The government plans to build 100,000 ‘affordable’ houses in the next 10 years.

How much greater is the housing stock likely to be in 10, 15 or 20 years as a result?

That is an analytical question. At its heart is the question of how many dwellings would be built anyway. The future housing stock is only larger to the extent of any difference.

Macroeconomic forecasters, including the Treasury, the Reserve Bank and the New Zealand Institute of Economic Research, are having to address this issue when they update their forecasts for residential construction.

The Treasury’s current verdict can be seen by comparing its pre-election projections for residential construction with those in its May 2018 economic and fiscal update. Both show strong growth. The May 2018 one is a little stronger, but the difference is not major.

It will be interesting to see how the other forecasters compare.

There are two major reasons for thinking a modest effect is sensible.

The first is short-term – capacity constraints. Newspaper headlines already scream of a shortage of construction capacity. A builder working for KiwiBuild is a builder not constructing someone else’s home. The short-term ‘crowding out’ of KiwiBuild could be close to one for one.

The second is long-term – demand. In the long-term the limiting factor is not industry capacity, it is price. Ridiculously high prices limit demand. The industry will not knowingly build houses for which no buyers can be found.

Get prices down and there will be more buyers. The industry will build more to satisfy the increased demand, even if government builds nothing.

Government could reduce prices by increasing land supply. This is politically difficult, but vital for overall community wellbeing.

So what was the spat with MBIE this week? Well, MBIE’s publicly-released document dated 15 May essentially assumed away either the capacity or price constraint issues.

The Minister of Housing seemed to interpret MBIE’s assumptions as plausible conclusions, lambasting Treasury for its analysis in comparison.

But who knows what MBIE really thinks about the issue - assuming it allows itself to think? 

And does this government not want the public service to do its best to provide it and the public with impartial professional assessments of policy proposals?

Ideally the government would have asked Officials for a competent cost-benefit assessment before setting out to spend $2 billion building 100,000 new homes. So where is it?