He said this was yet another example of the Government not investing in regional New Zealand and could lead to wider social ramifications.
"I think it will lead to overcrowding.
"Unhealthy kids will cost the health system and the education system.
"The cost for child poverty in this country is between $6-8 billion. Rheumatic fever costs $2million per child and is a direct result of poverty, it's quite bad in Hawke's Bay as well."
He said a lack of state housing in the region would increase the need for people to be more dependent on the welfare system and reliant on accommodation supplement increases.
"Places like Napier will go backwards and will become a city of two halves. Society is judged by how they look after the vulnerable."
He said Labour was campaigning to increase state housing stocks and provide warm, dry homes for anyone who required them.
"There is a growing need in Auckland, I accept that, but the Government must meet the needs of all the regions across New Zealand."
Napier's National candidate Wayne Walford said the 2012 statistics used by Labour were "old, redundant and out-dated" and should not be used when talking about the future of state houses.
"Nobody is going to be displaced."
He said the National Party policy wanted to encourage the housing sector and responsibly manage state houses.
"The composition of the state houses will change but I am confident Napier will have the same, if not more, state houses."
Housing New Zealand chief executive Glen Sowry said HNZ's aim was to ensure there were enough of the right types of state homes, in the right places and to meet demand.
"If the demand is there, we will aim to have properties available.
"The configuration of our houses has not kept pace with the changes that have happened in New Zealand over the last few decades.
"We have too many houses in provincial New Zealand, where demand is lower, and not enough in major cities."
Mr Sowry said Hawke's Bay's demand for state housing was fairly stable and not as high as in many areas, such as Auckland.
"We are investing in Hawke's Bay through new redevelopments, such as our new seven two-bedroom units in Maraenui.
"We do know that in Hawke's Bay we need more smaller properties, more larger properties and fewer three-bedroom properties.
"We wouldn't be doing our job properly if we weren't constantly monitoring demand and planning for the future. This is part of managing the $16 billion state housing portfolio on behalf of taxpayers," Mr Sowry said.
