Video - A blowout in the budget to put homeless people up in short term accommodation is only a small part of the total being spent on emergency housing, Prime Minister Bill English says.
Watch video of Prime Minister Bill English on Morning Report.
The government spent four times its annual budget allocation to put homeless people up in hotels and other short term accomodation in just three months, figures show.
The government expected its emergency housing special needs grant, introduced late last year, to cost $2m per year and help 1400 households.
Ministry of Social Development figures show that 8860 grants were given out to 2600 households between September and December last year, at a cost of more than $7.7m.
"It's a demand driven grant - if more people show up more people get it," Mr English told Morning Report.
The short term grant had to be seen context of a total of $300m budgeted over four years on emergency housing.
"The spend that really matters is the spend that's going to go on wrapping services round the famillies to try and straighten them out," he said.
Te Puea marae board chair Hurimoana Dennis told the programme the government was starting to see the "raw, hard, cold facts" of the stituation.
The marae in south Auckland opened its doors last year to homeless people including some living in cars.
Mr Dennis said the marae had dealt with "high-maintenance families", which had drug and alcohol abuse problems.
They were "kicked off the social welfare list" and private landlords and some emergency housing operators would not take them.
Labour Party leader Andrew Little said it showed the government had underestimated the size of the problem.
Mr Little told Morning Report he had met families staying in motels and many were holding down jobs, and were not all on a benefit or other social services.
"A lot of these people ... have been priced out of the rental market because the government won't accept there is a housing crisis."
Mr English said Te Puea Marae, along with others, seemed to have found a way to build trust and were starting to deal with the issues.
Rather than indicating a housing crisis, the overspend indicated these families were of in crisis and housing was a part of that, he said.
"If it's uncovering demand, that's good."