Labour leader Andrew Little says Housing NZ should become a ministry and focus on helping people, not paying the government millions in dividends.

Housing New Zealand will not pay $100 million in dividends to the Government over the next two years, following pressure from Labour and the Greens to stop treating it as a "cash cow".

The decision has not been finalised, but Finance Minister Bill English has signalled it is almost inevitable - while denying the move is a U-turn.

Last September, it was revealed Housing NZ would pay the Government a $118 million dividend for the 2015/16 financial year - the largest in five years, leading to criticism from those who said the money should be ploughed back into building more houses.

David Unwin/Fairfax NZ. Associate Finance Minister Steven Joyce has hinted Housing NZ will not have to pay a dividend to the Government for the next two years.

In Budget 2016 documents released in late May, the Treasury estimated Housing NZ would pay dividends of $54m and $38m over the next two years.

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The Government has consistently argued that the dividend is necessary to "place a discipline" on Housing NZ and ensure it uses its resources well when building new houses.

CAMERON BURNELL/FAIRFAX NZ Labour leader Andrew Little said Housing NZ was being treated as a "cash cow" by the Government.

However, Associate Finance Minister Steven Joyce said on social media that it would not have to pay a dividend for the next two years.

@Brycepearce @ShakingStick @nzlabour Housing NZ is already spending $2Bn over next 3 yrs building & buying houses - & no dividend nxt 2 yrs — Steven Joyce (@stevenljoyce) July 10, 2016

English said it had become clear as Housing NZ updated its long-term plan that it would require more money to ramp up its building programme.

No final decision had been made on whether a dividend would be paid, as there were a number of ways to fund the extra work, but it was likely Housing NZ would keep the money.

English denied opposition pressure had forced the Government's hand, saying it was part of long-term planning.

"It's nothing to do with Labour and the Greens. This is a $20 billion entity - you don't come up with capital plans for the next five years because Labour puts out a press release."

The dividend figures in the Budget were based on old information from Housing NZ, which was being updated.

DIVIDEND 'NOT STEALING FROM STATE HOUSING'

English said the decision was not a U-turn by the Government, which still saw the dividend as "a measure of efficiency and effectiveness", rather than an obstacle to building more houses.

"We don't accept that taking the dividend is stealing from state housing, because the dividend is not the constraint on what gets built...

"If there was less dividend, we'd just put in more capital - it's not driven by the availability of the cash."

English said the Government was talking to Housing NZ about giving it more money, although the corporation needed to finalise its plans first.

The revelation comes after Labour joined the Greens in calling for the Government to scrap the dividend and instead reinvest in in Housing NZ.

'IT'S A FLIP-FLOP, IT'S A U-TURN'

Labour finance spokesman Grant Robertson said the change of heart was "desperate and panicked", given the dividends had been included in May's Budget.

"To suddenly arrive at the conclusion that they shouldn't take a dividend is a remarkable transformation from where they've been before - it's a flip-flop, it's a U-turn."

Robertson said he was sceptical about whether the Government would keep its word, given it repeatedly defended taking the dividend in the past.

"Their record has been to take hundreds of millions of dollars out of Housing New Zealand, and the temptation for them...given their record [it] would be difficult for them to restrain themselves."

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