Thousands wrongly paid benefits totalling $30m

Welfare benefits of almost $30 million have been wrongly paid to people who worked in the past year.

Thousands of people have received - with or without their knowledge - 25,544 overpayments costing $29.5 million in the year to June.

The figures have been revealed from long-established fraud-detection methods of comparing data from several agencies, including the Ministry of Social Development and the Inland Revenue Department.

"It's obviously better if none of that occurred, but [this problem] is relatively typical of any such [benefit] system," said Richard Manch, the ministry's benefit integrity services general manager.

"A lot of it is failure to provide information about change of circumstances, deliberately or not.

"But we don't tolerate fraud or abuse of the system and where we find it we deal with it."

Mr Manch could not say if the figures showed an increasing or decreasing problem. "We are constantly monitoring the system and looking for ways to improve it."

Most problems involved the unemployment benefit. Some people also worked part-time and were on partial benefits, so their income and benefit entitlement could fluctuate.

In most cases, the most appropriate response was to make sure overpayments were repaid and entitlements were corrected.

"There are people who comply with a little bit of encouragement, and people who go out of their way not to comply," Mr Manch said.

"With deliberate fraud, people get prosecuted and are increasingly going to jail."

Of about 1300 prosecutions in the past financial year, 1200 cases were successful.

Data matching between IRD and the Ministry of Social Development exposed beneficiaries who were earning.

The ministry contacted them or their employers to clarify and arrange repayments where necessary.

Mr Manch said the ministry had started contacting companies about helping to prevent people continuing to receive benefits while employed.

The ministry had also matched data with Customs, Corrections, Internal Affairs and education services.

It has plans to introduce ACC and Housing New Zealand into the data-matching process.

Welfare fraudsters have been under the microscope this year after it was revealed one was repaying a $224,000 debt at $20 a week.

The repayment scheme was labelled a farce by the National Party's welfare spokeswoman, Judith Collins, who said the four leading welfare fraudsters had together ripped off $807,032.

It has also emerged that one beneficiary, who ripped off $200,460, went to the ministry after being caught and asked for financial assistance. The beneficiary was given another $260.

The most recent statistics show 290,466 working-age people on an income-tested benefit.

About 17 per cent of those declared they had been in paid work during the year.

Welfare payments are cross-checked with:

* Inland Revenue to see how much beneficiaries are earning.

* Customs to find out if they have left the country.

* Education services to determine students' entitlements.

* Corrections to find out if people were in prison.

* Internal Affairs to determine if beneficiaries have died.

- additional reporting: NZPA