The Ministry of Social Development has spent $80m resolving claims of abuse in its care since 2007, with 60 per cent of that covering legal fees and operational costs.
The rest, just under 40 per cent, has gone to survivors, covering allegations of "sexual, physical, verbal, emotional and psychological abuse and neglect" in state care.
Evidence presented to the Abuse in Care Royal Commission Inquiry redress hearing showed in 12 years to June 2019, MSD had spent about $77m resolving about 1800 historic claims.
This included about $30m paid to claimants as settlements, and $5.6m in legal aid fees.
But the lion's share, about $40m, covered operational costs and external legal fees, including to payments to Crown Law.
This included a case in 2017, where the Government spent over a million dollars fighting a case it eventually lost, paying out $340,000 to four separate claimants and $369,000 in legal fees.
The commission is investigating abuse in state and faith-based care between 1950 and 1999, and over the next two weeks will be hearing from the Crown about its procedures for providing redress, such as compensation, counselling or an apology.
Evidence presented on Tuesday by MSD deputy chief executive policy Simon MacPherson showed the number of claims they were receiving had ramped up substantially in recent years, with just six recorded in 2003, rising to 4177 in total as of June this year.
They were now receiving about 40 new claims a month.
The majority of claimants, 54 per cent, were Māori. Pākehā accounted for about 45 per cent and four per cent were recorded as Pasifika.
The vast majority, 71 per cent, have been male, with 28 per cent female and one per cent gender diverse.
The most common age range is between 35 and 54, which account for 58 per cent of claims.
Those under 35 make up 25 per cent, and the remaining 17 per cent are those aged over 55.
These claims covered a "very wide range of abuse and neglect allegations and alleged failures in the provision of care", MacPherson said.
"Claimants have made allegations about sexual, physical, verbal, emotional and psychological abuse and neglect.
"These allegations relate to residential institutions, foster care, Family Homes, Ministry caregiver placements, approved church and community organisations and by staff members."
They also covered decisions made by social workers, such as failing to remove a child from an unsafe environment, or failing to provide necessary care.
MSD had not been able to keep up with demand, the backlog of claims growing substantially with currently 2235 unresolved.
MacPherson said he expected this would change, as they'd instituted new processes in 2018 to expedite dealing with and resolving claims, and increase resources.
MacPherson said previously their expenditure came from existing departmental funding, but now a specific historic claims fund had been set up.
In 2019 they put in a "bid" for $125 million over three years to resolve around 2400 claims. Ultimately, Cabinet approved $95m over three years.
The commission's lead counsel Hanne Janes questioned how they expected to settle remaining claims, with dozens more coming in each month, within that budget.
MacPherson explained the funding came down to the way Government budgets were distributed, with all ministries putting in "bids".
"It is not as much as we asked for, but it is a significant amount ... more than in the past."
He also said there was no expectation the remaining claims would be resolved within the budget, and if they exhausted the funds they could request more.
Janes also questioned MacPherson on the time it took to settle some of the claims, and whether they were adhering to their principle of accepting claimants "at face value".
The commission had previously heard from Earl White - not his real name - who spent 12 years fighting his case only to receive a $35,000 ex-gratia payment after he was physically and sexually abused in state care.
"At what point is it unacceptable for victims and survivors to have to wait that long?" asked Janes.
MacPherson agreed those cases were "too long", and said they'd improved their systems to quicken the process.
Janes referred to evidence showing despite fighting lengthy legal battles around claims, MSD had been advised not to use defences such as the Limitations Act to deny claims, and that it had policies in place to take a "moral rather than a legalistic approach".
MacPherson disputed this, and said prior to 2010 it was Government policy to use all available defences in court.
He also said they'd made ex-gratia payments in cases where it was clear the claimant would not be successful in court.
As of October 31 last year, 45 per cent of the 1858 claims had been resolved by ex-gratia payments, and 37 per cent through settlements.
In nine per cent of cases no offer was made, and in the remaining 10 per cent the claim had been withdrawn or the claimant had died.
MacPherson also denied any inference their processes were about escaping liability.
"It is more focused on survivors than the perpetrators," MacPherson said.
Janes also questioned MacPherson if he had "any disquiet" about putting survivors of historic abuse through the "trauma" and Crown the cost of going through the High Court to settle claims.
MacPherson said looking back over the events from 2005 to 2010, it was "amply demonstrated" the High Court was not the best approach, which "reinforced the need for a different process".
The second State Redress Hearing runs until November 4, with further witnesses from MSD, Ministry of Education, Ministry of Health, Oranga Tamariki, Ministry of Justice and the Solicitor-General responding to survivors' evidence and outlining past and current policies and processes.
This follows the first State Redress Hearing held last month, which focused on the experiences of survivors in seeking redress for abuse in state care.
The Abuse in Care Royal Commission of Inquiry is investigating the abuse and neglect that happened to children, young people and vulnerable adults in care from 1950 to 1999. It may also consider experiences of abuse or neglect outside these dates.
After completing its investigations, it will make recommendations to the Governor-General on how New Zealand can better care for children, young people and vulnerable adults.