My husband is on 461 visa. Will he be able to apply for a permanent visa after living in Australia for two years? If not, can he renew his visa as long as we stay there? I am a NZ citizen.

He can continue to renew this visa as long he is in Australia for at least 2 years out of every 5: http://www.immi.gov.au/migrants/family/461/how-the-visa-works.htm

I believe he would need to apply for a separate permanent residency visa to stay permanently, but you'll need to check this with Australian Immigration - they are very helpful with questions like this if you call them on 131 881.