Department error strips cash from beneficiaries

Work and Income mistakes may be forcing thousands of welfare beneficiaries to pay back benefits totalling more than $60 million, according to beneficiary advocates.

A report by a Wellington advocate, Tina McIvor, says 15,600 beneficiaries were judged to be living in relationships "in the nature of marriage" and were forced to start paying back their benefits during the four years to December 2000, when Work and Income sometimes used the wrong legal test to judge whether two people were a "couple".

But only 5670 people applied for their cases to be reviewed after the mistake was revealed - leaving up to 10,000 others whose cases have not been reviewed. Many of these may still be paying back money to Work and Income.

The Government accepted in 2002 that officials should have used a legal test set in the Court of Appeal "Ruka" case in 1996 when the court ruled that Ms Ruka, a domestic purposes beneficiary, was not in a marriage-type relationship because her partner did not accept any financial commitment to her and there was no emotional commitment - she only stayed because he was violent and threatened to kill her if she left.

It said that both financial and emotional commitment were required for a relationship to be "in the nature of marriage".

The Ministry of Social Development wrote to 6300 people who had been judged to be in marriage-type relationships in the first four years after the Ruka decision. It also advertised to reach the other 9300 people judged to be in marriage-type relationships in those four years, but who were no longer on its books.

It received 5670 applications for reviews, said that 4561 were within the scope of the review, and found that 2865 of these (63 per cent) did not have enough evidence on file to show that the Ruka test had been met.

Ministry chief executive Peter Hughes told the Herald this week that the ministry had repaid these people $8.8 million and cancelled their outstanding debts of $35.2 million.

That means that they were originally told to repay an average of $15,367 each. At that rate, the 10,000 people whose cases have not been reviewed may be repaying around $153 million.

Ms McIvor said if only 40 per cent of them had been judged on the wrong legal test, they would be wrongly repaying around $60 million.

"The majority of these cases were women on the DPB [domestic purposes benefit]. They are scared and don't want to approach the ministry - and for good reason. The ministry, when they first wanted to undertake this review, was going to reinvestigate every case."

Beneficiary groups complained at the time, and Cabinet minister Ruth Dyson directed the ministry to check only whether the Ruka test had been applied.

But Ms McIvor, now on the DPB herself with a three-year-old daughter, said beneficiaries still lived in "a climate of fear".

"A lot of women on the DPB feel vulnerable. I do - and I know my rights," she said.

She said the ministry should have reviewed all 15,600 cases decided from 1996 to 2000, rather than forcing people to apply for a review.

Her report, funded by the Bruce Jesson Foundation, says:

* Advocacy groups say the ministry is still using admission statements and a checklist of factors to judge whether marriage-type relationships exist, instead of using the correct Ruka test.

* Some beneficiaries are being made to repay amounts of up to $90,000, which they will never be able to repay in their lifetime.

* Ministry investigators are driven by monetary targets and "cold-call" on beneficiaries without warning.

But Mr Hughes said the $60 million estimate of remaining mistakes was "simplistic" because many of the 10,000 people who did not seek reviews would not have been eligible. He said it was a "fundamental requirement of the review" that reviews would be voluntary.

He confirmed that the ministry used admission statements by people in marriage-type relationships, but it also required "strong additional evidence".

He said investigators did "cold-call" without warning where they had information that an offence might be being committed, but they now sent letters advising people of their right to postpone the interview until another time and place so they could have a support person present.