

One person every hour is reported for benefit fraud in New Zealand, but the Ministry of Social Development (MSD) is refusing to say whether it checks the motive behind those allegations.

Figures released to Checkpoint with John Campbell under the Official Information Act show 8968 allegations were made in the 2016/17 financial year, resulting in 5992 investigations.

However, an overpayment that needed to be paid back was only identified in 20 percent of cases - or 1829 of them - meaning 4163 people were needlessly subjected to an investigation.

"So many resources are being put into people with a gripe about anything, dobbing in these vulnerable people, and subjecting them to the misery of an MSD benefit fraud investigation," lawyer Frances Joychild QC said.

Ms Joychild successfully argued in the High Court for a beneficiary who MSD argued owed $109,852 because her bank loans and credit cards constituted income.

The woman, who has name suppression and can only be referred to as Ms F, spent eight-and-a-half-years fighting her case, which she says broke her mentally and physically.

The original allegation against her was made by an abusive ex-boyfriend.

"He later apologised and acknowledged they were all lies that he told, but that had no impact on MSD," Ms Joychild said.

"They got the allegation and they went for it … and all the time it was obvious he had a personal gripe."

She said MSD never tried to look into the man's motive behind alleging the benefit fraud.

"[MSD] just took everything he said at face value, then used the enormous resources of the benefit fraud unit to launch into this person and turn her life into hell."

MSD declined Checkpoint's interview request but said in a statement most of the benefit fraud allegations it received were anonymous.

The ministry also refused to answer questions around whether motive was checked for the allegations that were not anonymous.

Ms Joychild said Ms F's situation was not an isolated case.

One of her clients was vindictively accused of benefit fraud by a man her daughter accused of sexual assault, and she said she heard of another who "managed to waive an $86,000 debt that wasn't justified".

Together the two cases add up to nearly $200,000 - two beneficiaries who would have likely been forced into debt for most of their lives.

"It's time for this government to do a complete independent review of all the debts," Ms Joychild said.

"It's got to be done by external people, there's not enough external accountability with [MSD]."

The calls for a review have been echoed by the Child Poverty Action Group and other lawyers.