His so far carefully sequenced steps will ultimately see the dominant entity in the current market, Housing New Zealand, likely disappear.
Those in need of social housing will be assessed by the Ministry of Social Development. If they qualify, the market will provide them with a house. Or so English intends.
As with National's welfare reforms, English has been the back-room force driving this major policy change, leaving other ministers to front it. Housing, however, may be where he wishes to leave some kind of legacy, especially if this is his final term in Parliament.
He seems to have a particular ideological aversion to the concept of state housing alongside a wish to get the near $19 billion of housing stock managed by Housing New Zealand off the Government's books.
The reform is thus very much English's baby. It is also English's big experiment. And it could yet go horribly wrong.
As it is, this revamp of social housing could easily cut right across the Prime Minister's efforts to demonstrate National is serious about tackling child poverty.
The Children Commissioner's expert advisory group, which two years ago produced the most comprehensive analysis yet of child poverty in New Zealand, identified housing standards as a critical factor.
Moreover, addressing the housing situation for children living in poverty was the top priority of those who provided feedback on the expert group's initial report.
The group noted children in poverty frequently lived in poor quality or overcrowded houses, which were linked to the spread of infectious diseases including respiratory infections, such as childhood pneumonia, rheumatic fever and meningococcal virus.
Overcrowding also affected children's mental health, social well-being and performance at school.
Yet, the message the public is picking up from English is that the Government is no longer interested in replenishing the housing stock managed by Housing New Zealand, whose value to National as a state agency instead resides in the sizeable annual dividend produced by the corporation at the behest of English and his Cabinet colleagues.
What English and the Treasury are seeking to do is establish a social housing market.
The very large obstacle to achieving that is the near monopoly of Housing New Zealand which manages around 69,000 homes on its books out of a total of about 85,000 in the social housing sector.
If that market is to work effectively, that monopoly must end. But community housing providers, such as the Salvation Army, simply do not have the capital to purchase large numbers of units to compete with Housing New Zealand.
Community Housing Aotearoa, the umbrella group representing private providers, has flagged a number of initiatives for raising large amounts of cash, including issuing housing bonds. But it is also wanting the Government to come to the party big-time financially.
The private providers have English over a barrel. They know he will have to hand Housing New Zealand stock over to them at a substantial discount to its true value to entice them to enter the market in enough numbers to make a real difference.
In a Cabinet paper which is undated, but appears to have been written in the past year, the Treasury warned that even with providers getting the income-related rent subsidy, "low returns from social housing provision may not cover the full cost associated with some tenants as well as the cost of capital".
That might be enough to prevent new providers from entering the market or existing ones expanding their provision. One way of avoiding that was to explore "how we can unlock the potential of Housing New Zealand's asset base".
The Treasury suggested this be done by setting up an "independent transactions unit". Reading between the lines, the unit's task appears to be to drain off money which would otherwise go to Housing New Zealand and use it to help fund the private providers.
All this presents a political problem for English. The shift to private providers already lays him open to charges of privatisation by stealth. What makes things worse in this case is that with this privatisation, the taxpayer, who is normally on the receiving end of a tidy sum from the proceeds of asset sales, may well end up losing money.
It must be said that things are still a long way off reaching that point. A lot of decisions still have to be made.
Housing New Zealand's fate is now indeterminate. It will most likely survive until the next election simply because it will be difficult to run down its inventory within three years.
But it has been gradually stripped of its functions and it is not inconceivable that it will be wound up and the management of what is left of its housing stock contracted out to the private sector.
Overall, however, the reform gets more and more bizarre. Essentially, a market is being set up and organisations that cannot otherwise afford to enter it are being subsidised so they can enter it. Is this the Treasury's new take on market economics? Whatever, the taxpayer is the loser. State housing was not broken so why did it supposedly need fixing? But then in this case, ideology rules, okay.
Debate on this article is now closed.
