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The Beneficiary Rabbit

Jan Logie MP
Jan Logie MP
jan [dot] logie [at] parliament [dot] govt [dot] nz (Email)
Contact: Jan Logie MP

SkyCity, the closure of Christchurch schools, leaving troops in Afghanistan – it was never going to be a particularly easy week for the government.

But to their political, if not moral, credit, the government seems to have planned for this and introduced the Social Security (Fraud Measure and debt Recovery) Amendment Bill.  It’s strange how these Bills pop up on certain days.

And it works for them. This story is now the lead political story on TV 3. What political reporter could resist this quote from Chester Borrows:

 “Let’s be clear – welfare fraud is a crime, committed by criminals, for their own benefit at the taxpayer’s expense, and we treat it as such without excuse,” says Mr Borrows.

 “National promised to clamp down on welfare fraud, and I’m pleased to deliver on that promise today.”

 So what’s actually in this little populist piece of political camouflage?

 1)      “The first initiative is to amend the law to create a new offence targeting partners or spouses of beneficiaries who are convicted of fraud.”

This is good to the extent it will lessen an abusers ability to control his partner with the threat of dobbing her in to Work and Income. He’s not as likely to use that as a threat when he might be liable for costs.

It’s also good to the extent it will share the financial burden of the debt. Currently it is women who are typically carrying all the liability.

BUT we do not believe women in violent relationships should be considered fraudsters and we’re not convinced the systems are in place to exclude women in this situation from being prosecuted.

2)      “introduce new ways of working with beneficiaries who have previously been dishonest with MSD.  These new measures include greater verification of information and less access to self-service transactions, and will cover around 1000 beneficiaries each year.”

This has apparently been trialled within the department and the reports I get are it has been messy; people have been required to attend a lot more face to face meetings, at increased cost, and their case managers haven’t really seemed to know what they were doing. This does seem like a very expensive and ineffective measure, likely to build frustration. The government has suggested these measures will apply to around 1000 beneficiaries pa but last year the department only prosecuted 789 people. I’m not sure how many were found guilty.

3)      Enable the department to investigate complaints of fraud without informing the beneficiary and increase information sharing between departments.

This is in part creating the legislation to enable current practice. The current legislation requires a beneficiary to be informed of allegations unless there is ‘reasonable cause’ to believe that to do so would be ‘likely to prejudice the maintenance of the law’.  

This law change will mean investigators can go straight to external sources such as Housing NZ, IRD or an employer to investigate an allegation by-passing the person who is most likely to be able to resolve the issue. Ninety five percent of benefit fraud allegations don’t have grounds for prosecution let alone conviction yet this law seems to amount to a presumption of guilt and may well create prejudice and concern about the person for no reason. While protecting against fraud we also need to ensure we’re not undermining the privacy and human rights of those receiving income support.

 In 2011 the beneficiary fraud rate was 0.1% and while yes there are over 16,000 allegations of fraud every year only 4.2% result in prosecution.

 Tax discrepancies, including fraud, are estimated to be over $1.2 billion pa. The Government tell us that benefit fraud might be around $60million.

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