Labour is set to challenge the Government's housing infrastructure fund by releasing its own plan to ease the housing bubble.
Leader Andrew Little has criticised the loan approach taken by National and says bonds are the way forward.
"It would allow the council to issue bonds and repay those through targeted rates. That's a much more creative and flexible way of financing future infrastructure development, rather than just more borrowing which is going to go on existing ratepayers."
He says National's plan is a "piecemeal offer" that will result in more pressure on ratepayers.
"That's classic National Party under John Key - give the appearance of doing something, make it someone else's problem, blame everybody else if it goes wrong. That's what's going to happen here."
Labour has previously proposed bond financing paid back by targeted rates, taking financial pressure off ratepayers. It is going to make a series of announcements this week outlining its own plan.
Under the Government's plan, it will borrow $1 billion which it will then lend to councils interest-free. Councils will be able to use it to pay for roads, water supplies and other infrastructure needed before homes can be built.
It'll be available to Auckland, Tauranga, Queenstown, Hamilton and Christchurch.
Prime Minister John Key however says the plan will work because the councils won't have to put it on their balance sheets as a debt.
"It's bridging finance. The council doesn't have to put it on their balance sheet, which is what they're worried about," he told Paul Henry on Monday.
"They're not doing it up front… then what happens is they get the money back from the very people buying the houses. It's a clever sort of thing."
Mr Key says there's already a construction boom happening, and the loan will accelerate that.
"If there was nothing happening, as some people want to say, why is there 24,000 more people working in the construction sector alone in Auckland? Why have we got a building boom bigger than we've ever seen before in New Zealand? Why are we building more houses than we were before? There's a lot happening."
Statistics NZ data shows construction has been rising in volume and value since 2012, and recently surpassed the pre-financial crisis peak.
"Go out to my electorate - in Kumeu they have a special housing area. The reason those 5000 houses haven't been developed is because it's not the infrastructure within the development - that's not the issue - it's attaching that infrastructure," says Mr Key.
The Property Council says the Government's billion-dollar housing scheme strips councils of any excuse for inaction.
Spokesperson Ashley Church believes it will go a long way toward opening up residential land on Auckland's fringes.
"These measures are great and council and Government showing leadership on the development of new dwellings in Auckland particular is fantastic, but they're not going to solve the problem on their own."
Mr Church says the Government's focus must now turn to the private sector.
Tauranga Mayor Stuart Crosby sees the fund as a step in the right direction.
"A lot will depend on the details, which we're not clear on yet."
Mr Crosby says councils may be concerned about the level of debt it may add to their balance sheets.
Housing Minister Nick Smith isn't ruling out having the Government take land from developers if they're not building housing fast enough.
"Urban development authorities sometimes need the authority for those redevelopment schemes to be able to make them successful," Dr Smith told Paul Henry on Monday. "We've done so in Christchurch, because we are also a pragmatic Government, and we are looking at it as a potential tool with these urban development authorities."
He says Cabinet is yet to decide whether it's an option for Auckland.
"Cabinet hasn't yet made the decision on that. That's a work in progress. All I'm simply saying is that is what we have done in Christchurch, and it has been used very successfully in big cities around the world."