by Catherine Delahunty
The Government smokescreen for inaction on the rising unemployment figures is to raise the spectre of benefit fraud. I had a look at the Ministry of Social Development statistics and found this is not a growing problem:
| Year | Investigations | Overpayments | $ overpaid | Prosecutions |
| 2003-2004 | 53,631 | 9,845 | 50,048,006 | Not available |
| 2004-2005 | 55,632 | 8,203 | 41,455,851 | 1,306 |
| 2005-2006 | 45,992 | 7,299 | 35,757,865 | 937 |
| 2006-2007 | 39,141 | 7,084 | 41,935,634 | 905 |
| 2007-2008 | 26,736 | 4,407 | 33,702,275 | 1,028 |
That would indicate, if anything, beneficiaries are becoming more honest. We do not need a new initiative to sort out the “bad” poor people from the “good ” poor people because we already have the Benefit Control Units with what the Auditor General referred to in 2008 as “good systems, policies, and procedures in place to prevent, detect, and investigate benefit fraud.”
The Benefit Control Units are very active in pursuing anyone they think is exploiting the system. The Green Party wishes there was equal energy put into positive help to find appropriate work and a living wage for people in poverty. It would also be great if MSD staff gave all people full information on their actual entitlements for support.
I acknowledge that some people rip the system off but there are many who get investigated and are found to be confused and struggling, but not con artists. My only experience of advocating for solo mothers who were under investigation was shocking. One investigator demanded a diary of dates when she had sex with a neighbour with whom our client was casually involved. Another male investigator directed discussion with a solo mother under investigation by suggesting they talk about “love”, which was bizarre and inappropriate.
The real agenda behind the great red herring of benefit fraud is a plan to shift more vulnerable people from the more secure invalid benefit onto the sickness and unemployment benefits and to start pushing parents of children aged 6 out to work. Work is scarce enough at the moment so you would think it would be a focus of Government effort, but it is so much easier to talk about bludgers off the welfare system, so the public can be encouraged to froth with indignation. This is understandable as most people hate a rip off, but we are not encouraged to look at the long term rip offs from the big players such as the banks and businesses who have been found in courts of law to have been exploiting us.
The Government showed virtually no interest in the banking inquiry in 2009. Bashing the little fish is so much easier!
Published in Economy, Work, & Welfare by Catherine Delahunty on Mon, February 15th, 2010
Tags: beneficiaries, beneficiary bashing, Benefit Control Units, Ministry of Social Development, unemployment
More posts by Catherine Delahunty | more about Catherine Delahunty
on the trolls and those who are unable to keep on topic
Yeah I’m pretty sure it’s always been in fashion
Like or Dislike:
4 
2 (+2)
Any focus on fraud or abuse is counter-productive. But a debate about misuse is overdue. Is it, for instance, misuse of a benefit to add children to it? Or to move a family to an area where there is no prospect of working? I am certain that the architects of the original social security system would be aghast at today’s numbers of dependent people – one in eight working age people.
Like or Dislike:
5 
5 (0)
Like or Dislike:
12 
2 (+10)
SPC, Full employment was only achieved through government work schemes. It isn’t the sixty-odd thousand on the unemployment benefit that would have surprised Savage and Nash after abandonment of the full employment policy. But the quarter of a million on the sickness, invalid and domestic purpose’s benefits would have had them reeling.
Like or Dislike:
4 
7 (-3)
“The Green Party wishes there was equal energy put into positive help to find appropriate work and a living wage for people in poverty.” Please tell me why they can’t do it themselves, and why it is someone elses responsibility?
“It would also be great if MSD staff gave all people full information on their actual entitlements for support.” Actual entitlements? Who on earth is born to receive “actual entitlements” while doing nothing (or making babies) and get paid by those who actually work and produce?
Like or Dislike:
5 
12 (-7)
Haven’t had one, then kiwi?
Like or Dislike:
6 
2 (+4)
That is a very interesting post Catherine, it is most definately a smoke screen and it is often used by right wing governments to deflect culpability from their own dirty yards to those who are vulnerable.
Not many people know that Senator Mc Carthy was going to be investigated for fraudulant financial practices (tax dodging) in the mid fifties. So he embarked upon a campaign of bashing communists, and to his advantage it took off and got way out of control.
He wasn’t investigated!!!!
Jenny Shipley did the same sort of thing in the ninties when the likes of Fay/ Ritchwhite and co were hastily jumping boat to avoid prosecution for tax evasion.
The real big time corporate criminals have Act and National firmly in their pocket.
I would be interested to compare the above figures that Catherine has provided with the annual rate of tax avoidence commited by the large corporations.
One example that sticks out like a sore thumb is how much a corporation like Rio Tinto pays in tax and how much it pays on a leasing land from the government for the Manapauri smelter.
If they were kicked out of the country there would be extra power to provide 350,000 homes daily.
Now value that in dollars and think how many people that would employ and then I an sure we would realise who the big criminals are.
Like or Dislike:
14 
5 (+9)
PLUS
having lost 83000 tax payers to Australia this last three years (sure that includes children, but they are the future tax payers required to service the loans we are burning up today).
http://www.briangaynor.co.nz/blog/2010/2/12/who-will-turn-out-the-lights-as-flight-to-australia-accelera.html
Watch with interest what the IMF and the creditors for Greece will require from the Greek people to repay debt.
Same in New Zealand. That mining issue is the first soft sell to finance the repayments New Zealand will need to make on all those loans (budgetted to be $160Billion by 2016 and requiring ALL surplusses in the economy till 2030 before they will be repayed).
So this latest “benificary bashing” is part of the what New Zealand must do today to try and minimise borrowing so that in future our children wont be beholding to any foreign lender.
Greens are fully into sustainability so yes hit the tax avoiders like big business PLUS the tax avoider like the benificiary who should be in productive work.
Social welfare will be unsustainable in the future unless those who can get into productive do so and work towards paying taxes to enable funding to those who need a temporary hand up to get back onto their feet.
Like or Dislike:
8 
0 (+8)
Ooooops. Its $50 Million per week.
Like or Dislike:
1 
0 (+1)
“If they were kicked out of the country there would be extra power to provide 350,000 homes daily.”
Bad move. Very Bad. That power is hydro and clean and if we don’t make it here the Al is going to be made in China or Oz with power that is Coal and dirty as sin. The Hydro was built with the Al smelter in mind and the whole thing works quite well. Better than trying to transmit power the entire length of the South Island, across the Cook Strait, and most of the way up the North Island to Auckland where it is actually needed. We export hydroelectric power in the form of pure Aluminium, and we derive income from that as a country. It is one of the few actual productive industries we have remaining.
We must NOT look at the power demands of the Al smelting operation and think of it as a resource we can obtain at no cost. If we take it the price is quite high indeed.
respectfully
BJ
Like or Dislike:
8 
0 (+8)
Not to mention the jobs (read tax payers) that the smelter requires both directly and indirectly.
Drakula
How, where and doing what?
You mean those politicians (Greens included) who are borrowing from our children to pay for an unsustainable welfare state today?
Like or Dislike:
5 
0 (+5)
such as those who are “milking” the welfare system?
Like or Dislike:
7 
5 (+2)
The smelter is a power resource that we are already using. During dry years, the smelter cuts back on its electricity consumption. If you kick them out and use the power for other purposes, you will end up with bigger power shortages during dry years.
However we could make more use of smelters’ ability to use off-peak power. The Tiwai Point smelter is unusual in that it runs continuously. Most aluminium smelters run on off-peak power only. (This could be related to why Tiwai Point produces some of the highest quality aluminium in the world.) Changing some of the pot lines at Tiwai Point to run intermittantly would allow better use of variable renewable resources like solar, wind, wave and tidal power generation and reduce the pressure on peaking plant such as gas turbine generators.
Trevor.
Like or Dislike:
3 
1 (+2)
The use of renewable energy for aluminium smelters is interesting. I understand that Iceland is investing big time in using its renewable energy for aluminium smelting in a bid to dig itself out of its financial problems. It is unpopular with some environmentalists because of destruction of wilderness areas; this is similar to the protests concerning Lake Manapouri when the power station was built there.
In Australia, the proposed carbon pollution reduction scheme provides free permits to aluminium smelters which use electricity generated from coal. I raised the issue of how it would be better to let the smelting industry go to places like New Zealand and Iceland in a seminar given by someone from the Department of Climate Change, and was told the reason for free permits was to protect jobs.
So there is a trade off here: flood lakes etc to produce hydro electricity for smelters, or burn heaps of coal.
Like or Dislike:
0 
0 (0)
I can sail or water ski on a lake. I get nothin at all from a Coal Mine and my kids get to cope with the warming…
…yup, that’s a tough decision there.
Not saying all hydro is good mind you, but when you put it that way I just couldn’t resist…
Like or Dislike:
2 
0 (+2)
BJ,
Dont forget the fishing.
Must be a que though for all those “wild” river lovers to dump on the electric power generation capability of a river system.
I would prefer the electricity generation capacity AND the jobs (tax paying) generated (pun intended) PLUS a placid lake over any wild river.
One way to reduce overseas borrowing and attracting foreign investment into paying taxes to fund our leaking welfare system.
Like or Dislike:
3 
1 (+2)
Gerrit – given that our population will increase, along with our need for jobs and electricity, your yearning for placid lakes over any wild river points to the loss of them all. This is not a pov that you’d expect to get a lot of support for here on Frogblog.
The placid lake .v. wild river seems to have psychological implications, I think, much like the lawn .v. wild garden issue.
Like or Dislike:
4 
3 (+1)
greenfly,
No doubt.
Reminds me of the quote from a long ago song.
“Everbody wants to go to heaven, but nobody wants to die”
We want the safety net that welfare provides but we dont want to dam, mine, or allow a nuclear power station to make it sustainable.
Still if we keep borrowing like we are, we as citizens may not have much choice.
Watch with interest not just Greece but also the other “PIGS”, namely Portugal, Spain, Ireland and see what will happen to the sovereignty when you end up owing your soul to the devil.
Worth a read
http://mises.org/daily/4091
and a background on what happens when people live beyond their means.
Like or Dislike:
2 
2 (0)
Kia-ora
Like or Dislike:
6 
1 (+5)
Gerrit – I share you reservations over living beyond one’s means, though I don’t agree that mining, damming or building nuclear powerstations is the appropriate solution, given that none of them align with my perception of ‘Green Solutions’. There are better ways to serve the needs of the people, not the least being improved efficiency of existing resources and behavioural change in the consumers.
Like or Dislike:
5 
3 (+2)
I’d like to see them publish the figures for how many cases of underpayment to beneficiaries have been logged in the years concerned, I’m sure the People’s Resource Centre have a pretty good idea!
Like or Dislike:
5 
1 (+4)
Commenting on the lowering number of fugures in subsequent years,Catherine says “That would indicate, if anything, beneficiaries are becoming more honest”.
No, it could indicate that fewer debts arising from fraud are being investigated – ie more fraudulent debts are being written off instead of investigated.
Like or Dislike:
2 
1 (+1)
There is much more cost from the bludging done by those who hide their income in trusts to qualify for WFF (and qualify children for student allowances) and from those who buy and sell houses for profit but never pay CG taxation on their profit, than by beneficiaries.
And the irony is, if “bludgers on welfare” who could work were in jobs, others now working or desperately looking for a job would be on welfare in their place – as there are too few jobs for full employment. Thus there is little saving in targeting bludgers on the dole – only those being over-paid because they get black market work money they don’t declare, or those who committ benefit fraud.
Given the facts, the focus on welfare is misplaced.
Like or Dislike:
4 
2 (+2)
Of course there will be those who are dishonest abusers of the welfare system – just as there are dishonest abusers of the tax system. I have friends who have laughed at me for declaring ‘cash jobs’ – and also for not partaking of “perks” (stealing from the firm). And what about the likes of the Bridgecorp directors? I long ago came to the conclusion that theft in its many forms is normal for human beings. So to those of you who are quick to criticise those who are dishonest beneficiaries, I say along with Jesus – “First take the beam out of your own eye before you point out the speck in someone else’s”.
Like or Dislike:
5 
0 (+5)
It is also interesting to compare those overpaid with those underpaid. Yes folks – UNDERPAID!
This figure can be identfied. When Labour introduced the Woking fior Families/Employer subsidy in 2005/6 it removed the Special Benefit and replaced it with Temporary Adfditional Support (TAS). Both are third tier levels of support for individuals/households in hardship. Both driven by formula of which the main costs are accommodation and health related. The difference being Special benefit allowed discretion to take into specific circumstances whereas TAS is controlled by regulation. Assistance driven by regulation should be easy to get if one meets the criteria, one should get it – YES!
Sadly, NO!
MSD report the take-up/granting of TAS for those they can determine are eligible is currently only 58%. Yes, more than 4 in 10 are missing out. And this is based on details MSD/Work and Income have about the beneficiary’s circumstances. The percentage varies between 73% for the best sevrice centre to 36% in the worst. The numbers estimated to be missing are 34,000! That compares to the 4,400 overpaid.
Sadly but not surpisingly the bureaucrats in Work and Income are winning, and the poor folks are loosing…..And behind the statistics is an anti-brown skin bias too.
Like or Dislike:
5 
2 (+3)
Full employment came up in this discussion thread with some thinking past government’s full employment policies (1936-78 in any case) focused mainly, if not exlcusively, on employing people directly. This is a narrow perspective.
Bill Sutch, perhaps NZ’s most significant public servant of this era argued for import-led economic planning, and it was this that lay at the heart of the “full employment” initiative. It was acheived mainly through tariffs and import licencing and many industries here developed as a result, and, yes, they employed people. I agree state departments, including the armed services were certainly used to employ,but more importantly they trained workers. The vast majority of tradesmen during this period came from apprenticeships spent within the broader public service(including the armed services as well as Railways, Works and development, Electricity dept etc).
While import-led economic planning is not popular anymore – export-led planning is the vogue (with the drive for so-called free trade – I suspect import-led economics may be the key to our future as the price of oil hits the cost of exporting as opposed to domestically grown goods and services with the cost of oil affecting exports of goods (dairy, wine etc) and services (tourism).
I have also indicated in previous posts that the ratio of futt-time equivalent employed people as a percentage of of the adult population was remarkably static through-out the 20th centuary. This idea can be seen as the “dependency ratio” when comparing workers to the entire population and there was quite a lot of literature about the subject in the 1990s by NZ social policy researchers. MSD, or the Ministers during this period tried to politicise the term as part of the beneficiary bashing campaign but failed as their analysis did not stack up.
In any case, the particpiation rate of those in the labour market full-time according to census data was 40.3% in 1891 and 41.9% in 1981, (the definition changed in 1986 to 30/hrs per week as opposed 20/wk pror) with it maxing out in 1911 at 45% and actually hitting its low of 37% in 1961. (Note 1: No census waas done in 1931. That anomoly aside, the figures are relatively static. Note 2: There is some methodological issues around part-time work when the full-time was defined as 20/hrs/wk prior to 1986.) (Source: 1996 Year Book)
The dependency ratio according to my own analysis was 1.536 in 1896 and 1.700 in 1991, with the lowest ration 1.330 to 1 in 1911 and the worst 1.701 in 1961. (I simply took the ratio of FTE workers to the entire population) Subject to the caveat of not having data for 1931, the worst ratio was 1961 the height of full employment – ironic really.
Like or Dislike:
2 
0 (+2)
Like or Dislike:
3 
0 (+3)
Don’t despair, there will be minimum wage jobs for all beneficiaries in the mining industry really soon..I imagine it will be ok to take the kids to work, they can get into really small spaces…
Like or Dislike:
2 
0 (+2)
And Miners’ Lung is a disease all the family can enjoy!
Like or Dislike:
2 
0 (+2)
‘fly, recall that we used to have a Miners’ Benefit as part of the social security system:
If Gerry has his way, we might have to bring that back.
Like or Dislike:
1 
0 (+1)
If Gerry has his way, no pie, pudding or pastry will be safe to walk the streets alone.
Like or Dislike:
2 
0 (+2)
@dave February 16, 2010 at 7:15 PM
If that were the case, I’m sure the Auditor-General’s office would have picked it up in their 2008 report as being an area that needed improvement. They didn’t.
Like or Dislike:
1 
0 (+1)
Toad, no, because only fraud identified as such in the system would be picked up ( written off fraud is not identified as fraud), and only overpayments that are escalated would reach the attention of the auditor general I would have thought.
Anyways if you are deemed as being overpaid AND not receiving TAS when you should, do you think the overpayment will be offset against the underpayment?
Like or Dislike:
1 
0 (+1)
Bj; My point here is that if the smelter was 100% owned by NZ or better still a state owned entity I would agree with you.
BUT who owns Rio Tinto? and where do the profits go?
Certainly not to New Zealanders.
The Holland government had foolishly signed a 99 year lease at a ridiculiously low rate to the then Comalco company (now Rio Tinto).
Even Muldoon tried to negotiate more reasonable terms but Comalco were being hard nosed about it determined to screw the New Zealand public.
And who put up the money to build the tunnel (that took 12 lives) and the power station? That can be taken as a rhetorical question.
I am not saying that fraud is right from anyone but if the corporates government are going to get heavy with the workers, then we need the data to fight back!!!!!!
Like or Dislike:
1 
0 (+1)
BJ;Furthermore what did Rio Tinto do to the community in North Baugainville? It had New Guinea’s Chan government firmly in it’s pocket when they hired mercinaries to drop tons of explosives on that community. Luckily that attack was foiled by aan insider rebellion.
There is a good parallel on this story with Avatar on http://www.socialistaotearoa.co.nz and shows Rio Tinto in it’s true light, a preditory corporation that has been a blight on this country for over forty years.
The beneficiary fraudsters would look like Rin Tin Tin in comparison.
Like or Dislike:
0 
0 (0)
Benefit fraud is actually ver low, and if detected is not written off. The main rea of benefit fraud is a person working and not declaring their wage income while in receipt of the full benefit. This may be detected fom the various investigative tools WINZ has, including data matching. A second area of fraud is single and sole parents living in the nature of marriage, but this rea is less clear because of difficulties in determining the real nature of the relationship. SD/WINZ I claim are failing to implement the definition of marriage relationships determined y our Court of Apeal.
Overpayments are another matter. They can be written off (section 86(9A) and (9B))BUT WINZ have to be shown to have overpaid by error, the bene did not contribute to the error, the bene relied on the over paid benefit in good faith, and it would be unfair to expect repayment. Proving the 86(9A) and (9B) arguments is difficult.
Like or Dislike:
0 
0 (0)