Mayors in the regions say the Government didn't consult with them before announcing their towns will be taking in some of Auckland's homeless.
Social Housing Minister Paula Bennett on Wednesday said the city's homeless and state housing tenants will be offered up to $5000 to move elsewhere.
Homelessness is on the rise in Auckland, with the Salvation Army and City Mission saying it's reached levels never seen before. Rents have increased 25 percent in five years, rising well ahead of inflation, and average house prices are now 72 percent above what they were at the last peak, in 2007.
Gisborne Mayor Meng Foon says he only found out while watching the news last night that Gisborne was one of the towns the Government expects to absorb some of Auckland's homeless.
"We don't want any more homeless people in Gisborne. We've got a few already living under bridges due to mental health, drug and alcohol issues," he told Mark Sainsbury on RadioLIVE.
"What we want is actually people that are skilled, that are looking for work, that are wanting to work."
He says there is also a lack of available state housing in Gisborne, and most of what there is needs serious attention.
"A lot of the windows are boarded up, and they don't even meet the housing standards. If they are thinking about this policy, it will be more than $5000 the Government will need to spend. I think they'll need to spend quite a bit of money getting the empty state homes into a state where people can actually live."
Whanganui is another town Ms Bennett singled out. Mayor Annette Main told RNZ there are only "half-a-dozen" state houses free, with the rest already occupied or undergoing repairs.
The city's private rental market is also stretched. Ms Main says last year's floods halved the available stock, and many properties are still not insulated to the 2008 standard, which is likely to be the legal minimum by 2019.
She says the policy is short-sighted.
"It pretends that these families don't have any social networks, any family networks, any kind of connections to where they're living. It just assumes that they're floating and ready to move to the next place."
Unemployment is also a concern. In Whanganui it's 6.9 percent and in Gisborne, 10.9 percent -- almost double the national rate.
Mr Foon says Gisborne has more than 100 job vacancies but they're for "skilled, semi-skilled, professionals".
"We want entrepreneurs, we want people with great attitudes willing to do something to contribute to the economy of Gisborne and the East Coast. We don't want more homeless people."
Ms Main says the $5000 on offer simply isn't enough to relocate people with otherwise limited means.
"You have to come down, check out a place, look at schools, look at housing -- it's not a lot of money and it's not a great incentive," she says.
"They would need ongoing support and while we're willing to provide that... the money does need to come from the Government if it's trying to solve an Auckland problem."
Mr Foon says many homeless Aucklanders don't even want to live in a house, so they can't be helped.
As for those who do want a house, there are already 3500 families on the Housing New Zealand waiting list -- 1240 of those in Auckland. Only 201 of the existing 2500 empty houses across the country are fit for habitation, according to RNZ.
Mr Foon is hoping to hear from Ms Bennett today.