Ministers were told in May the cost of living payment could be given to ineligible individuals but went ahead with the policy anyway as they believed it was the most efficient way to support vulnerable New Zealanders affected by rising prices.
Newshub has seen a number of emails sent to individuals offshore informing them they will receive the support. That's despite the eligibility criteria saying someone has to be a New Zealand tax resident and "present here" to receive the payment.
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First announced at the May Budget, the payment was touted as a "targeted" means of supporting low and middle-income New Zealanders not benefiting from other recent supports the Government had implemented.
Kiwis earning $70,000 or less and not entitled to the Winter Energy Payment will receive the $116 a month over three months starting on August 1. The scheme is automatic, meaning those eligible don't need to apply to receive the money.
But people who previously worked in New Zealand and now live offshore have reported being told they will receive the payment, riling up the Opposition.
"This is another shambolic rollout from a Labour Government that repeatedly treats taxpayers’ money with disrespect," said National's finance spokesperson Nicola Willis.
ACT leader David Seymour said he has heard from individuals as far away as London who haven't been in New Zealand for years who have been told they will get the money.
"The problem lies in the novelty of the scheme, it was rushed together at the last moment for all the wrong reasons," he said.
Prime Minister Jacinda Ardern on Monday morning said the Government wanted to administer the payment quickly.
"Because we've used our automated IRD system, it's not always possible for us to decipher [someone is a resident in New Zealand]. This will not be the majority of New Zealanders," she told RNZ.
"The alternative to weeding out these issues would have been an application-based process. That would have taken, as you can imagine, a long time and as you would appreciate, we may well not have received those most vulnerable who we want to reach."
Creating a "perfect system" would mean a "less timely payment" and potentially not reaching everyone the payment was intended for, Ardern said.
Advice to ministers in May, ahead of the policy being announced, said some of the information Inland Revenue holds "may not be up to date".
"This would mean some people who should receive the payment may not, and conversely, some people who received the payment should not have," it said.
The IRD said it used 2022 tax assessments to determine who is eligible for the scheme, but has also told media people may get the payment if they received income into a New Zealand bank account from the likes of bank interest.
"If someone has left the country and hasn't told Inland Revenue they're not living here currently we will have treated them as resident here and they may receive the cost of living payment."
It acknowledges on its website that some people who are not eligible may receive the payment.
"It is possible that the information that we have been provided to determine eligibility could be incorrect. The correct information may show that a person is not eligible.
"However, we'll only apply resources to identify such cases, and to recover payments, when there has been fraudulent or wilfully misleading information provided."
Revenue Minister David Parker told Newstalk ZB on Monday that the vast majority of recipients would be people in New Zealand.
"There will be a few people at the margins who aren't living in New Zealand. They're all New Zealand taxpayers, but the alternative was not to make the payment.
"The only other way to get around it would be to make every one of those [eligible] 2.1 million people apply. You just wouldn't have got it out the door and it would have been a huge waste of money actually."
The May advice, also from Treasury, "recommended against" the policy. It said it was a "broad-based" payment that was a "poor mechanism for supporting households with a longer-term problem". It could also add to inflation in the short-term.
Willis on Sunday described it as a "band aid" policy "made up on the fly".
"Both the Treasury and IRD warned Ministers not to go ahead saying it would be administratively complex. Despite the warnings, the Government pressed go regardless and Kiwis are now paying the price for that arrogance."
Seymour said "the Government’s last minute, made-for-PR, cost of living payment is spraying taxpayer money around like a garden sprinkler".
Advice also said making IRD administer the payment would "compromise" the department's "already stretched workforce" and have "critical operational impacts". It was suggested up to 750 full-time staff may be needed over the three months.
The IRD told Newshub last week that "temporary contingent workers" had been hired to work on the payments, while the "work of a number of full-time staff has been re-prioritised". While the policy is expected to cost $814m overall, the cost of administering the payment is $14m.
