Some beneficiaries affected by the earthquake in Canterbury are having their payments docked because of interest accruing on their insurance payouts.
The Ministry of Social Development considers the interest on payments from the Earthquake Commission to be a source of income and is reducing people's pensions and benefits accordingly.
Christchurch East MP Lianne Dalziel says it is nonsense to think that the interest accrued before repair work can be carried out would be used for day-to-day expenses.
Ms Dalziel says there is still an excess to pay and people will need to put every bit of the interest towards that.
She is calling on the Government to make an urgent exception to the way income is means-tested by Work and Income.