More than half the money gained from the Government's $50 "offender levy" will be chewed up by administration costs before getting to the victims it is intended for.

The levy will be paid by convicted offenders at sentencing and is forecast to collect $13.6 million in its first four years.

But a Herald calculation based on Budget figures shows it will cost $7.3 million to set up and run over the same period.

The money is to go into a victims' fund that will help with one-off expenses not covered by ACC or other state help, such as travel to court and additional counselling.

Introducing the policy last year, Prime Minister John Key denied the levy would become just another unpaid fine.

However, the $13.6 million it is forecast to collect is based on the assumption that only 69 per cent of offenders will pay.

Justice Minister Simon Power said the administration costs were largely offset by the $6.8 million saved over the same period by abolishing the Labour Government's proposed Sentencing Council.

Mr Power said that after waiting nine years for nothing under Labour, victims of crime were getting a net gain that made them "better off by $13.6 million".

Labour law and order spokesman Clayton Cosgrove said the levy was "a piece of propaganda that has ratcheted up victims' expectations".

Mr Cosgrove said it would be more effective to give the money to an organisation like Victim Support, and not bother setting up the bureaucracy required to run the levy.

The Sentencing (Offender Levy) Amendment Bill is progressing through the House and is expectedto be in place by next year.

Budget documents issued last week show the levy will cost $1.3 million to set up and about $1.5 million a year to run. That means 30,000 offenders will have to pay the levy if it is to break even.

The Justice Ministry estimates there will be 120,000 occasions each year where the levy will be imposed.

It will be imposed at each "sentencing event", meaning if an offender is sentenced for several convictions at once, they will pay a flat $50 levy. Some offenders will be sentenced more than once in a year, with the levy imposed each time.

Justice Ministry collections manager Bryre Patchell last week told the justice and electoral select committee that offenders would not pay if they could not afford to, ended up in jail,or had a "different attitude" topaying.

Collecting fines is already highly problematic, with figures made public earlier in the year showing New Zealanders owed $790 million in fines, of which $448 million is overdue. Much of those fines come from traffic offences.

OFFENDER LEVY

* $50 from each convicted offender to go to victims' fund.
* 69 per cent of offenders expected to pay.
* $13.6m gathered in first four years of fund.
* $7.3m budgeted to be spent on set-up and administration costs.