Public housing advocates claim the revamp of Kāinga Ora could lead to an increase in homelessness.
The state housing provider's board and CEO are being refreshed while the Government comes up with a new focus for the agency.
However there's concern from the construction industry and those campaigning for more public housing that any building pause during the revamp could increase the state housing waitlist and put tradies out of work.
When Kāinga Ora replaced the previous agency Housing New Zealand, the organisation went from landlord to urban developer.
This Government says that made it financially unviable after former Prime Minister Sir Bill English conducted a rapid review of the organisation.
Housing Minister Chris Bishop said Kāinga Ora's fundamental job is to be a good landlord to a huge number of often quite vulnerable tenants out there around New Zealand.
A refresh is now underway which means five board members are leaving along with current CEO Andrew McKenzie, who will receive a $365,000 severance package.
As the revamp gets underway, Bishop said Kāinga Ora still has 3800 houses to build and another 800 to retrofit.
Newshub has previously revealed that work has been contracted out, but another 3001 homes that have been consented are now paused.
The construction industry has previously raised concerns about the effect this will have on the sector - and it comes as consumer spending drops.
Data agency Centrix managing director Keith McLaughlin said his organisation's latest credit report shows that the construction, retail and hospitality sectors are really impacted by the drop in discretionary spending.
"And that's leading to, really, a record number of insolvencies, more so than any year since 2014."
Reinforcing the gloom is more bad stats.
Stats NZ said residential building consent numbers for May 2024 are 23 percent down on this time last year.
The New Zealand Institute for Economic Research also released its Quarterly Survey of Business Opinion which found a net 35 percent of businesses expect conditions to worsen over the coming months.
Public housing advocates ActionStation say any pause in building by Kāinga Ora could lead to more homelessness.
"The Government really needs to be building public housing at a massive scale. And withdrawing from building at this stage will be a disaster, " said ActionStation's Vanessa Cole.
"It will lead to more homelessness and more housing stress in our community."
Housing Minister Chris Bishop said he is committed to building more social housing and points to the Government's Budget '24 allocation of $140 million for 1500 new homes to be built by the community housing sector.
He said it's not an either-or situation but how to grow both Kāinga Ora and community housing in a sustainable way.
But what role Kāinga Ora plays will not be known until a new board is appointed and it comes up with a new plan.
