Turns out the government has been wrongly paying some accommodation supplement recipients for the last 23 years. Here's my overly cynical and (I hope) deeply wrong take on the advice MSD will give the government about how to respond.

RNZ's Morning Report led off today with a story about a "coding error" that has meant some recipients of accommodation supplement payments have been wrongly paid since 1993. Exactly how many people and how much money is involved appears to be still unclear, but RNZ is saying: "Initial analysis shows just over 41,000 people have been underpaid a total of $23 million, and just under 46,000 people have overpayments of around $32 million."

Couple of points on this. First up, the fact the error was uncovered in September 2014 (in other words, the month of the election), fixed for current accommodation supplement recipients in December 2014, but the Minister claims she only was told about it in March this year is ... troubling. So much for the public service's "no surprises" operating approach!

Second, according to the RNZ report:

The Ministry of Social Development said it would report back to ministers in June on proposals to address the error.

It said it would also supply ministers with advice on reimbursing clients who had been underpaid, which would then go to Cabinet.

I think I can predict what that advice will look like, based on past precedent. Something like this:

Due to an inadvertent error by unauthorised staff, since 1993 a large number of beneficiaries have either not received money they legally were entitled to, or received money that they were not entitled to. While the problem has now been rectified going forwards, there remains the issue of retrospective legal liability to beneficiaries who did not receive payments to which they were entitled (as well as accounting for money improperly paid to beneficiaries not entitled to it).

The sums involved are in the tens-of-millions of dollars, amounting to more than a flag referendum on each side of the ledger. In addition, it will take our staff quite a bit of time to work out exactly who is owed how much (as well as who owes us how much back). Plus getting money back off people who have been overpaid will be hard and probably look terrible (seeing as these are poor people with housing issues). And it wouldn't really be fair to the taxpayer to give money to people who were underpaid, while not reclaiming it off those who got too much.

So the simplest and easiest thing for us would be to just follow established procedure and retrospectively change the law to validate the payments. This will make them lawful and thereby remove any requirement to pay people who missed out (as well as tidying up our books by making overpayments appear kosher). That's what we recommend here, because easy. After all, it's not like these people are anyone who really matter, like the Police or MBIE employees.

Comments (2)

by Ross on June 02, 2016
Ross

"Where overpayments occurred, the Government would not be seeking reimbursement. 

Where underpayments occurred, they would be work on solutions to pay back to beneficiaries. Tolley said the Government would not pass legislation to allow them not to make payments."

http://www.stuff.co.nz/national/politics/80562529/thousands-of-beneficia...

by Andrew Geddis on June 02, 2016
Andrew Geddis

That's good - but let's also wait until after the MSD gives its advice before popping out the champagne corks ... .

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