Prime Minister Jacinda Ardern has defended Kiwibuild as a Government watchdog probes whether the scheme skirted rules by backing housing developments that were already in progress.
The Auditor-General's office is looking into complaints by National's Judith Collins that the way the house-building programme underwrote some projects breached the mandate it was given by Cabinet.
The issue will form part of the Auditor-General's regular annual review of the Ministry of Housing and Urban Development, according to a letter sent to Collins.
She says tax money was misused and there was no benefit to the public when a number of homes already being built in the Auckland suburb of Otahuhu were added to the list being backed by the scheme.
"KiwiBuild's Cabinet paper made it clear the taxpayer underwrite - which guarantees developers a minimum price for houses that don't sell - was for homes sold 'off the plans' and offered for sale 'in the first instance' to KiwiBuild buyers," she said.