Te Maioha o Parekarangi, established in 2010, is one of the four youth justice resident centres in New Zealand and can house up to 30 young people.
Oranga Tamariki operates nine residences and four community-based remand homes in New Zealand, with one of each in Rotorua.
An addition of 20 beds in each of the remand homes is expected to address the additional strain.
At $110,000 per prisoner per year, Little said he would prefer to see the money used to address the reasons for offending and prevent reoffending.
"I'd rather spend money the right way, the effective way, to save us the cost further down the track."
Little said a combination of addressing the offending, along with rehabilitation stepped away from previously just putting people in prison, which he said was not working.
Two current Te Maioha o Parekarangi residents, both 17, had been in the residence for less than a year and told the Rotorua Daily Post they fully supported raising the youth offending age.
Both agreed the rehabilitation programme would be better than prison.
"It makes you think different, to take a look at your actions," one said.
"You've got more of a chance," the other said.