Thousands of low-income families are enduring cold damp homes because their landlords are not taking up a government subsidy to help insulate their properties.
The government hoped its two-year $18 million programme would lead to 20,000 more homes being made warm and dry. One year in, only 3700 homes have been insulated using the subsidy.
The 'Warm Up New Zealand: Healthy Homes' programme splits the cost of providing ceiling and underfloor insulation in rentals occupied by low-income New Zealanders between landlords and the government - typically they pay about $1500 each.
Energy and Resources Minister Judith Collins told a select committee the free offer was proving a hard sell.
"We're trying to give money away here, you know, you'd think that landlords would want to receive some of this benefit," she said.
"It's not only for their tenants, the fact is we're paying essentially half the cost."
With new insulation rules on the way, Ms Collins said landlords would be wise to act now.
"The landlords don't realise, despite all the publicity, that the law is changing and from 2019 they have to put in the required standard anyway - it's simply that taxpayer funds may not be available to help them do it."
Andrew Caseley is the chief executive for the agency that runs Healthy Homes, the Energy Efficiency and Conservation Authority. He said he suspected many landlords believed their rental properties were already insulation compliant and they might be in for a nasty surprise.
"Well, we'd certainly like them to take it up - we'd like to be able to give out those grants just as soon as we can," Mr Caseley said.
"There are a lot of rental properties, so 20,000 is actually not a great proportion of the total, so you would think it is an achievable one - and we are doing everything we can to do that."
Green MP Gareth Hughes said the programme was shaping up to be a massive failure and the government should be doing more to promote it.
"There are slumlords out there and it's a tragedy, the conditions that some people live in ... the government needs to be so much more proactive making sure all New Zealand homes are warm and safe."
Labour MP Clare Curran said New Zealanders were paying the price with their health for their landlords' inaction.
"The carrot is not enough and certainly the stick is not strong enough.
"We know that there is legislation coming into force that requires a level of insulation, but the minister today admitted that people don't really understand what the requirements are, and they think if there's a bit of insulation in the walls then that suffices."
The government's wider Warm Up New Zealand programme began in 2009, and has assisted nearly 300,000 private homes be insulated.