National's Housing Spokesperson Judith Collins has raised concerns about the Government's KiwiBuild programme after one of the construction companies involved went into receivership yesterday.
Ebert Construction was due to commence work on a state housing development in Northcote, Auckland before it went under.
Ms Collins thinks this highlights the risk that New Zealand taxpayers will have to pay for the fallout.
"This is not the only construction company to go under this year and it probably won’t be the last," Ms Collins said.
"This leaves private and government-backed housing developments vulnerable and raises real questions about how robust the KiwiBuild due diligence process is and how vulnerable taxpayers are to risks and cost blow outs associated with failed developments."
The National MP raised the issue in Parliament's Question Time today, asking Labour's Jenny Salesa, who was answering on behalf of Housing Minister Phil Twyford, if the Crown bore any risk from developer insolvency.
"On behalf of the Minister for Housing and Urban development, in the buying off the plans initiative the Crown underwrite is only triggered on completion therefore there is no risk to the Crown in the event of a developers insolvency.
"In some cases there may be progress payments in which case liability is limited to the progress payments made.
"The KiwiBuild unit advises me however that these contracts are rare and they have not entered into any so far," Ms Salesa replied on behalf of Mr Twyford.
It's estimated at least $40 million is owed to creditors by Ebert Construction.
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