- Hon David Parker
More than four million Cost of Living payments have now been made to provide timely support for low and middle income New Zealanders and soften the impact of inflation pressures.
That number is expected to grow to more than six million payments once the remaining eligible people file their tax returns by the first quarter of 2023.
Up-to-date information was released by Inland Revenue today in its final summary report after the third Cost of Living payment on October 3.
The total Cost of Living payment of $350 is being made in three instalments of about $116.
Revenue Minister David Parker said the targeted and meaningful support helped take the hard edges off for Kiwis feeling the pressure of higher prices.
“The payment was designed to get the money into people’s hands as quickly as possible and the best way to do that was by using the available information held by Inland Revenue to determine eligibility,” David Parker said.
“The criteria for eligibility that were agreed by Cabinet have always been absolutely clear and remain the same. They include that a person has to be present in New Zealand to be eligible for the payment.”
IR had continued to work on refining the screening tests for eligibility to the payment to ensure it went to those intended.
“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.
“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,” David Parker said.
IR has estimated that an application-based scheme would have cost $30 million to administer – $14 million more than the administration cost of the scheme put in place.
“As the three payments were rolled out IR has refined its screening tests, leading to a significant drop in payments going to ineligible people, over the course of the three instalments,” David Parker said.
“The most significant changes were made between the first and third instalments, after I questioned IR about the tests it was applying and whether further screening tests could be used. The Auditor-General also expressed concerns.”
Further information from NZ Customs was made available for use ahead of the third instalment on October 3. (See timeline below.)
IR estimates 1.7 per cent of expected payments had been made to recipients who are potentially overseas, and so may not be eligible.
“This percentage will fall as some of those recipients subsequently confirm they are in New Zealand and as further information is available from New Zealand Customs,” David Parker said
The amount paid to people who are potentially overseas is $12.6 million, which is less than the extra cost of an application-based alternative. Some of those assessed as potentially overseas will be eligible, so that figure of $12.6 million will drop as some confirm they were in New Zealand and therefore were eligible.
“If people believe they should receive a payment and don’t get one, they can contact Inland Revenue to confirm they are eligible,” David Parker said.
Timeline:
11 April 2022 – Cost of Living Payment agreed by Cabinet
19 May 2022 – Cost of Living payment announced as part of Budget 2022
1 August 2022 – First payments made
1 August 2022 – Minister Parker raises concerns with IRD around reports of payments being made to ineligible people and questions if other screening methods could be added
1 August 2022 – Minister Parker obtains power-to-act from Cabinet for senior Ministers to make any necessary changes to the scheme prior to the second payment
3 August 2022 – ³Ô¹ÏÍøÕ¾’s Nicola Willis writes to Office of the Auditor-General
15 August 2022 – Ministers agree to make changes to the scheme to include additional screening for eligibility
29 August 2022 – Office of the Auditor-General issues findings
1 September 2022 – Second payments made with screening criteria in place
21 September 2022 – IRD integrates customs data into screening regime
3 October – Third payments commence with screening criteria including customs data in place
Editor’s note:
IR today also proactively released earlier papers relating to the Cost of Living payment. They should be read in light of the final report, which has the most up-to-date information. Numbers and other information in the earlier papers are often partial or present an incomplete picture.
The papers show IR, due to coding and administrative errors, mistakenly paid the first instalment to a number of people who were ineligible. These involved 394 people who also received the winter energy payment (but had two IRD numbers due to bankruptcy), 85 deceased people whose coding was changed to allow tax returns to be processed but was not reinstated, and 11,546 who had negative balances in PIE accounts but received a payment because of a coding error that had only excluded people with positive balances.
