Prime Minister Jacinda Ardern is rejecting National's claim that Labour undercosted its KiwiBuild policy by $18 billion.
"We have always said that the $2 billion that had been set aside is to kick-start the KiwiBuild programme," Arden told media this morning.
She said that money was to enable the Government to "get going on intervening in the housing market, which has clearly failed".
"As we build and sell, funds go back into the KiwiBuild pot – we're also partnering with others in order to develop the programme."
Ardern said the Government had been open with the fact it would be partnering with developers and others to deliver the full scale of KiwiBuild.
National has claimed Labour undercosted its flagship KiwiBuild policy to the tune of $18 billion while in Opposition but Housing Minister Phil Twyford has also denied that is the case.
A Ministry of Business, Innovation and Employment (MBIE) KiwiBuild business case, prepared in April – released under the Official Information Act – showed Labour's pre-election KiwiBuild funding promise to implement the policy was nowhere enough to build 10,000 homes a year.
Before the election, Labour promised to deliver 100,000 KiwiBuild homes over 10 years – 10,000 a year.
This would be funded by a $2 billion capital injection, which would be recycled as the houses were sold, then returned to the Crown at the end of the KiwiBuild programme.
Midway through this year, the Government amended those figures to 1000 homes being built in the 2019 financial year, 5000 in 2020 and 10,000 in 2021.
That figure would climb to 12,000 per year from the 2022 financial year onwards.
But the MBIE business case study said $2 billion was simply not enough money to provide 10,000 houses a year.
"$2 billion is insufficient working capital to meet the target of 10,000 homes per annum (on an optimistic average three-year recycling of the capital, only 1000 homes could be built per year)" the document said.
This advice assumes the Crown would be building all the KiwiBuild houses itself.
The document went on to say the Government would need to leverage "other parties' capital in order to achieve its goals".
National Leader Simon Bridges said as Labour's pre-election policy was for the Crown to build the homes, MBIE's data shows Labour undercosted KiwiBuild by $18 billion.
He said the $2 billion Labour had promised for the Crown to build 10,000 houses a year would only be enough to build 1000 homes and therefore the policy had been undercosted.
The promised funding, according to MBIE, would mean a 9000 home shortfall and the estimates to reach 10,000 homes a year were $18 billion off, Bridges claimed.
Because of this, he said the Government shifted its focus from building KiwiBuild homes to underwriting private developers to build them.
"Labour had nine years in Opposition to come up with policies. It's unbelievable that one of its flagship policies that it campaigned on in the election was miscalculated by such a huge amount."
He said rather than increasing the budget tenfold, Labour shifted the policy from "KiwiBuild to KiwiBuy."
In May, the Government unveiled its buying off the plans initiative, where the Government underwrites developers to build KiwiBuild homes.
Twyford revealed 800 – or 80 per cent – of the KiwiBuild homes in the 2019 Financial Year would be bought off the plans. That number jumps to 2500 in 2020 and 4000 in 2021.
An MBIE document, detailing KiwiBuild's buying off the plan scheme, said: "There is insufficient funding for the Crown to deliver all 100,000 KiwiBuild dwellings by itself."
At the time, Twyford said the document was poorly worded.
Now Twyford has denied Labour undercosted the policy before the election.
"It has always been Labour's plan to work with builders and developers, and in turn leverage private investment, to build KiwiBuild homes."
He pointed to the party's Comprehensive Housing Policy launched in 2016.
"Labour's Affordable Housing Authority will have two chief functions – acquire land for housing, including Crown land, and partner with the private sector, councils and iwi to create housing developments," the policy said.
Twyford said: "We knew then that we would need to use the best of public and private sector expertise to work with developers to cut through the red tape, with fast-tracked consenting so it can get on with building the houses we need."
He said buying off the plans had been a part of the KiwiBuild programme for years.
In the MBIE document, it was noted that buying off the plans scheme was one component of a wider KiwiBuild programme, which also includes existing Crown developments, the Crown Land for Housing programme, and establishment of an Urban Development Authority.