MSD admits 21-year payment error

Anne Tolley (Getty)
Anne Tolley (Getty)

Four more decades-old mistakes that have left beneficiaries under or overpaid have come to light after an initial discovery which will cost the Government $23 million.

In 1993 a mistake was made while processing automatic payments for beneficiaries that wasn't picked up until two years ago.

Around 41,000 people were underpaid for accommodation, and may now be paid that money retrospectively. Most of the underpayments amounted to less than $1000.

Another 46,000 were overpaid to the tune of $32 million, but Social Development Minister Anne Tolley says no attempt will be made to claw that money back.

"I'm awaiting further advice around the total number of people affected, the total amounts involved, and the best way to deal with any reimbursements," she told Newshub.

It's believed human error is to blame.

But Ms Tolley has now also revealed four other mistakes among revelations of 30 instances at the Ministry of Social Development where law changes weren't followed.

She isn't releasing details of those botch-ups.

People granted the accommodation supplement since December 2014 aren't affected by the 1993 mistake.

The mistake came to light after Ms Tolley asked the Ministry of Social Development to review its practices to ensure they align with legislation.

She was told of the error of March 9. It was fixed in December 2014.

There are 286,000 people receiving the accommodation supplement at the moment, of which 800 are believed affected by the historical error.

Prime Minister John Key says he's "pretty disappointed" by the mistakes, but the Government's response is the right one.

"On one level I suppose it's good news it eventually was picked up through the audit of their systems, but it is distressing the Government has underpaid and overpaid people."

The systems nowadays were much better than the "ropey systems" in the 1990s, he said.

Labour leader Andrew Little was surprised it took two decades to pick up the mistake, but would help the Government if it could to get the money to whoever was owed it where possible.

“The Ministry needs to take what people are entitled to seriously, rather than having this culture at Work and Income New Zealand, where success is based on how much you can deny people,” says Labour’s social development spokeswoman Carmel Sepuloni.