Minister of Housing Chris Bishop says he made the government's priorities clear. Photo: RNZ / Samuel Rillstone
Ministers say hundreds more job cuts at Kāinga Ora will not affect its performance.
The social housing provider is set to cut 321 roles, on top of those announced in a previous restructure, which takes the total to 553.
Across the public sector, more than 6500 jobs are proposed to be disestablished.
Minister of Housing Chris Bishop said he was advised many of the cuts were associated with the agency's "project velocity", which had been around for about five years and was tasked with making the delivery of houses more efficient, now known as the "housing delivery system".
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Kāinga Ora said the proposed cuts would hit roles across urban planning and design, commercial, construction and innovation, and investment management office teams.
Chief executive Matt Crockett said the agency had grown over the past five years, and it was now entering a new phase, focused on what he called a "steadier state" of builds and upgrades.
Bishop said he had made the government's priorities clear.
"Ultimately the way in which they give effect to the mandate that ministers have given them is over to them," he said.
"We've asked them to be more financially sustainable, we've asked them to be more efficient, we've asked them to cut costs, and they are doing that."
In a recent, highly critical review, chaired by Sir Bill English, the agency was called out for underperforming.
Kāinga Ora chief executive Andrew McKenzie resigned in July, along with five out of seven of its board members.
Public service minister Nicola Willis said this second round of cuts did not necessarily mean there would be further rounds at other agencies.
"There's a new board [and] they know they have a responsibility to ensure that that organisation is operating as effectively as possible," she said.
"Obviously they've made that decision they can do that and still deliver."
Prime Minister Christopher Luxon said job losses were incredibly sad, but necessary.
"The reality is, we've seen job losses across businesses, we're seeing it in the public sector here as well. It's a function of government tightening its belt, but also, that's what business and families have been doing for the last two years."
Unemployment was a "lag effect" of a poor economy, he said.
But the opposition was concerned about the effect of further cuts.
Labour Party deputy leader Carmel Sepuloni said morale across the public sector was low.
"Quite often these jobs are deemed to be back-room roles, but actually, they're crucial to the public sector being able to run, and a lot of pressure is being put on those that remain."
She said the government was not prioritising housing - whether that was building news ones, or maintaining them.
Crockett said the agency would now consult its staff, and planned to confirm numbers in mid-November.
PSA national secretary Duane Leo said these people were critical to the planning, design and construction of social houses, like architects, technical advisors, project coordinators, urban designers, spatial planners, and quality assurance experts.
"They work across the country with a third in Auckland and represent around 10 percent of Kāinga Ora's workforce."
He said the confirmation of reduced roles could lead to a decrease in houses available, and would mean uncertainty for families.