Deputy Prime Minister Paula Bennett has admitted "in hindsight" the Government's response to the housing crisis has been too slow.
At current spending rates, $50 million of taxpayer money will go to motel owners and other emergency housing providers in just a year.
"We had no idea how much it was going to cost," Ms Bennett told The AM Show on Friday morning.
"We had no idea it would ever be this big. No Government had ever picked up the bill for this. No Government has ever funded emergency housing."
Asked if the Government should have done something about it earlier, Ms Bennett said that "in hindsight, you always wish you'd gone earlier".
Social agencies have been warning the Government about the housing crisis, particularly in Auckland, since around 2013. In September of that year, Newshub reported on families paying $265 a week to live in a caravan park. In 2014, social agencies told us housing was at "crisis point" and the worst it had ever been.
Since then, housing prices and rents have only continued to rise. Bernie Smith, chief executive of social housing provider Monte Cecilia, says the situation has deteriorated since then - and the worst is yet to come.
"You can't expect people who are earning $15.75 to be able to afford their rent, pay for schooling, rent and electricity," he told The AM Show.
And while it's hard for working families to get by, it's even more difficult for those with mental health issues.
"My belief actually goes back to the de-institutionalisation of mental health and other support services, where the community was supposed to care for these people. Some of these people are quite complex, and that's why we've ended up with many in a chronic homelessness situation."
Mr Smith acknowledged the Government has picked up its game of late, but "they've missed the boat" on building emergency housing, and the current policy - a black cheque for temporary housing - is just "keeping some motels open and viable", rather than solving the problem.
Labour deputy leader Jacinda Ardern said much of the blame is down to the Government's requirement of Housing NZ that it pays a dividend.
"It is galling to look at the fact that net, we have lost 2000 state houses under National," she told The AM Show.
"Housing NZ has been returning a dividend to the Government rather than building housing. The magnitude of that dividend means we could have built 5000 state houses with the amount Housing NZ has been giving back to the Government, instead of doing their job."
Ms Bennett said she couldn't give "actual numbers" on how the Government's emergency housing build was going, because she "didn't know we were going to talk about it this morning. I haven't looked at it for about a year."
Newshub.
