Kāinga Ora hid the fact it was using Labour candidate Arena Williams in taxpayer-funded advertising

Newshub can reveal the Government's housing developer Kāinga Ora brazenly took steps to cover up the fact it was using a Labour candidate in its taxpayer-funded advertising - risking its political neutrality.

Although it knew Manurewa MP Arena Williams was planning to run for Labour, emails show it hid the fact, choosing to act like it was unaware. 

The Minister has scolded the agency but won't say if anyone has been sacked.

Arena Williams is a rising star in the Labour Party and before politics she was already hot property - so much so that Kāinga Ora, the Government's housing developer, wanted her as a face to advertise their work, posing as a news article. 

The problem is, they knew she was running for Labour, and covered it up.

"It wasn't really about me," Williams told Newshub in June. 

When asked if she should have disclosed that she was planning to run for Labour at the election, Williams said: "Yeah, so, I did."

And yet, Kāinga Ora conspired to hide that key detail. 

"This is blundering at best, it is deceitful at worst," says National's housing spokesperson Nicola Willis. 

Official emails obtained by the National Party show they worked out that "FYI her name isn't pronounced like the word 'stadium, it's the Maori pronunciation... Learned that the hard way!"

The emails also show the department's senior communications advisor wrote: "She's understandably nervous about people perceiving this as her electioneering ahead of her campaign announcement" but "we can just act as though we don't know anything!"

Willis told Newshub: "They certainly chose to actively cover up the fact that they knew this person was a Labour Party candidate and they thought they could get away with it."

Did they ever - the senior staffer sent another email saying Williams "was worried putting herself out there in the media might suddenly seem like she's helping coordinate some publicity for herself".

"I assured her it wasn't a problem in my view and we could proceed as though we didn't know about her impending announcement," the email continued.

Housing Minister Megan Woods says it was "below the levels of professionalism that I expect as a minister".

"I operate on the maxim that once you know something you can't unknow it," she says.

Kāinga Ora has already been in trouble for hiding the fact the 'articles' were actually ads.

Newshub revealed in June it spent nearly half a million taxpayer dollars on the sponsored content.

"It didn't concern me because I still saw it as a really great story about a community that had come together," Williams says.

Initially Kāinga Ora included a paragraph disclosing her candidacy, but then pulled the mention - saying "it keeps Kāinga Ora's powder dry too!"

The agency was aware it could jeopardise its political neutrality.

"I am not comfortable with them using political candidates and I have made that clear," Woods says.

When asked if anyone lost their job over this, Woods said this was something to ask the chief executive of Kāinga Ora.

Woods' office sent an email to Kāinga Ora in August telling them she'd "reviewed the emails to be released as part of the Official Information Act response relating to an article on OneRoof". 

Her office said Woods wanted to "convey that some of the conduct reflected in the emails does not meet her expectations for how Kāinga Ora should operate". 

Woods also wanted to "emphasise that Kāinga Ora should operate on the same basis as the minister", and "once they know something, they cannot un-know it".