Government Still Recovering Millions Of Wrongly Established Debt

A report released today by the Wellington People’s Centre says the government is recovering an estimated $60 million of debt against beneficiaries because the Ministry of Social Development has wrongly determined thousands of individuals to be living in relationships in the nature of marriage. This is despite government assurances that the problem has been fixed.

A Ministry of Social Development review of benefit overpayments established between 1 November 1996 and 31 December 2000 has already resulted in the reversal of over $35 million of wrongly established debt because of an identified systemic failure to apply the correct legal test for determining when a person is living in a relationship in the nature of marriage.

However, Wellington People’s Centre researcher Tina McIvor said that while a huge 63% of the overpayments reconsidered were disestablished, only about one third of the 15,600 cases decided within the timeframe were revisited. The government placed an unnecessary onus on the people affected to make a special application to get their cases reviewed.

“This leaves a very large question mark over the accuracy of the remaining 10,000 cases. There is absolutely no reason why the Minister could not have directed all cases to be reconsidered. The Ministry knows it was responsible for the mistakes, and has all of the information at its fingertips.”

“Instead, the onus was placed on individuals within a vulnerable population to apply for reviews, despite the government knowing that it was responsible for all of the errors in the first place”, Ms McIvor said.

Reasons for the mistakes included a culture within the Ministry’s investigation unit based on financial targets and incentives aimed at recovering from beneficiaries as much money as possible. Within the review timeframe there was a “Million Dollar Club” for Ministry investigators who established over $1 million against beneficiaries in a year.

“There is evidence that the correct test continues to be ignored, which would make the $60 million figure conservative.”

“Unfortunately, there is no guarantee that the problem has been fixed. Advocacy groups still report cases where investigators have little or no idea about how to apply the correct legal test.”

Ms McIvor says that the terms of reference for the Ministry’s review ought to have been much wider, including a greater timeframe, and reconsideration of some of the overpayments upon the Ministry’s own volition.

“The Ministry’s review didn’t go anywhere near far enough to rectify errors that were made on such a large scale. It was their mistake. The government should be required to ensure that the poorest in our community are not forced to bear the brunt of errors caused by a failure to apply the law correctly.”

© Scoop Media