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.”

WELFARE FACTS # 1: THREE OUT OF FOUR UK BENEFIT CLAIMANTS FOUND FIT FOR WORK

Evidence of the need for reform of Britain’s £192 billion per annum welfare system continues to flow in, with applicants for the new Employment and Support Allowance (ESA) now having to submit to tough new tests called “work capability assessments”.  Currently 2.6 million Britons claim the incapacity benefit, costing taxpayers £12.5 billion a year. According to The Telegraph, four out of 10 new applicants for the ESA were found fit to work and:

Another 36 per cent abandoned their application before submitting to medical tests, leading ministers to suggest that many gave up their attempt after realising that they would have to be assessed by a doctor.

Just six per cent were signed off work, with another 16 per cent found to be capable of some form of employment if they received help and support.

UK Employment Minister Chris Grayling said the figures justified the government’s plans to shift people off incapacity benefits which have simply been used as a “dumping ground”.

“We now know very clearly that the vast majority of new claimants for sickness benefits are in fact able to return to work.

“That’s why we are turning our attention to existing claimants, who were simply abandoned on benefits.

“We will, of course, carry on providing unconditional support to those who cannot work, but for those who can it’s right and proper that they start back on the road to employment.”