Criticism that more should be done to upgrade Housing NZ properties is valid, the minister responsible for the agency says.
Bill English was responding to a coroners' findings that linked the death of a two-year-old girl to the conditions of her South Auckland state house.
Emma-Lita Bourne was suffering from pneumonia when she died in hospital last year from a brain bleed. Coroner Brandt Shortland found the cold, damp and leaky home may have contributed to the toddler's death and said the property was "unhealthy for this family."
Housing advocates say such conditions affect thousands of children, not only in state houses but in rental properties.
Minister responsible for Housing NZ Bill English said the agency had a large capital programme but the criticism that more should be done was valid.
"They've done a very large scale programme - insulated every house that it can, which is 48,000 houses over the last four or five years.
"It's got to deal with the same limitations of process as everybody else, it's got to get consents, it's got to find a workforce, but it's not short of money to do the job."
The house had been insulated, but the family could not afford to run an electric heater. They were on a waiting list to move to a better home.
Green Party co-leader Metiria Turei said there was a correlation between poor housing and illness and the two-year-old's death was a terrible inevitability.
"We've heard the statistics over and over but now we have ... a child's name, Emma-Lita,to make real the fact that our houses are causing our kids to get sick."
The Labour Party says the Government must ensure every rental property in New Zealand, including state houses and private rentals, meets minimum standards of heating and insulation.
Leader Andrew Little said the party would re-submit its Healthy Homes Bill to the members ballot and called calling on the Government to support it if it is drawn.
However the Property Investors' Federation says the focus should be on a cheap heating programme rather than a warrant of fitness system.
Executive officer Andrew King said insulating homes was not enough, and the government should look at providing electricity vouchers to some families during the winter months.
The government would look at whether Housing NZ, medical services and social services responded quickly enough to the family.
"Regardless of the cause it's a tragedy for this family," he said.
There was a scheme in place to deal with rheumatic fever, which affected the household, and a large scale scheme for insulating houses.
"It appears that while the system worked to some extent, we've got to test whether it was responsive enough quickly enough to the very real needs of this family.
"They didn't really have the option of ordering a higher grade of insulation for the house."
Mr English said the Emma-Lita Bourne and the other children's illnesses needed to be dealt with more quickly.
"We've got a strong focus on organising the government services around vulnerable families - and this is a vulnerable family - rather than expecting those vulnerable families to find their way around various government departments.
"This type of case should illustrate I think to the people making public policy, including us, that we've got some way to go yet to be as responsive as we should be when there's serious issues going on in this family."