Thirty-one grandparents who have not received the correct benefit for bringing up their grandchildren are in line for back pay averaging $20,000 to $30,000 each after Work and Income agreed to review their cases.
Social Development Minister Anne Tolley has told the support group Grandparents Raising Grandchildren that all the cases will be reviewed by the end of the year.
Work and Income has also updated its guidelines for the Unsupported Child's Benefit (UCB) from December 7, telling staff to accept a statutory intervention by Child, Youth and Family (CYF) as sufficient evidence that a child's nuclear family has broken down.
The changes, revealed by Labour social development spokeswoman Carmel Sepuloni, follows a doubling of all complaints about information provided by Work and Income staff from 537 in 2008-09 to 1197 in the year to June 2015.
"This is symptomatic of an issue about how Work and Income is giving incorrect information," Ms Sepuloni said.
Kawerau grandmother Hinewaka James, 67, who has cared for her two grandsons since 2004 and 2005 with her late husband Dale until he died last year, has received the UCB only since Grandparents Raising Grandchildren took up her case in 2013.
A former lawyer who now works for the support group, Kate Bundle, believes Mrs James should get back pay at least back to 2007, when she first applied for the benefit, and possibly back to when she took the boys in at their mother's request because their parents had split and their mother was not coping alone.
Mr and Mrs James had both taken redundancy from the Kawerau paper mill in 2004 and have had only insecure work since then in kiwifruit orchards, a local rest home and, until Mr James' death, a part-time job at a tyre outlet.
"Our income was very up and down, we couldn't actually really budget with it properly," Mrs James said. "Things broke down but we didn't always have the money for it. Sometimes we had to borrow from Work and Income just to make things meet."
When she first applied for the UCB in 2007 she was refused because, she was told, she didn't have sufficient evidence of a family breakdown.
"They just shunned me."
But she was approved for assistance in 2013 after she produced parenting orders, social workers' reports and other documents.
Her case is one of the 31 now being reviewed, and she plans to put any back pay towards her remaining mortgage of $58,000, which she is paying off at $200 a week.
Ms Bundle said Work and Income staff had turned down many grandparents seeking the UCB even where there had been a CYF intervention.
She said Work and Income had paid out back pay averaging $20,000 to $30,000 in the cases reviewed so far.
A Work and Income spokeswoman said nearly all the reviews had been completed.
Unsupported Child's Benefit
• Payable to a caregiver, other than a parent or step-parent, who expects to care for a child for at least a year because of a breakdown in the child's family.
• Rates are $146 a week for a child under 5, $169 aged 5-9, $187 aged 10-13 and $204 aged 14-plus.
• Numbers have risen slowly in the past 5 years from 8730 to 9373.