Hon Chester Borrows
Associate Minister for Social Development

29 August 2013 Media Statement
Welfare fraud bill passes first reading

Legislation to ensure that both parties in relationship welfare fraud are held to account passed its first reading in Parliament today.

“We know the overwhelming majority of beneficiaries are honest and follow the rules,” says Associate Social Development Minister Chester Borrows.

“Yet those very few who chose to defraud the system place a very real cost on a system which should be there to support our most vulnerable citizens.”

The Social Security (Fraud Measures and Debt Recovery) Amendment Bill introduces a new offence designed to catch partners of beneficiaries who receive a single benefit, such as Sole Parent Support, when they are in a marriage-like relationship.

Only partners who knew of the fraud, or turned a blind eye to it, will be captured by the new offence.

“Relationship welfare fraud cases are some of the most difficult fraud cases the Ministry of Social Development faces,” says Mr Borrows.

“They made up more than half of the $48 million of welfare money taken dishonestly last year, and are frequently among the highest value cases.

“Yet too often one partner, usually the woman, is left carrying the whole debt, when it took two people to create the offence. That’s not right.

“These changes will allow us to hold both partners to account, and help the taxpayer recover the money faster.”

The Bill received wide support, passing with 103 votes in favour, and will now be considered by the Social Services Select Committee.

The changes are part of a package of initiatives announced earlier this year to better prevent, detect and punish welfare fraud. These include:
• new measures to prevent reoffending by beneficiaries who have previously ripped off Work and Income;
• new joint agency fraud investigations which have already seen charges laid against 28 people as part of a $375,000 scam in Auckland; and
• enhanced information sharing between the Ministry of Social Development and Inland Revenue, with over 3000 illegitimate benefits cancelled since it began earlier this year.

Mr Borrows also used his speech on the Bill to highlight MSD’s latest year to June fraud results.

“Already we’re starting to see the benefits of our welfare fraud initiatives. The amount of fraud and dishonest overpayments has risen from $41 million in 2011/12 to more than $48 million this year.

“More pleasing is the big increase in money that we’ve stopped going out the door illegitimately in the first place, which rose 30% to $108.5 million. Preventing a debt being created in the first place is good for the taxpayer and for the beneficiary.”

More information on the Bill, including how you can make a submission to the select committee, can be found on www.parliament.govt.nz.

ENDS

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