The ministry says it will cut off funding to non-government providers from July unless they hand over information about their clients including names and the number of dependent children.
Privacy Commissioner John Edwards has slammed the policy as excessive and unnecessary, saying it could have serious and unintended consequences such as dissuading people from using services.
Ms Kapua says many Māori are already wary about seeking help, and that will get worse if it means their provider becomes an information collector for the government.
"It's hard not to get away from the fact they are sharing [data] and therefore it's about checking up on people, whether it's going to be about prosecutions in various departments and getting information that is going to be used against people. MSD hasn't been at all clear about what their purpose is," she says.
Ms Kapua says the ministry has enough anonymised information to assess the effectiveness of the programmes it funds.
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