OPINION: The great hunt for a buyer for the Government's state housing sale continues.

First the Salvation Army turned down the prospect, saying it could not handle the numbers involved. (The Government wants 1000-2000 houses sold initially.) This was a harsh blow, as the group had been frequently cited as the sort expected to fill the gap.

Then came iwi interest – but leaders suggested they should get the houses for free, which is not what Finance Minister Bill English has in mind.

Now an Australian not-for-profit outfit, Horizons Housing, is getting a tour of the stock – it is looking at buying as many as 400 houses.

English says that's a possibility, and houses may be sold to Australian or British community housing providers, as long as they can do the job required.

The vendor is eager to sell, in other words, and the net is being cast wide. Forget Social Development Minister Paula Bennett's incantations that selling state houses will mean that "services are delivered by local people for local people". Now it is about those agencies with the skills for the task, wherever they may come from.

The overseas interest raises many questions, chief among them: why does an Australian non-profit company want to buy houses here? It's a trans-Tasman takeover bid, but without the profit motive – so what's in it for the charity?

Horizons boss Jason Cubit says he wants to expand the company, make surpluses and reinvest them into the community. He certainly speaks the language of the market, then, but it also reveals the confusion in the policy. How, exactly, will they make surpluses? By cutting back on costs like maintenance, by charging more, by getting stricter on the vulnerable?

Efficiencies, the retort will be. The company would have 400 houses and the forces of innovation behind it. But is it so plausible to believe that an Australian company can transform these ageing and bleak houses on the sort of budget that has seen Housing NZ fail? Why? What's the magic sauce?

The Government is trying, all at once, to get a good deal for itself, for the agencies who take over the houses, and for the tenants who need them.

It takes immense optimism to believe this can be done. Governments are never any good at selling their assets – the whole process of announcing sales distorts their execution, because it's politically worse for the sale to fall apart than for the government to be shortchanged. Buyers know this well.

With state houses, in any case, only a bargain price will do, because the "business model" is so weak. It doesn't matter how you cut it: accommodating vulnerable, high-needs tenants just isn't a lucrative game.

This isn't to say there shouldn't be any reforms. The Government rightly says that many state houses are the wrong size and in the wrong place. It should simply sell those and buy new ones that do meet the need.

But that's different to bringing in private agencies to run social housing – a model that rang hollow from the first mention. It has been one muddle after another so far. The Australian flirtation looks like one more.