The Auckland Council is taking too long to issue consents for new houses, Finance Minister Bill English says.
He said the council's consenting process was the main "bottleneck" in addressing the housing shortage, despite improvements made to the way it issued consents.
The Government is unlikely to exercise its powers under its housing accords legislation to override council planning powers.
Special housing areas catering for thousands of future homes have been established in Auckland in a bid to boost supply and curb price inflation, but English said they still hinged on consents.
The Government wanted to see the council follow through on the special housing area announcements and process the required consents to allow construction to start.
"They've had pretty positive leadership in this area, but I think they're yet to show the kind of urgency about really changing how they do business," English said.
"Their decisions have an impact on the whole economy. They have an impact on thousands of households, so they need to understand that impact and get on with the job."
The council needed to understand the wider implications of the decisions it made, he said.
"The fact that planners in Auckland might have personal preferences about what the city should look like is less important than the fact that New Zealanders believe it's fair to have affordable housing," he said.
A spokesman for Auckland Mayor Len Brown said more than 95 per cent of consents were processed within the required period.
Its housing project office had been set up to manage all the work the council did with developers and the private sector, and it was working on a project to allow it to deal with consenting online in a bid to further speed up the process, he said.
The special housing areas would boost supply.
"We just have to work within the time frame set by the Government, and the special housing areas legislation allows us to do it faster," the spokesman said.
Under the legislation, consents had to be processed in under six months for developments outside the urban limit and three months for developments within it.
While the time frame was shorter under the special housing legislation, the council had to consult with the public and ensure developments were consistent with the Resource Management Act, he said.
Consents were just one aspect of the housing issue.
"There are a whole range of constraints on housing supply and affordability in Auckland, and we're working on the bits that we can, but it's not something that has a single solution to it," the spokesman said.
English said a lack of capacity in the construction sector could hinder efforts to boost supply, but he was confident the sector would cope.
"There is growth in the cost of building, which tells you the construction market is getting pretty tight, but our experience from Christchurch is that if there's a clear pipeline of work to be done, you'll be surprised who shows up to do it," he said.
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