The Government's announcement that it will now co-fund half the cost of new community housing is "not enough", providers say.
The Government announced earlier this week it was injecting a further $24.4 million into social housing, boosting the amount it would contribute to new builds from 30 to 50 percent.
The $24.4 million is aimed at community housing providers building new social housing. They will be able to receive an upfront grant of up to 50 percent of the value of the development.
Salvation Army social policy analyst Alan Johnson says most community providers don't have the money to pay their half, and the Government should fund at least 70 percent of the cost of the builds.
But Paula Bennett says she is confident community providers will be able to meet the required 50 percent threshold to get Government funding for the development of new social housing.
Speaking on TV3's The Nation, Ms Bennett says community housing providers can borrow the other half of development costs.
"We've got 3000 new homes coming on over the next three years. What we also want to do is grow the community housing providers - and, no, they may not have 50 percent sitting in the bank, but they can borrow that 50 percent.
"I've got providers that are ready to go, that actually have the land, have got resource consents and actually can do it with a 50 percent grant up front."
Ms Bennett wouldn't name any of the providers but says she will announce them in December.
She said there are plenty of incentives for providers to make it work.
"We're going to pay 50 percent up front, and then we're going to pay 100 percent of the rent every week at market rent levels... That is currently costing about $766 million a year, and we put another $60 million in just for the rent component that we will pay weekly, and they will own the asset.
"So for a 50 percent grant, plus a guaranteed weekly market rent from the Government, I think that they can actually make that work."