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Building scheme needs private sector support - Shearer

Published: 10:59AM Sunday November 25, 2012 Source: ONE News

Labour Party leader David Shearer says that if his KiwiBuild scheme goes ahead it will initially rely on funding from the private sector.

Speaking with TV ONE's Q+A programme, Shearer said that his ambitious house building proposal will aim to help kiwis into their first home by building 100,000 "affordable" houses over a ten year period.

"Basically, we will go out and raise the money through bonds and use that money to build houses through the private sector. When we sell the houses, that money comes back into a pool, and that goes around and we build more houses again.

"So it's effectively a continual cycle of building, selling and continuing to build again," said Shearer, adding that any margins made on the houses would be used to pay back the bond.

He said that the proposed scheme is aimed at getting low income earners into their first home.

"We've got hundreds of thousands of kiwis who would like to own their own home, but can't get on that first rung of the ladder.

"Obviously in Auckland it will be possibly more expensive than in other places, but we believe that we can build houses there," said Shearer.

The Labour leader added that 10,000 homes should be built in Auckland each year, "but we are currently building 3000 and only 5% of those houses are actually in the affordable houses range."

"So what we are doing in building at the upper end but not building at that first level that allow people to get into their first home," he said.

Shearer added that Labour's proposed housing package is also focused on making sure "rental properties are actually up to scratch so there is going to be a guarantee in and around rental homes".

In response, Political Scientist Raymond Miller told Q+A that he thought Shearer's proposal was a good idea.

"I think it's a very good idea, we do have a crisis in housing in New Zealand. The market is not responding right now, and clearly there is a need for a lot of new houses to be built, over the next few years," he said.

However, Miller added that he was not sure that it was fair to ask low income earners to pick up such a large mortgage.

"Is it even possible for people on low incomes to be able to pick up a mortgage of say $250,000 to $300,000? It's quite a big ask.

"The other thing is... do we have the skills in New Zealand? At the same time as dealing with Christchurch - who are also producing 10,000 new houses a year," said Miller.

Similarly, Fran O'Sullivan said that it would take a lot of training for the building industry to "gear up" for such a scheme.

"To do this, I don't think you can kick it off immediately. I think there will have to be a period of up skilling. It may be that they will have to import workers from elsewhere in the world, as is happening with Christchurch," she said.

But Prime Minister John Key told Q+A that he thought Shearer had unrealistic expectations for building low-budget housing in main centres.

"I'm sorry, but you won't find a section in Auckland for $50,000."

Instead, Key said that the Government is focusing on releasing land as means of aiding the building of new houses.

"We want to reform the Resource Management Act so that our property developers aren't in the position where they are spending a decade to trying to get an approval for a property," he said.