Part 6: Other Opportunities for Improvement

Social Security Benefits: Accuracy of Benefit Administration.


Our examination focused on the definition of accuracy as it relates to the Ministry’s obligations under the Social Security Act and its Purchase Agreement. However, we identified wider opportunities for improvement outside this relatively narrow scope. In this part, we outline opportunities in two main areas:

Consequences of the Ministry’s Structure

The Service Delivery and Specialist Services groups described in paragraph 2.6 on pages 26-27 operate in relative isolation from one another, because the Ministry views their objectives as distinct (although they do collaborate closely in a number of areas). For example:

  • Debt Management, as a Specialist Services section, undertakes the recovery of debts from people who are no longer receiving any benefit. Service Delivery undertakes debt recovery from current beneficiaries.
  • Benefit Control, another Specialist Services section, identifies instances of possible fraud once a benefit has been granted. Case managers undertake activities that limit the potential for fraud, but the Purchase Agreement does not require the Ministry to link the resources of Benefit Control to any assessment or estimate of the number of inaccuracies that are not identified by case managers.

Separate funding streams for each type of activity (see Figure 12 on the next page) reinforce the distinction between objectives. Benefit Control is funded through Output Class D4, and Debt Management though Output Class D5. Service Delivery is funded through three Output Classes – D1 for working-age beneficiaries, D3 for Senior Citizen Services, and D2 for getting people into work.

Figure 12
Funding of Service Delivery and Specialist Services

Output Class D1 Income support services to working-age beneficiaries
Output Class D2 Employment services to working-age beneficiaries
Output Class D3 Services for senior citizens
Output Class D4 Benefit control
Output Class D5 Debt management – former clients

What Does the Separation Mean for Accuracy?

The separation of Service Delivery and Specialist Services has two consequences:

  • the Ministry takes a different approach to funding and resourcing each type of activity; and
  • there is a risk that new initiatives will be developed in isolation, with insufficient consideration of whether there would be any advantages in creating complementary processes for both activities.

Different Approaches to Funding and Resourcing

The funding and resourcing of Benefit Control is approached from a cost/benefit pe rspective. For example, Benefit Control will seek to identify over-payments (including fraud) early so that the prospective saving from doing so can be maximised. Currently, the cost/benefit target for Benefit Control is $2.50 saved for every $1 spent. Decisions on programmes that Benefit Control undertakes are judged against this target.

It would be possible for Service Delivery to adopt a similar approach. For example, if a reduction in caseloads were shown to be linked with improved accuracy (and therefore a quantifiable reduction in under- and over-payments and resulting beneficiary hardship), the Ministry could consider the cost/benefit case for extra funding to reduce caseload levels.

However, the Ministry does not view Service Delivery in this way, and has indicated that it has not considered putting any such case to the Government.

While the Ministry endeavours to keep the rate of inaccuracies to no more than 10-12%18, this target – and any incremental improvements over time – is based on what appears achievable from previous experience, rather than an informed assessment of the costs and benefits of different resourcing options.

Separate Development of Programmes

In our view, the Ministry has not set out to devise complementary or integrated processes that achieve the best mix of the combined work of both Service Delivery and Benefit Control in meeting overall performance targets.

For example, Benefit Control has the primary responsibility for limiting fraud and identifying fraudulent cases. But Service Delivery activities could also be altered or expanded to help limit fraud. These could include altering target times for processing benefits19 to accommodate further fraud prevention and deterrence procedures – such as more rigorous authentication.

However, the Ministry does not assess such options. Nor does the Ministry consider any adjustment to the level of Benefit Control activities consequent on changes in the accuracy levels actually achieved by Service Delivery. The Ministry has commented that its Purchase Agreements with the Minister have not provided for such adjustments.


The Ministry views the Service Delivery and Specialist Services components of its benefit administration separately. Viewing them in this way runs the risk that potential cost/benefit opportunities from examining the various components together will not be identified.

Recommendation 13
We recommend that –
The Ministry treats all its processes for administering benefits as components of an integrated system. It should periodically re-estimate the optimum balance of effort between the different components in order to achieve the most cost-beneficial outcome. The method of estimation should consider all costs and benefits, including those incurred by or realised by beneficiaries, rather than being confined to those of the Ministry.

Obtaining More Complete Information on the Population of Potential Beneficiaries

In our view, the Ministry needs information on:

  • the number of people likely to be eligible for benefits but who are not claiming them; and
  • whether this is because the people are not aware of their eligibility or have chosen not to apply.

The Ministry requires this information if its forecasts of the number of beneficiaries and the amounts of benefit it is likely to pay out are to be as accurate as possible. The information should also be reported to Parliament.

The Ministry does not believe that seeking out eligible people is its responsibility in the light of its interpretation of the Ministry’s obligations under the Social Security Act. However, for 2002-03, Parliament expressly appropriated money for The provision of information on the full range of assistance available to enable people to apply for any such assistance they consider they might be eligible for and wish to apply for.20

Making an effort to reach these eligible people would seem to be consistent with the Government’s social policy goals. Indeed, the Ministry undertakes a range of activities that are intended, among a number of objectives, to provide information to people who may be eligible for a benefit but have not applied (see Figure 13 below).

Figure 13
Ministry Activities to Improve “Uptake” of Benefits

Provision of information to potential beneficiaries, including advice:
• From case managers about possible eligibility for extra assistance e.g. Accommodation Supplement, Childcare Subsidy, and Family Support. Includes maintaining contact with people placed in work to help them achieve sustainable employment.
• On the front page of main benefit application forms about what extra assistance may be available.
Development and support of front-line staff to help them provide appropriate advice:
• Training through regional trainers, team coaches, and weekly briefings.
• On-line assistance – desk file, legislation, policy, “What’s New” page outlining changes.
• Helpline – on-call advice and assistance for staff.


These activities reinforce our view that the Ministry requires fuller information on the potential population of beneficiaries, since the activities are likely to be more effective if the characteristics of the target population are known.

Recommendation 14
We recommend that –
The Ministry periodically undertakes exercises to estimate the number of people who are potentially eligible for social security assistance but who have not applied. For a supplementary benefit such as the Accommodation Supplement, the exercise would be likely to require information on personal income that might best be obtained from the Inland Revenue Department. The Ministry should investigate the feasibility of undertaking data matching or data extraction exercises that would yield the necessary information.

18: That is, to be accurate in no less than 88-90% of cases – see paragraph 5.4.

19: The Ministry is currently required by the Purchase Agreement to process 95% of benefit applications within five days, although it sets higher internal targets.

20: Estimates of Appropriations 2002-03, parliamentary paper B.5 Vol.II, page 1060.

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