New Plymouth Mayor Andrew Judd says dangling money in front of vulnerable families is not the solution to the housing crisis.

Sending homeless Aucklanders to the regions with $5000 won't work, New Plymouth's mayor says.

Social Housing Minister Paula Bennett announced the scheme, which is also open to families living in state houses, on Wednesday saying there were plenty of empty state houses, affordable rentals and jobs around the country for these people to go to.

However, Andrew Judd believed the grant was a reaction to the problem, not a solution, and would not work without job prospects for these families.

Helen Harvey New Plymouth MP Jonathan Young said Social Housing Minister Paula Bennett's $5000 relocation grant is a good idea, but not for New Plymouth with its current job market.

"It's a sugar hit and not a good strategy at all - if they're going to incentivise anything, they should incentivise employers to move here."

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* Social Housing Minister Paula Bennett hits back at media over the word 'crisis

* $5000 for homeless Aucklanders?

* Rental woes have family of five living in one bedroom unit

* Tight household budgets putting Taranaki people at risk of eviction

* Limited interest in Taranaki state houses

* Marfell housing project canned

Central government hadn't communicated with the regions about the idea and there needed to be more of a plan than "dangling" money in front of vulnerable people, Judd said.

"It's a challenge to the whole country, not just Auckland," he said.

"The question is how we are going to fix it, not react to it."

Taranaki was already struggling to house and take care of its own, Young Peoples Trust social worker and counsellor Bridget West said.

People within Taranaki were living in cars or garages at times, but more commonly two families would be living in the same house in order to share the bills they could not afford to pay on their own, West said.

That brought with it issues of overcrowding and sickness and was not a good enough solution for families in need, she said.

The promise of a $5000 relocation grant was giving false hope, she said.

"For some it could be a small start or go some way to help but where's the rest of it? Where's the rest of the support that comes with that as well?"

Forcing people to relocate would isolate them from their support networks, which were just as valuable as money when it came to getting back on your feet, she said.

The money to be given out in grants would be better spent if it were given to agencies struggling under the increasing work load, West said.

"They do a really, really good job in the community, but there's not enough people and not enough money to help everyone who needs it - it's a vicious cycle really."

New Plymouth MP Jonathan Young believed the relocation grant was a good idea but admitted the region's job market couldn't support more job seekers at the moment.

"In the long-term picture it's a good thing, but currently, right now, our labour market is a bit difficult."

Young said there was "excess stock" of Housing New Zealand houses in New Plymouth, which ideally would be redeveloped for social housing or first home buyers in the future.

A plan to redevelop HNZ stock in Marfell fell over in 2014, and many of those houses had been left vacant.

"There are some houses there that would probably take a lot of money to get up to scratch."

The long-term goal was to have more people buying houses rather than relying on social housing, Young said.

"Social housing is always going to be needed and Housing New Zealand feel they do have adequate stock [in New Plymouth]."