Social Services Minister Roger Sowry National must instruct Work and Income new Zealand to cease investigations of parents who have fallen foul of its disastrous new childcare subsidy regime, says Labour's social welfare spokesperson Steve Maharey.

"Parents have been threatened with their benefits docked as a result of Winz's muck-ups," Mr Maharey says. People have been investigated on suspicion of abusing a system when the system itself is at fault, as the Government now admits.

"It's time to tell Winz to back off. Nick Smith's belated admission that the childcare subsidies regime is a 'bureaucratic nightmare' is cold comfort to families still fighting the red tape.

The eight-month shambles of the subsidy regime is an indictment of the Government's incompetence, Mr Maharey says.

"It was clearly wrong from the beginning. Parents, childcare centres and Labour have been telling the Government this all along. I wrote to the Government as early as March pointing out the problems. My letters were just part of a stream coming in from the families and childcare people caught in the mess."

Childcare centres previously kept attendance records and made a single monthly claim for families entitled to subsidies. Since February 1, payments have been made weekly to the centres, and parents are responsible for reporting their child's absence directly to WINZ. The result is the regular overpayment of subsidies to the childcare centres. It then falls on parents to repay the debt to Winz and recover the money from the childcare centres.

"As usual, the response from Winz and the Government throughout has been denial. We're looking at a department and Government that refuse to admit their mistakes until they're unmanageable.

"The tragedy of this particular stuff-up is that it has loaded more stress onto those who need it least, namely beneficiaries struggling into work. National's only reason for changing the system was to try to pinch a few pennies and as usual the people who pay the price are those they pretend they want to help."

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