disagree with statements made by his fellow Labour MPs, while pointing out the potential problems with their approach.

One of the challenges he has raised has already been demonstrated through the process of establishing Special Housing Areas, an initiative between the government and the Auckland Council that allows consenting to be fast-tracked in those designated areas.

A row between the two parties broke out over who would pay for certain infrastructure for more remote housing areas, a matter that had not been addressed properly before the roll-out started.

Those tensions neatly encapsulate the current debate - how much influence should central government have over policies Auckland Council may end up having to carry out, leaving ratepayers to foot the bill, and ultimately, whose view should take precedence?

If the comments coming out of the Beehive this week are anything to go by, the government has already made up its mind.