The payments were made through 2022 to low- and middle-income earners to help with the impact of inflation. Photo: RNZ / Rebekah Parsons-King
Less than 14 percent of the people who were incorrectly paid a cost-of-living payment ever paid the money back, Inland Revenue says.
The payments were made through 2022 to low- and middle-income earners to help with the impact of inflation.
Payments were made in three instalments to a total of $350.
But Inland Revenue had to contact 80,000 people it believed had wrongly received at least one of the payments, including people who had left the country, and people who were not in work. They were asked to return the money.
A spokesperson said the total number of cost-of-living repayments made was 10,985.
"We did see a direct increase in repayments received after issuing letters to a group of customers who may have been ineligible for one or more payments. The letter prompted customers to review their eligibility and although we saw an increase due to the letter, we aren't able to determine if the repayments were made due to ineligibility. Some customers made repayments simply because they did not want the payment/s even though they were eligible."
She said Inland Revenue had chosen not to take enforcement action against people who did not make a repayment, unless it believed they had deliberately given false information and received the payment fraudulently.
ACT finance spokesperson Todd Stephenson said the policy was poorly implemented.
"ACT said at the time we thought it was a really badly targeted policy, poorly designed. We advocated for the government cutting its spending and letting Kiwis keep more of the money they earn."
He said IR should be trying harder to get the money paid back. "They really should be trying to recover that money but as I said it was a poorly designed policy that never should have been implemented."
An IR report in July 2023 put the cost of the payments at $573 million.
Infometrics chief forecaster Gareth Kiernan said the payments would have added less than 0.1ppt to inflation.
"The size of the economy in the December 2022 quarter was $98,342m, so if households spent all the extra money within a three-month period, and it was funded by government borrowing and didn't displace any other government expenditure, it would have added just under 0.6% to economic activity for the quarter.
"The payments just weren't that big in the grand scheme of things, when we compare them to the overall Covid-19 Response and Recovery Fund (CRRF) at $62 billion, or the effects of interest rate cuts on debt-servicing costs.
"For context, if CRRF spending was spread over three years it was equal to about 5.7 percent of the economy; Stats NZ's national accounts data shows a $2.1b decline in annual interest payments by households between Dec 2019 and Dec 2021, equal to about 0.6 percent of 2021 GDP."
