The Beneficiary Rabbit

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.

37 Comments Posted

  1. BJ, it is best if you stop being so condescending.

    The Greens did claim well above market rents. I’m not specifically going after the Greens as English did it, too. What is annoying is many here damn English but give the Greens a free pass. They were BOTH out of order. They were both wrong and admitted same. Both as guilty as each other. Stop trying to justify one over the other on partisan grounds.

    I remind you of the Q&A interview:

    “GUYON So you have refunded Parliamentary Services. So you’ve become a second party to refund. Let me talk viewers through this because they won’t know about it, and let’s look at this Wellington home where Jeanette Fitzsimons and Catherine Delahunty live, now it’s a fairly modest house, but over a four month period from February to May this year, those two MPs paid a thousand dollars a week in rent out of taxpayers’ money to live there, nearly double the market rate. Now that’s a ripoff pure and simple isn’t it?”

    $2000? PW? An “oversight”?

    That’s either fiscal incompetence or a rip off. So which?

  2. Arana

    Unlike Wild Bill we actually audited ourselves and discovered a problem ourselves and fixed the problem (in 2009). Bill English had to be pushed pretty hard to come clean. You are basically full of shit on this issue.

    Now we are getting rid of the cause of the problem, which is the still LEGAL practice of the party owning the houses it rents to its members.

    From your link.
    Ms Turei says with the current confusion on MPs’ allowances and expenses it was decided the party should take decisive and clear steps so there is no doubt about the actions or intention of its MPs.

    Try not to become just another right wing nutjob. You have some potential as an honorable opponent… don’t blow it.

  3. When they tell lies it is. However, I’ll let it ‘lie’ for now. I won’t be regarding your claims with any more respect than you’re due though, Arana, and that’s none.

  4. Where have I lied, Greenfly? Why are you making accusations about another poster on FrogBlog? Is that within the rules?

  5. Greenfly attempts a lame diversion. Won’t work.

    If the Greens do believe in transparency, then open those books. That is what transparency means, not just claiming it. Transparency is an action.

  6. I believe in honesty. You lied before. If you want to be taken seriously, you should go elsewhere, somewhere no one knows that you tell lies.

  7. “You have yet to tell us all about the Green Futures super fund. An issue around market rentals, I recall. Tell us all about it.”

    Arana, I think this is was what you were referring to, but it was also related to the fact that we Greens were wanting greater transparency around MPs expenses and thought before challenging others the Greens should be clean themselves. An issue was identified internally and dealt with immediately. Other Parties should have done the same.

  8. Stealing from greed is worse than stealing from need, a simple concept but one National supporters dont get.

    The greens may have gotten infected by the greed, self-entitlement and rule bending which characterize the national government but I believe they have apologized and promised not to do such again.

    Whereas John Banks and John Key always claim not to remember what they said and did.

    John Key, National and their mate John Banks are liars ….. and everyone knows it and if they dont know it they are learning it

  9. Your morality seems highly selective. A politician who claims more than they are legally entitled to is just as bad as a beneficiary who does. They are, in fact, both beneficiaries taking from the taxpayer.

    National are plain evil …… Labor are bad and rotten, that sums up the two main party’s.

    You have yet to tell us all about the Green Futures super fund. An issue around market rentals, I recall. Tell us all about it.

  10. It would seem National party supporters expect higher standards from people on benefits than the “right honorable ” rip-off artists that make up the National Government.

    Lets not forget the politicians wrote their remuneration rules so the fact they built a trough which they get their snouts in should come as a surprise to no-one ….

    The $11 Million bonus scam that the Nat Govt paid the greedy mangers of Solid energy just shows that when the rich steal they inflict far greater damage than any solo mum or unemployed person.

    How many hundreds of millions were scammed by the directors and managers of all our recently failed finance company’s ????.

    Over 1 Billion and that was done by a very very small group of National voting old white men.

    National are plain evil …… Labor are bad and rotten, that sums up the two main party’s.

  11. Uh-huh. Before you start hurling stones, tell me all about property that was vested in the Green Futures super fund.

    We have politicians, operating “within the rules”, yet it’s the rules that are the problem. I agree there doesn’t seem to be much of a moral compass in many of them. Many have got “clever” with the rules as written, but not the intent.

  12. Why would Arana defend fraudulent behaviour from Government ministers?
    I’ve asked myself this question over and over but come up with no good reason. Defending English over his “accommodation” claims? Defending Banks over his “donations” dishonesty?
    Those corruptions are patently obvious to everyone!


  13. Everyone knows Bill English bull shitted about where he was living to claim more money.

    The police said John Banks broke the law and everyone knows he was telling lies about not remembering helicopter rides and $25,000 donations X2 from big kim.

    These are the standards of the present National Govt and you’d have to be stupid to support them.

    As a side note its been revealed the Govt has recently paid $11 Million in bonuses to the managers of Solid Energy !!.

    Lets have a fraud unit set up to look at “bonusus”.

    ….. as NoRightTurn puts it …. “That poor management has now cost us hundreds of millions of dollars. And we should be trying to recoup that loss from the people who caused it. At the least, we should be reclaiming their golden handshakes and performance bonuses – because its now crystal clear that none of them deserve a cent”.

    I bet that the amount paid out in bonuses to SOE’s is greater than total benefit fraud.

    The bonus fraud is worse in my eyes as its being driven by greed by the already wealthy.

    Benefit fraud would be more about a new pair of shoes for the kids …

  14. A serious allegation. You give examples of operating within parliamentary rules, not fraud.

    Pretty stupid to write such things down, Daddy0

  15. National Ministers commit fraud and never seem to get in trouble for it.

    For instance take Bill English, if a person on a benefit said they were living at a different address in order to claim a rent or housing allowance then that would be benefit fraud, right?. …. but not if your a National party minister , and Mrs English must have benefited from Bills lies and the extra money that brought into the house.

    And then we have John Banks not properly declaring $50,000 and claiming not even to remember asking for or getting it !!!, and of course Banks signs legal documents without even reading them. I bet his wife benefited too.

    So in essence if the National Government were beneficiary’s they would be prosecuted and booted off/out.

    The national government behaves the same as or worse than welfare cheats, but thats ok with national party supporters.

  16. I advocate for a single transaction tax replacing all other forms of taxation. Only a question of what is the right rate.

  17. A transaction tax, if done right, will be at such a low % that evasion won’t be worth the bother. Therefore penalties become a moot point. As an aside it will put all the tax accountants and lawyers out of a job, how sad is that?!

  18. sprout says “Kathryn Ryan of “Nine to Noon” tried to get Chester Burrows to say whether tax or benefit fraud deserved greater priority and he refused to answer”

    That was a very one sided interview – Borrows was cut off at every oportuinity. But the lawyer was allowed to rant endlessly, despite admiting he had no knowledge at all of the subject of the interview ! (the proposed new laws).

    There have been moves to clamp down on tax evasion. Among other things in the last few months NZ has entered treaties with other nations to share information between tax departments to clamp down on evasion, which has been a massive step forward.

    With someone getting say an unemployment benefit, if you get a tip off it’s VERY easy to prove they also have a job.

    Whereas with tax evasion, the IRD has to first know that there is money being earned that is not being declared. How do they find that out without investigating the whole country?

    i.e. to give the IRD a tip-off that someone is evading tax, you first have to had looked through their tax returns.

    However we should still be doing more on both fraud and evasion.

  19. Kathryn Ryan of “Nine to Noon” tried to get Chester Burrows to say whether tax or benefit fraud deserved greater priority and he refused to answer (claiming that he didn’t have responsibility for tax crimes). As Holly says on another post, National always appear to have a beneficiary related initiative to announce when other things are happening that may cause embarrassment.

  20. The Swedes also have no statute of limitations for financial crime and they are obliged to pursue until death, then tap the estate as first creditor.

    For good measure they throw in massive prison sentences.

    Ruthless but effective, I understand.

  21. And harsh financial penalties/prison sentences, samiam.

    Sweden (I think?) has an evasion enforcement policy of 7 times the sum in dispute.

  22. When there’s not enough money to EVER go to the pictures, on holiday, pay to see a good live show, for no other good reason than that there aren’t enough suitable jobs to go round (sure, we can all be cleaners – not being derogatory to those valuable people), or other circumstances, its little wonder they seek comfort in a partner while staying on a single adult’s benefit (or other), and often it is their childrens’ welfare that comes before being honest with WINZ. Meanwhile many civil servants live off the pig’s back. In some instances there is blatant benefit fraud, but mostly what will happen is more beneficiary bashing. But yes, the partner should be held accountable in cases of co-habiting on a singles’ benefit.

  23. “3/ It sounds perfectly reasonable for investigators to be allowed to go to an employer to see if someone is working while they are claiming the unemployment benefit (without having to inform the person first)”

    I had 4 heart attacks, I have two congenital chronic diseases, and I was forced out of the workforce as my ’employers’ refused to have me on their properties, so I went to Social Welfare, who in the goodness of their hearts decided I needed an interview to make sure I was on a benefit for all the right reasons. The non medical person who interviewed me seemed to get embarrassed by the questions she was obliged to ask, as that’s what were on the list. Is it my fault one of my chronic medical conditions is about sex?

    These poor people are forced by their gutless employers (the Government) to ask really personal questions because some moron in Government gets some stupid idea that Beneficiaries have some hidden agenda to get more money than they can working! That was actually one of the stupid questions.

    I feel really sorry for these people who are regularly forced to change tack and run their department differently because of the ever changing mindlessness of the Minister who runs their department. People eventually stop trying in those situations, they don’t want to do their best, they just want to get paid and go home! They stop caring.

    There are lots of people on the Unemployment Benefit because there’s no work to have, there are greedy employers who want work done but won’t pay for it. Does Social Welfare go after them? No of course not, the Minister of Social Welfare doesn’t care about people who have been ripped off because of their willingness to work!

    The last time the Minister of Social Welfare decided on a crack down it was to make all 5 year olds be attending a school, because the Minister of Social Welfare believes large numbers of Beneficiaries do not send their children to school. There is no evidence that says it is true, but beneficiaries are free standing targets! The Minister of Social Welfare must be racked with paranoia!

    Anyway, the Ministry has no way of enforcing this new policy, the Ministry has no idea which beneficiaries send their children to school or not, how many home school, or at what age they do send their children to school. A 5 year old is NOT legally required to attend any school, merely be REGISTERED at a school! The Minister of Social Welfare NEEDS a policy that can be enforced, that is being enforced, that gets the Minister in the news, to promote National Party dogma, also to deflect the population form the bigger issues of the day, like their anti smoking policy being the sole reason for the high value of the New Zealand dollar, forcing manufacturers to the wall, driving more people out of work and onto Benefits, where the Government can push them around!

  24. “1/ It sounds perfectly reasonable to charge someone with a criminal offence if they are knowingly benefiting from their partners benefit fraud”

    Recveiving stolen goods is not the same as ‘benefitting from suspected benefit fraud’ as people can be ‘defrauding’ by accident, but receiving stolen goods’ is not ‘by accident’ is it deliberate.

    If you receive money you’re not entitled to, that is defrauding, even when you’ve told Social Welfare that you no loonger require the money and have signed off the benefit. But they don’t always cut off that flow of money, and sometimes people don’t notice they’re being paid, when they thought they weren’t being paid. Others go overseas or are jailed, and their benefit is still paid to them, and they don’t know it, and the fault is with Social Welfare, but technically it’s fraud.

    Oh and if you read the news, the single biggest fraudsters of Social Welfare Benefits are in fact Social Welfare employees. And they do it because they can, or it’s a challenge they can’t resist, but they very rarely ever need the money. But people on a Benefit, they always NEED the money. It’s not exaxctly a fortune! If the Government really wanted to save money there are much bigger fish to fry than skinny little DSW beneficiaries.

  25. “Meanwhile, lets not forget the elephant in the room. Tax evasion costs the government between $1 and $6 billion a year. Meanwhile, welfare fraud costs only $39 million. They’re chasing peanuts while ignoring the pot of gold. But then, I guess those peanuts aren’t being stolen by their mates..”

    From NoRightTurn

  26. So will with this partners being convicted, how will it work, will they do test to make sure the partner is one for a start, do they have joint accounts, shares utility bills, married benefit status, or will they take it as it is to what favors the investigator on the day. Second will be the legislation making it where you can investigate behind the person back, and is it right for an employer, neighbor, bank manager, local cop, butcher, supermarket checkout operator, the local mechanic, the guy at the petrol station, president of the local RSA, Cossie Club, etc, the local MP, postie, budget adviser, the mother-in-law, the uncle over in the UK plus other people to know before the Person is being investigated. Example, Solo mother on DPB has father to come around daily to look after the kids, while mum does a couple of hours work because of DPB requirements. To the Neighbor, Is Carol in a relationship with Phil, neighbor replies, No they had a marriage break up.
    Investigator, so does he see the kids at all? Neighbor, well he come around everyday to see the kids. Investigator, So does she go out at all during this time? Neighbor, she got a cleaning job at the local school. Investigator, Do you know how many hours she work there? Neighbor, I don’t know a couple I suppose, its really none of my business. Investigator, does phil leave straight away when carol get home from work? Neighbor, sometimes yes, sometimes no.
    Investigator, do you deliver any mail for phil at all? Postie, occasionally but not often, maybe it someone who he has forgot to tell his new address. Investigator, is there ever letters addressed to both Carol and Phil? Postie, not sure, maybe. Investigator, did phil put in a mail redirection order for when he moved? Postie, no there wasn’t one.
    Investigator-Bank Manager
    Investigator, Does Carol and Phil still have a joint bank account? Bank manager, no that got close when they broke up. Investigator, do Carol and Phil have a joint mortgage? Bank Manager, yes they do, Carol would not be able to get a mortgage on her own, she only get the benefit. Investigator, is this the family home before they split up? Bank Manager, yes it is.
    Investigator, does Carol bring in her own car for her Warrant? Mechanic, Phil has brought it in, he only worked down the road. Investigator, do you say phil pays for it? Mechanic, well he hand me a cheque for it when he does. Investigator, what is the name on the Cheque? Mechanic, Carol’s.
    Investigator-Supermarket Checkout Operator
    Investigator, does phil and carol come in together to do the shopping? Supermarket Checkout Operator, not really. Investigator, how much do Carol and Phil spend a week on Groceries? Supermarket Checkout Operator, Carol about $150 and Phil about $75 but it does vary from week to week.
    Investigator-Carol’s Employer
    Investigator, how long has Carol been working for you. Employer, she been working for us since she broke up with Phil? Investigator, what is Carol’s role? Employer, Cleaner, and a good one. Investigator, how many hours a week does she work? Employer, about 10 hours a week. Investigator, does she get paid every fortnight? Employer, well she is one of my employees having problems with nover pay, at least she had the DPB to help her out, i don’t know how she would have coped otherwise.
    Investigator-Phil Employer
    Investigator, How long has Phil worked for you? Employer, about 15 years. Investigator, what was Carol doing before they broke up? Employer, she was a stay at home mum. Investigator, do you know that Carol has a job now. Employer, yeah i know that, phil has to finish work at 3 now, to look after the kids while she is at work, he used to finish at 4. Employer, Do Carol and Phil know that you are investigating them? Investigator, no they don’t and you are not allowed to tell them, otherwise you will be charged with perverting the course of justice.
    Investigator-Budget Adviser
    Investigator, does Carol get any extra money from phil? Budget Adviser, no she doesn’t, but he does have a steak in the house. Investigator, do you know how much of a share he does? Budget Adviser, about 50% i think.

    Investigators conclusion
    Carol is committing Relationship fraud
    1. phil comes to the house every night.
    2. phil has a 50% steak in the house.
    3. phil take the car to the mechanic for a warrant, and pays for it, himself
    4. phil is living off site so they can receive DPB money plus accommodation to help pay the mortgage
    5. carol and phil closed the joint account to avoid suspected question when giving MSD her bank account number
    6. phil still lives at carols because he receives his mail the on a regular basis
    7. carol is also committing fraud related to her income at the school, despite novapay not paying her, she was legally obliged to still report the income and msd would have made the appropriate deductions.
    8. her having a food grant in October when her pay from the school didn’t go through is also a case of fraudulent behavior as she should of been paid from the school.
    9. my advice she should have taken her employer, the school to court over her pay not being paid, as it not MSD fault she was not paid.
    Your sincerely
    the corrupt MSD investigator

  27. 1/ It sounds perfectly reasonable to charge someone with a criminal offence if they are knowingly benefiting from their partners benefit fraud (just like someone knowingly receiving stolen goods, or part of the takings in a bank robbery).

    Though this should be for knowingly benefiting from ALL fraud, theft, and similar crimes – not limited to just benefit fraud.

    2/ It sounds perfectly reasonable to have extra checks and not allow self service for criminals who have already been convicted of benefit fraud previously.

    3/ It sounds perfectly reasonable for investigators to be allowed to go to an employer to see if someone is working while they are claiming the unemployment benefit (without having to inform the person first)

  28. If I comment and I’m a beneficiary and the Gov’t doesn’t like my comment will that be cause to investigate me?

    If my real name is John Banks anmd I receive $50,000.00 in two payments instead of one, can I pretend I didn’t know and get away with it? After all, all John Key need do is pretend he’s never read the report accusing me, to pretend I never did anything wrong, all I need do is say I never did anything wrong.

    Is it a case of “do as I say, not as I defraud?” Is it one rule for the 1 seat majority holder and anouther law for everybody else? How short are New Zealander’s memories?

  29. I look forward to the “Tax Dodging Business(Fraud Measure and debt Recovery) Bill” (it would save the taxpayer at least 20 times as much as benefit fraud)but I won’t hold my breath. Our leaders won’t dob themselves and their mates in…

  30. It would be only fair for this rule to apply more generally to fraudsters. Looking at the numbers, roughly $40 million a year in benefit fraud vs 40 billion in other fraud, I think we’d get a lot more bang for buck by stripping human rights from anyone suspected of benefiting from tax fraud (just to pick an easy parallel). Why not allow the IRD to quietly nose around asking questions about people and companies who don’t seem to pay enough tax?

    But as you point out, this is dog-whistling and bashing away at people not seen as likely to support National, it’s not actually meant to improve NZ society.

  31. The 1000pa/789pa figure might work out if you assume that the 789 people prosecuted later receive benefits for more than one year, and thus are counted more than once overall, but that’s only if they have to continue to have the meetings to continue to receive benefits, rather than just to get them.

    On the whole I’m (obviously) not too keen on these changes – of the ones you listed, #2 seems incredibly fuzzy and wishy-washy and #3 is the one I’m most opposed to. They claim 95% of requests don’t get responded to so the case is held up for 25 days. Aw, how sad, democracy is slowing you down. Sir Geoffrey Palmer commented on that once – “more democracy, less speed”. He didn’t mean it as a bad thing. (Incidentally, it usually takes months for a private citizen to go through the justice system when they’re a victim of a crime, if not longer. IIRC it was about five months for me for an assault & battery.)

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