$12.6m in overseas payments may drop

The Government has paid out $12.6 million in cost of living payments to people who are potentially overseas.

That figure was expected to drop as some people confirmed they were in New Zealand and therefore eligible. The payments were for people who earned up to $70,000 last year and were in New Zealand. However, payments were made to some people who had moved overseas, and to tourists who had been in New Zealand

on working holidays.

Inland Revenue estimated 1.7% of expected payments were made to recipients who may have been overseas.

Revenue Minister David Parker said the $12.6m was less than the amount it would have cost to run an application-based scheme.

‘‘While IRD records are good, they are not perfect, so a small percentage of payments went to people who, for instance, were overseas but had a New Zealand address in IR’s data sets,’’ Parker said yesterday.

‘‘The only alternative – requiring people to apply – would have taken much longer, cost far more in wasted administration than would be saved, and seen many eligible people, who did not apply, miss out because of the extra administrative barrier.’’

An application-based scheme would have cost $30m to administer, $14m more than the existing scheme cost to administer, the tax department estimated.

IR had refined the screening tests for eligibility to the payment, with the biggest changes made between the first and third instalments, Parker said. That had led to a significant drop in payments going to ineligible people over the three instalments.

Auditor-General John Ryan had previously raised concerns with Inland Revenue about the payments, saying speed and expediency were prioritised over certainty and accuracy.

People who received the winter energy payment, such as those on sole parent support, the jobseeker benefit, veterans and people getting NZ Superannuation, were not entitled to the cost of living payment.