WELFARE FACTS #2: BENEFIT FRAUD ON THE RISE

Three separate welfare stories caught my eye this week, all on benefit fraud.  The Bay of Plenty Times reported that more than $1 million of benefit fraud was committed by 41 Western Bay people prosecuted in the 18 months to the end of last year.  According to a lawyer for the Ministry of Social Development, benefit fraud is on the rise.

Benefit fraud cost New Zealand taxpayers nearly $16 million last year, and fraud detected by the Ministry has almost doubled from $8.1 million five years ago. That figure includes fraud committed by 10 social welfare staff, who were sacked for ripping off the system.

 MSD chief executive Peter Hughes says:

I do not tolerate benefit fraud and whenever a client has [been] deliberately involved in planned and premeditated benefit fraud they are prosecuted.

And yet I read in Tuesday’s New Zealand Herald about 5000 people who had moved off the dole, but who it seems should not have been on it anyway. This was, according to Minister Paula Bennett,

… because of the new requirement to reapply after a year, either because they did not reapply, had found jobs or were no longer eligible.

“It was an interesting exercise that tells you 5,000 people who were on an Unemployment Benefit didn’t actually need it and probably shouldn’t have had it.”

What is that if not benefit fraud? 

A conventional view is that you can’t get immediate savings from welfare reform – you have to first invest up front to get people into work. Cases like this cast doubt on that view.  And I suspect there would be a lot more low-hanging fruit. 

Here’s another example from the same Herald story. Until recently only 37 percent of beneficiaries were work-tested, but changes already brought in by this government are making a difference, such as part-time work requirements for DPB recipients with children over the age of six:

The number of those coming off the DPB since part-time work requirements were introduced had increased by 22 per cent over the past year – to more than 3,500 people.

Then on Tuesday in Rotorua’s Daily Post  I read about two Rotorua households being investigated by MSD:

Figures released to The Daily Post show two homes in the city, each occupied by six adults and one child, receive weekly benefits totalling $1749.60 and $1590.74.

That’s $173,000 being collected by these two households annually. The article also reported that:

… one Mangere home has 18 occupants, including 11 children, collecting weekly benefits of more than $2400.

Rotorua beneficiaries advocate Paul Blair has slammed the investigation as “benefit bashing” but Ms Bennett told The Daily Post it was about accountability to taxpayers and ensuring fairness.

Ms Bennett said some of the worst cases of child abuse in New Zealand occurred in situations where multiple people were living and collecting benefits.

Good on her. Too few people in the welfare sector have the courage to speak out about the link between child poverty, child abuse and benefit-dependent households.

‘Beneficiary bashing’ is also the tired old term a number of so-called beneficiary advocates have used to attack the Welfare Working Group’s report on reducing benefit dependency. ut you’d be hard pressed to find anything in the report that sounds remotely like that.  Indeed there is much in the report that proposes improving the lot of beneficiaries, not just through helping those with work capacity to get jobs, but also, and importantly, improving support for the truly needy with significant sickness and rehabilitation needs or disability issues that prevent them from participating in society.  The report’s emphasis on the need for much improved core health services, such as mental health services, disability support and rehabilitation for people recovering from sickness and for those with drug and alcohol dependency problems, should be welcomed by people working in these sectors.

Meanwhile it is good to see MSD getting tough on benefit fraud and abuse.  Relationship fraud is reportedly one of the most prevalent forms of abuse, and measures are needed to remove the difference between payments made to single individuals and those living with a partner. Among the working group’s recommendations in this area is a publicity campaign to reduce public tolerance of benefit fraud and abuse and promote use of a hotline to report it.   Sounds like a smart idea. After all, as Minister Bennett said: 

“Hard-working New Zealanders are doing it tough and would love to have an extra $1000 a week coming into their homes.”

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5 thoughts on “WELFARE FACTS #2: BENEFIT FRAUD ON THE RISE

  1. Sounds like it will all achieve absolutely nothing

    There is only one real welfare “reform” as you know all too well: stop the cheques.

    Now who was it who said: “We know what needs to be done – so why don’t we do it?”

    Answer your own question: why don’t we just stop all the benefits?
    We sure as Greece can’t afford another red cent

    Do you really think, that if all the benefits stopped, one million Kiwis would starve to death?

  2. I look forward, in the interests of balance, a post on corporate fraud in NZ and how much that costs NZ Inc every year.

  3. Chickenfeed compared to the $l billion (approx) given to the 65+s who, whatever else they might need, do not need social welfare money. Shame on them who did line up with the unemployables and the teenage mothers to hold their hand out.

    • Right! Do you know it would take only an order in council to stop all benefits in NZ.

      After the election, Don Brash as minister of finance could finally stop all the rot over the first weekend

  4. The evidence for the existence of widespread benefit fraud is paltry to non-existent – despite the fact that a special fraud intelligence unit was set up in the Social Welfare department in 2007 to detect it. Last year, the department checked 29 million records, and found the benefit fraud rate (as a proportion of the total benefits paid) was a miniscule 0.10 per cent. A declining number of prosecutions – from 937 in 2009 to 789 last year – resulted.

    Of the $16 million in benefit fraud detected last year, a proportion was carried out by social welfare staff – ten of whom were sacked last year for ripping off the system – and not by beneficiaries themselves. While any level of benefit fraud is unacceptable, the $16 million a year currently being incurred is hardly an intolerable burden. Currently, New Zealanders spend $16,1 million a day on impulse purchases.

    Moreover, other forms of unacceptable behaviour leave benefit fraud far behind in the dust without attracting the same negative stereotypes. The major foreign owned banks for instance finally agreed in late 2009 – and only after being pursued at great expense through the courts by the IRD – to cough up $2.2 billion of what they owed in unpaid taxes. Meaning : the settlement figure this case alone was about 140 times greater than the total amount lost in benefit fraud last year..

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