The number of superannuitants and veterans wrongly stripped of their Winter Energy Payments as a result of a bungled law change has climbed to more than 16,000, a Social Development Ministry review has found.
Released today, the review looked at why thousands of payments were wrongly cut off during the rollout of new checks to verify clients were being paid the right amount earlier this year.
It also reveals issues were raised as early as April but only seriously addressed in August.
Today's report findings also, for the first time, put numbers on a processing backlog that wrongly suspended payments for thousands more clients on top of the first error.
Social Development Ministry chief executive Debbie Power apologised to those affected.
"Some people did all the right things but still had their payments suspended," she said.
"We know that even a short suspension of payments could have caused a lot of anxiety and trouble meeting costs.
Payments for some were wrongly stopped after a law change was rushed through Parliament last year. (Source: 1News)
"We've identified those affected, restored entitlements, and paid arrears."
Prime Minister Christopher Luxon and Social Development Minister Louise Upston also offered apologies for the problems last month.
Labour's social development and employment spokesperson Willow-Jean Prime said the review was "damning" and demanded further apologies from Luxon and Upston directly.
"Where are Christopher Luxon and Louise Upston? Hiding behind officials, letting them front for a mess National made," Prime said.
"This law was pulled out of a proper bill and pushed through without a select committee process. That meant no submissions from the people it would hurt. Nobody checking whether the law did what it was meant to do."
The Greens said Upston remaining in her job was untenable after today's disclosures.
The review identified two main faults which led to payment problems.
One was a drafting error in the Government's legislation to institute the new check for welfare recipients, while the second was a processing backlog that built up after MSD underestimated how much work the new checks would create.
'Technically correct'
A drafting error in the 2025 law to bring in the change failed to shield the Winter Energy Payments of superannuitants and veterans who didn't complete their checks in time.
According to the report, the policy intent had been that these New Zealanders would keep receiving the seasonal payment regardless.
The review found the law as passed did not reflect that intent, and MSD's systems then suspended the payments in line with the legislation in a manner "technically correct".
"That exclusion from the legislation was on us. It was never the intention that their Winter Energy Payment was open to suspension," Power said.
"MSD has a long history of implementing important and complex legislation, including under short time frames, and doing a good job of it. That did not happen in this case.
"We did not meet the expectations we have of ourselves, or that others have of us."
The number of superannuitants and pensioners affected had earlier been reported publicly as 14,862, but newer analysis in the report lifted that figure to 16,270.
The highest arrears payment was $301.06 for an individual, $418 for a couple rate, and $468.21 for couples or individuals with a dependent child.
The review also found the winter payment issues wasn't internally escalated for months.
A staff member first raised it on April 30, only days after winter energy payment began for suppernnuiants, but senior leadership were only made aware on August 13.
"As most of these questions were handled as individual client concerns, MSD did not connect those individual cases quickly enough to recognise a broader pattern and identify an unintended consequence," the review said.
The Government passed the legislation under urgency last year, a move that has been subsequently criticised by the opposition following revelations of the errors.
Constitutional experts and commentators say they worry about the upwards trend in the use of urgency by governments of all stripes. (Source: Q and A)
Backlog created problems
The second fault, which meant people didn't receive their payments on time, resulted from a processing backlog that caught clients who had completed their checks correctly.
"The review also found that MSD didn’t correctly forecast the workload involved in processing … responses from clients, and as a result backlogs built up," Power said.
The review found 2460 clients on a main benefit were affected, with an average arrears payment of $390, along with 11,990 clients receiving supplementary assistance.
Power said workload from the change was badly misjudged.
"Fewer people responded using online forms than anticipated, and many more people than expected had changes in their circumstances to report," she said.
"This meant staff had to spend longer working on each return.
"Around 80% of people who responded had a change of circumstances, compared to the one-third that was expected.
"These delays were compounded by a MyMSD email notification issue which meant email alerts advising clients that they had new correspondence was not sent as intended."
Call for compensation, ministerial resignation
Prime noted MSD staff had raised the alarm on April 30, two days after payments started, but senior leadership did not confirm the extent of the problem until August 13.
"The question Louise Upston has to answer is simple: when did she know? Because an entire winter went past while elderly New Zealanders sat in cold houses," she said.
"Many of those affected are living pay cheque to pay cheque. Some will have taken on debt, interest and late fees just to keep the power on. And the problem isn’t fixed. She was told to fix the law three weeks ago and there's still no bill."
The Green Party has called for affected families to be compensated.
Social development spokesperson Ricardo Menéndez March said the review left key questions unanswered, including which main benefits had been affected.
“Falling behind by $3000 when you are on a main benefit means potentially falling in debt, losing your home, or experiencing hunger," he said.
"This may not mean much for a minister who claims $52,000 in taxpayer subsidies, but it’s a lifeline for people in poverty. Louise Upston needs to front up, and answer questions that are not being answered by her ministry’s report."
Menéndez March said it was untenable for her to remain in her ministerial job.
“It’s not tenable for Louise Upston to remain in her job when she has frequently avoided answering questions to this issue, given conflicting statements over the impact this has had on people’s lives, and initially refused to apologise for the suspensions of main benefits," he said in a media release.
"Behind the suspensions are people often living below the poverty line, in debt, or with health conditions needing support.”
He added: "The Greens welcome the recommendations from the Ministry of Social Development and urge the Government to look at compensating families for the harm they have endured while these critical payments were suspended."
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