The Government spends up to $6 million a day propping up New Zealand's private rental market.

The $2.3 billion annual spend supports 60 per cent of the country's private renters, and is helping to keep a vast number of Kiwis out of poverty.

Those figures were revealed by Prime Minister Bill English at the leaders debate on Three on Monday night as an example of how the Government cared for Kiwis in financial difficulty.

During the debate, host Patrick Gower took a dig at the Government's increase in hotel ownership under National, to cater for the growing number of homeless.

Housing Minister Amy Adams backed her leader, and said around 550,000 households rent in New Zealand.

"We support approximately 320,000 of those households – which works out to be around 60 per cent of renters."

However the Labour Party housing spokesman Phil Twyford says the yearly spend has increased by $500 million since 2009, and is a "systemic failure of policy".

Is this an example of the Government helping those in need, or another consequence of a struggling housing market?

HERE IS HOW IT WORKS

The annual spend is a combination of people getting an accommodation supplement, and those receiving income-related rent subsidies.

An accommodation supplement is paid by the Ministry for Social Development (MSD) and goes out to half of all private renters in the country, and also helps a small number keep up with mortgage payments.

The supplement is claimed by people right across the country, and is largely made up of people on various benefits and those getting superannuation who can't afford all or part of their rent.

Income-related rent subsidies are paid to Housing New Zealand and other social housing groups.

It is paid per home and is calculated as the difference between what the household can afford, usually 25 per cent of their salary, and the market rent of the property.

WHY IS IT LIKE THIS?

Professor Philippa Howden-Chapman says the accommodation supplement was brought in during 1991 and was based on an American version.

Howden-Chapman is a professor of public health at Otago University in Wellington, and has had a major influence on housing, health and energy policy.

She says the cost of the benefit is rising because it is demand driven.

"It's the largest benefit after superannuation, and is an indication there is something seriously awry with housing in this country.

"Fifty percent of Kiwi households are now paying 50 per cent of their income on housing."

It was hoped the supplement would decrease the amount of state housing stock, but with the supply of subsidised housing going down it puts real pressure on the private rental market, she said.

"Home ownership was supposed to counter that but no affordable homes are being built."

New Zealand Property Investors Association spokesman Philip Macalister says the formula exists to top up people's earnings to reach market-valued rents.

"The Government is providing a mechanism to make sure the market remains in balance, essentially it's happening because people don't earn enough money."

Labour Party housing spokesman Phil Twyford said the low wages and skyrocketing housing costs have caused a "huge poverty trap".

"Without this massive subsidy cost the housing market wouldn't work, and lots of people would be thrown into acute poverty," Twyford said.

"The housing market and the policy settings controlling it are just not working, particularly if the taxpayer is bailing out landlords in order to save a large number of Kiwis from grinding poverty."

People who are on superannuation and do not own their own home would find it difficult to survive without it, he said.

"It's a big problem in Tauranga, Auckland, Hamilton, and Wellington where we have seen fast-rising rents."

SO, WHAT TO DO?

The massive shortage of housing - 60,000 nationwide and 40,000 of those in Auckland - needs addressing immediately, says Twyford.

Labour intends to address the problem by financing the construction of affordable new homes sold at cost, taxing property speculators who make money from buying and selling property, and taking the shackles off city planning restrictions to allow cities to grow.

National's policies mirror those in opposition, and include creating special housing areas in high demand regions.

But National have indicated changes to the accommodation supplement will mean 136,000 more families will be better off by an average of $36 a week from April 1, 2018.

Howden-Chapman believes the problem could provide an opportunity to improve the standard of homes available.

"If a landlord is going to achieve market-value rents from the accommodation supplement, you might as well use it as a leverage and say the home must meet minimum standards before you can get it- like the rental warrant of fitness being trialled in Wellington.

"It's the taxpayers money going in, the taxpayers should demand properties have better conditions."

However, she says the focus on what social investment can give back to the country is improving, and housing is pivotal to that.

"They are private dwellings, but they have public consequences."