Nearly one in four beneficiaries could be receiving the wrong level of support, according to the Ministry of Social Development's annual report.
Just 77.6% of clients had their entitlement correctly assessed in the 2023/24 year, based on a representative sample.
That's worse than the previous year's result of 82.7% and well off the ministry's target of no less than 95%.
The ministry blamed the result on "case complexity [and] staff having to navigate multiple frontline systems".
Social Development Minister Louise Upston appeared before MPs this morning as part of scrutiny week. She told MPs the ministry "absolutely" had more work to do to improve its accuracy.
"I know how incredibly stressful it is, particularly if somebody's work hours are irregular... it's resulted in an overpayment, they then get a debt.
"It has been a problem for many years... quite frankly, MSD continue to work on that."
The average level of overpayment debt was recorded as $2948, again worse than the year before at $2850.
Green MP Ricardo Menéndez March pressed the minister on whether it was acceptable so many beneficiaries were potentially "getting less than they should and then struggling even more, or getting overpaid and then slapped with an overpayment debt".
Upston said the issue was "particularly challenging", but she hoped a planned major tech upgrade - Te Pae Tawhiti - would improve accuracy.
"I'm really confident that with the Te Pae Tawhiti programme, we will be far more accurate in terms of those payments."
Labour Party deputy Carmel Sepuloni followed up, asking whether the ministry's accuracy problems were due to inadequate staffing.
Upston replied: "No, because we have clearly protected the frontline... there hasn't been a reduction in the frontline staff."
Menéndez March also quizzed Upston on how accurately the sanction regime was being applied.
Neither Upston, nor MSD officials, were able to provide a figure, but Upston stressed that just 0.6% of beneficiaries were designated "orange" on the traffic light regime.
"When they're at orange, that is the conversation where if, for some reason, it is not accurate, that is the opportunity for the person to then say, actually, the information you have is wrong."
