Concerning advice had prompted the government to "get to the bottom" of what is happening with Kāinga Ora's debt, the housing minister says.
An independent review of the government's social housing landlord was announced on Monday.
It will be fronted by former prime minister Sir Bill English who will report back to government by the end of March.
It would cover Kāinga Ora's financial situation, procurement and asset management.
Housing Minister Chris Bishop told Morning Report the government had received "concerning advice" from Treasury and Kāinga Ora's debt was expected to rise to $29 billion by 2033.
Bishop said it was "really important" that the agency ran efficiently and effectively.
"We want to get to the bottom of what is happening inside the company," he said.
"They are not efficient at building new social houses which we need."
Bishop said money was not the problem, as it had been given billions in the past six years, but it had gone on a borrowing and spending spree.
"The problem is the way they run themselves and that is exactly why we have commissioned this review."
He was critical of the number of back office workers, saying numbers had risen by 1500 in four years.
Following the announcement of the review, the Green Party said National was creating false problems and using this as an excuse to provide fewer social houses.
Bishop said that was "fantasy".
"We are trying to save Kāinga Ora. It's really important that it's run properly. It provides accommodation for around 200,000 quite vulnerable New Zealanders, often quite vulnerable people. Kāinga Ora is the country's biggest landlord. It operates 70,000 social houses around the country.
"It's extremely important that is run efficiently and effectively. This is a good idea for taxpayers, and also for tenants."
The number of people on Kāinga Ora's waiting list for a home was "frankly, a disgrace", Bishop said.
Numbers were around 25,000 and needed to be brought down as quickly as possible.
"There is a range of things we need to do. There is no one silver bullet. We do need to build more social houses and add more social housing places."
Community Housing Aotearoa chief executive Paul Gilberd told Morning Report that building homes in New Zealand was expensive, and many people used borrowed money to do so.
Kāinga Ora was no different in that.
But Gilberd said he had "every faith" in Sir Bill conducting a thorough review.
He said every organisation, such as his own, accessing government funds should be held to the same level of scrutiny and transparency and should be held to account to deliver the best value for money.
Gilberd said more houses needed to be build to deal with the large number of households on waiting lists for public housing.
From Invercargill to Kaitaia, Gilbert said his organisation's members were saying things had never been as bad as they currently were - and it was driven by the "chaos of poverty".
All Kiwis deserved to have an adequate house to live in, he said.
RNZ
