PSA says staff cuts drove MSD's payment disaster
A public sector union is blaming the New Zealand government's cost-cutting drive for the Ministry of Social Development's (MSD) payment bungle that left thousands of beneficiaries and pensioners without money they were owed.
The Public Service Association (PSA) said the errors, which resulted in more than $2.5 million in arrears across tens of thousands of suspended payments, were a consequence of slashing staff numbers at MSD.
"These errors would not have happened if the Government had not cut hundreds of workers from MSD over the past three years leaving those remaining with unmanageable workloads," said PSA national secretary Fleur Fitzsimons.
Review finds systemic failures
MSD's own review, released on Thursday, found that more than 30,000 benefits and supplementary payments were wrongly suspended following a law change requiring beneficiaries to annually confirm their circumstances, Radio New Zealand reported.
Processing delays caused by unexpectedly high volumes of confirmations left some beneficiaries thousands of dollars short before they were backpaid.
Separately, 16,270 pensioners and veterans had their Winter Energy Payments wrongly suspended after the ministry failed to account for an exemption that should have been built into the legislation.
MSD chief executive Debbie Power apologised, acknowledging the ministry fell short of its own standards.
"We did not meet the expectations we have of ourselves, and that others should have of us. We're extremely disappointed. We got this wrong," Power said as quoted by RNZ.
Warnings went unheeded for months
The PSA said MSD had cut more than 700 roles, nearly 10% of its workforce, under the government's cost-reduction programme, and that remaining staff were left with workloads they could not manage.
MSD workers went on strike the day before the review was released.
Fitzsimons said the review's findings were evidence of what happens when public service capacity is stripped back.
"It is clear from this review that New Zealanders missed out on money they need to survive because public servants are struggling with widespread burnout and unmanageable workloads," she said.
The review itself noted the problem was compounded when MSD's automated emails warned clients their payments would be suspended, prompting a flood of calls to staff who were already overstretched, worsening delays further.
Concerns about the Winter Energy Payment issue were first raised internally on 30 April, but were not escalated to senior leadership until 13 August, more than three months later.
Power said she only became aware of the scale of the problem after speaking directly with a staff member who handed her a client's letter.
"I looked at the letter and thought 'that can't be right'... it was only a matter of time before it came up. It should have come up way earlier," she said as quoted by RNZ.
Social Development Minister Louise Upston also apologised, saying the delays in identifying the problem were "unacceptable." No compensation beyond backpayment would be offered, as the law does not authorise it.
The PSA warned the errors were a sign of things to come.
"We will see more errors like this, as long as we have a government intent on dismantling the public service," Fitzsimons said.
