Social Security (Fraud Measures and Debt Recovery) Amendment Bill

I move, That the Social Security (Fraud Measures and Debt Recovery) Amendment Bill be now read a first time. I nominate the Social Services Committee to consider the bill. New Zealand has a welfare system we can be proud of. It is a safety net that is there for those in need. Although we might debate the details of our system, we are all proud that, as a society, we look out for each other. The overwhelming majority of people receiving welfare assistance do the right thing and follow the rules. Unfortunately, a tiny few see our welfare system as a target. They put their own greed first. They take money they are not entitled to, and in doing so undermine the entire welfare system. As a Government we have a responsibility to the taxpayer whose money funds the welfare system. That is why this Government has taken action against welfare fraud. This bill is part of a package of measures that this Government is putting in place to prevent and detect welfare fraud and hold offenders to account.

This bill deals with one particularly troubling aspect of welfare fraud, which we refer to as relationship fraud. Relationship fraud is when someone is receiving a benefit that is dependent on them being single, such as a sole parent support—the old DPB—yet they are in a marriage-type relationship. In this case, their relationship is not simply part of their private life; they are being given money by the taxpayer based on that fact. By failing in their obligations to tell the Ministry of Social Development or even lying to hide their relationship, they continue to receive money that they are not entitled to. The reality of this offending is that it can occur only when the partner is present, but it takes two to tango. The current law means that the beneficiary, usually the woman, is held accountable for her fraud, while the partner often gets off scot-free. We say this is wrong. This bill will create a new offence to hold those partners to account.

These changes strike a careful balance. They recognise that new relationships are never simple. When a partner is genuinely unaware of the fraud, they will not be liable. But if the partner knew about the fraud or turned a blind eye to it, they will be held to account for their part in the crime. I want to make it clear that these changes will not disadvantage women in a violent relationship. Ministry of Social Development investigators are extensively trained to deal sensitively with violent relationships, and the law on this point is clear that violence in a relationship will often mean it is not, for welfare purposes, a relationship in the nature of marriage. The last thing we want to do is to remove the financial lifeline that might help a battered woman extract herself from that situation. These changes will not remove this protection.

Welfare fraud is not a small deal. Last year over 950 people were convicted of fraud, with debt totalling over $26 million established. A further $22 million of overpayments was established from investigations. Relationship fraud accounted for more than half of this $48 million debt. It made up approximately one-third of all welfare fraud prosecutions. These numbers are rising. Our reforms are delivering real results, as we catch fraud that we might never have caught before. Even more encouraging is the increase in prospective savings—money that would have been taken illegitimately that we were able to stop before it went out the door. Our more proactive measures have pushed this saving from $84 million in the 2011-12 year to $109 million in the 2012-13 year.

Yet there has been criticism from some that we should not be focusing on welfare fraud. They attempt to draw misleading comparisons with tax fraud and evasion, to distract from the very real drain on the taxpayer. The tax and welfare systems work in different ways, with different clients for different purposes. To portray them as apples with apples comparisons is deceptive, so let us get a few things on the record. It is a big Government. We can do more than one thing at a time. Tax fraud is a bigger problem than welfare fraud, and no one is disputing that. That is why we put far more effort into combating tax fraud than welfare fraud. Any suggestion to the contrary is shown by the numbers to be patently false. The Government spends more than four times as much pursuing tax debt than it does pursuing welfare debt. Over the past 4 years we have invested almost $200 million of new funding into the Inland Revenue Department’s compliance activities. None of this needs to distract from taking responsible, sensible steps to protect our welfare system from those who would take advantage of it.

This bill makes a few other changes to the way the Ministry of Social Development manages debt. Prosecuted fraud—debt owed to the ministry—stands at over $120 million. Yet a series of recent High Court cases have provided different views on the Ministry of Social Development’s power to recover debt. Not unreasonably, New Zealanders expect that that debt owed to the Crown will be recovered. The law needs to be clear about this. The bill imposes a duty on the Ministry of Social Development to take all reasonable and practical steps to recover debt. There remains discretion to determine on a case by case basis the method and rate of recovery. In exceptional circumstances, debt recovery may temporarily be deferred. Decisions about the method and rate of recovery and deferral will be subject to ministerial direction. This will allow us to ensure we recover money owed, without placing people in undue hardship.

We know that the vast majority of people receiving welfare support are honest. It is wrong of a dishonest few to hide amongst them. This bill will help us bring those dishonest few to account, and it will protect the welfare system from those who really need it. I want to congratulate those officials from the Ministry of Social Development who assisted in the preparation of this bill, formulating the policy into the bill as it finds itself today. I commend this bill to the House.

It is my pleasure to rise and follow on from the Associate Minister for Social Development the Hon Chester Borrows on the Social Security (Fraud Measures and Debt Recovery) Amendment Bill, which has been brought before the House. I want to say up front that I appreciate the time that the Minister gave to me personally to give me some extra breakdown details on the bill and how he foresees it working. We have already said that Labour will support this bill to the Social Services Committee, but we said at the very beginning that we feel like there are some inconsistencies with different forms of treatment of fraud, and we wanted to see whether or not this was an opportunity for us to even up that playing field. That is something we will pursue through the select committee process.

I think with debates like this that it is always important to set up from the outset the general principles and values that you want to apply, before then setting out the way that you are going to anticipate the policy working. First and foremost, we would like to get on the record that fraud, wherever it exists, is wrong—bottom line. There is no dispute. Fraud, wherever it exists, is wrong. As the Minister has said, and I agree, fraud within the benefit system is also particularly destabilising, because fraud in that system undermines the entire system for those who need it most, and that is why it does need to be weeded out. Equally, it then tars other clients with a very unfair brush, as does an individual who does not fulfil their obligations to try to seek work. That then tars other people with an unfair brush, as does a Minister characterising people in the system in an unfair way. I think it would be disingenuous not to imply that there are times in this House when people who access Government support through a genuine need and legitimate reasons are unfairly portrayed. So that is why we treat these issues with a lot of caution, and we seek that members treat fraud across the board in an even-handed way. It is for that principle, which I have already outlined, that we see it as important.

In that regard, fraud, where it exists in our tax system, must always be pursued, because just as fraud within social security undermines the system for everyone else, fraud and tax evasion undermines the principle that we all have a collective responsibility to contribute to the ability to run this nation, to build the roads, to build the schools, to build the housing system—all of those universals that we consider so important. But not all fraud is treated equally. Why should it not be? If we are saying that in principle they both undermine a system, then, surely, we should be treating them equally. There are provisions in this bill that will not apply across the board, and, yet, they are lowering a threshold, the test, for prosecution. That is why we want to ask the question: why are we not treating them the same?

There are some differences. Scale is one of them. As I said, fraud everywhere should be pursued, but there is certainly a gap in the amount that is being pursued or at least in our success in prosecuting and reacquiring money that is lost through tax evasion and fraud. Just a comparison: $39 million in the benefit system and it is more like $1 billion as an estimate within our tax system. So that is certainly an area on which we would like to hear a bit more of a public conversation from the Government in terms of how we can do better in that area. Do not drop, either. That is not what we are saying. But why, when we have had two debates now on fraud within the benefit system, have we not had one on this other area where there is so much more work to be done? That is something we implore the Government to do.

I have heard it argued, though, that it is unfair to compare benefit fraud with tax fraud and tax evasion, because tax evasion is evasion, and it is not fair to strictly label that as fraud. But it is fair to say that that exact thing has been happening with some of the announcements that the Minister has been trumpeting. Not so long ago we heard him point out that great swathes of fraud had been uncovered as a consequence of the Inland Revenue Department sharing information with the Ministry of Social Development. The issue is that not all of that necessarily was fraud. Some of it, indeed, will be, but some of it is just highlighting the blatant inefficiency of our system. It is highlighting where there had been overpayment. Why was that? Well, because a large number of people who are getting Government support are actually in work. They are just not earning enough to survive week to week, so their earnings are topped up with a benefit of some description.

In order to make sure that someone who is working different hours every single week is not being topped up by too much or too little, they are required to call Work and Income at the end of each week, usually a Friday, and state the hours that they have worked. The issue, as anyone will know who has worked somewhere like a supermarket or a fish and chip shop, like I have in the past, is this: I did not always get my payslip at the end of the week, telling me the hours I had worked. I would carefully take down what I thought I had done, but they were not always necessarily the same thing, and that is what is happening with our Work and Income clients. They are calling based on what they know, but sometimes they are in precarious seasonal work with fluctuating hours and fluctuating overtime and changing rates, and they are not always giving the correct details to Work and Income.

When Work and Income staff then go and do that data match, they find that sometimes there are discrepancies. At various points we had up to 20 percent of our sole parents in part-time work. We are not talking about a small group of people, where this potential error can take place. So all I ask from the Minister is that the next time he does a data-matching exercise, rather than standing up and trumpeting the amount of fraud he has weeded out, perhaps we could talk about the fact that not all fraud is deliberate; some of it is the inefficiency of our system. Can we address that? Can we address the fact that I have Work and Income clients who come and tell me that Work and Income found it so difficult to manage their—

💬 Peseta Sam Lotu-Iiga: I raise a point of order, Mr Speaker. I do not mean to interrupt the member, but she is clearly getting away from the context of this bill. You allow her to go a little bit away, but for 2 minutes now—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! I am on my feet. All contributions will be heard, and the member is making some valid points and it is a debatable issue. This is a wide-ranging debate. It is the first reading.

That intervention just demonstrates that the chair of the Social Services Committee does not understand the driving forces between overpayment and what has been characterised by his Government as fraud. If we want to fix the amount of time that is wasted by the Ministry of Social Development pursuing overpayment, which is sometimes confused as fraud, then these are the issues we need to deal with. So I would hope that we would have a little more enlightenment by that side of the House during this debate. Otherwise we are going to miss that, actually, in some cases we are targeting the wrong issue. It is a very valid point to raise in the context of this bill. I am sure that the officials will talk about the fact that they spend a lot of time trying to filter between overpayment and fraud, and that is the issue I was speaking to.

So getting back to it, once the Ministry of Social Development has gone through that process of it trying to, once it has seen the discrepancies, filter out which is which, it then needs to go and pursue them. It is an issue around the amount of effort that it then goes into, relative to some of the other areas of fraud that we have within our system.

One of the things we do want to accept on this side of the House, though, is that relationship fraud probably represents a significant chunk. It is fair to say that there will be cases, and we are certainly aware of them from the side of advocates, that some women in particular are left carrying debt from relationship fraud that actually should be apportioned across to individuals who knowingly partook in that fraud. We also must acknowledge that some women are in relationships with a particular power dynamic as well, and we need to be mindful of that. Some women also have threats made against them that if they do not fraudulently claim these benefits, then their well-being is at risk. All of these things we have to take into consideration when we consider that this bill will amend the Social Security Act 1964 and enable a lower threshold for prosecution of partners when they have been involved in relationship fraud, by saying that they can be prosecuted when they ought to have known that fraud was taking place. So the test has been lowered. Our question is—

💬 Peseta Sam Lotu-Iiga: It’s still a high test.

It is very difficult to prove whether someone ought to have known something, versus whether they did. It is. We are going to test that out at the select committee; it is something we need to look into in more detail. But our question is that if you are willing to say that someone who committed relationship fraud ought to have known that fraud took place because they benefited from it because there was more money coming into the household, why could you not say the same for white-collar fraud? If someone is benefiting from white-collar fraud because more money is coming into the household, why is it that a spouse in that case will not be liable for prosecution? That is the kind of question I had when I talked about the principles of treating fraud even-handedly. Those are the kinds of questions we will be raising at the select committee, and I hope the Government will take those queries seriously.

Talofa lava and good afternoon to you and all those across the country who are listening in on this debate or watching it on TV. It is a pleasure to take a call on the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. The last member, Jacinda Ardern, might have used a lot of superlatives, but she did not actually talk much about the bill. The bill puts in place new tools to prevent, detect, and catch welfare fraud. That is what we are talking about here today. It is not about business fraud, it is not about tax fraud; it is about welfare fraud. I want to thank the Associate Minister for Social Development the Hon Chester Borrows for the hard work that he has done on this bill, along with the officials, to bring about a bill that I think is measured, informative, and certainly will be workable going forward. As the chair of the Social Services Committee, I look forward to debating and examining some of the issues that are within this bill, and hearing from submitters from around the country about what they see as legitimate in terms of prosecuting and enforcing welfare fraud.

The Ministry of Social Development is owed a significant amount of money—a significant amount of money—from fraud-related debt, overpayments, and recoverable assistance. This is $128 million on convicted fraud alone—$128 million. So I think we have to take this issue seriously. I know Ms Ardern mentioned that it should be even-handed and that we should look at comparisons between the various pieces of legislation, but one of the issues that she did not raise is that recent High Court decisions have questioned how the Ministry of Social Development applies discretion to recover welfare debts. Those decisions have created uncertainty about its powers and duties when recovering welfare debt. This bill addresses that. Our Government has decided to act, and I encourage parties across this House and I encourage all New Zealanders to get behind the bill, because the bill addresses the effect that those High Court decisions have on the ability of the ministry to prosecute fraud.

This bill amends the Social Security Act so that it imposes a duty on the Ministry of Social Development to take all reasonable, practicable steps to recover debt. I think that is reasonable, and I believe most New Zealanders would say it is reasonable. Secondly, the ministry has the discretion to determine, case by case, the method and the rate of recovery. Again, it is quite objective, and, I believe, quite simplistic and realistic in terms of what we are trying to achieve. In exceptional circumstances the ministry may defer temporarily that recovery of debt, so it has a social and empathetic element to it. The Minister is required to issue directions identifying those exceptional circumstances in which recovery may be deferred. But the bill also identifies, as the Minister has pointed out, the considerations to which the ministry must have regard in setting the rate and methods of recovery for those debts, and that is really important.

We know that the vast majority of beneficiaries are honest and do the right thing, and I do not think anyone has mentioned that in the House today. The vast majority of beneficiaries actually have needs and have those needs met, but a small minority take advantage of the system. The Associate Minister has outlined the elements of the relationship fraud, which is a big part of that. Welfare fraud is a crime, welfare fraud is committed by criminals, and welfare fraud is done for their own benefit against the wishes and needs of New Zealanders, so we treat this fraud as a crime, without excuses. The bill introduces a new criminal offence for spouses and partners who benefit from welfare fraud. Those spouses must know, or are reckless, as to whether those payments are obtained by fraud. I put it to the member opposite Jacinda Ardern—I know she is not present in the Chamber—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! The member will be seated. It is not proper that members refer to the absence of another because in this place all of us at one time or another have to leave the Chamber for whatever reason. That is out of order.

We know that the evidentiary burden is a high-threshold test. She stated in this House that it is low; I beg to differ. I beg to differ, because it requires a mens rea—a criminal mind—and the evidentiary burden is clear. They need to know, or ought to have known. I do not believe that is unreasonable in the circumstances, because an objective set of facts can be presented where you can assess whether that person ought to have known that the fraud had been committed. Partners could face a fine of up to $5,000, or 12 months in jail. We will debate whether that sentence is appropriate, but I think that, in the circumstances, that is reasonable.

In 2013 relationship offending cost the taxpayer $26 million. That $26 million could have been spent on our most vulnerable families who are in genuine need of assistance. It is important that the public has every confidence in the welfare system, and these measures will give the ministry the tools to achieve this.

I conclude by saying that welfare will always be there to support people who are in need in our communities. That is a basic tenet of our nation’s social fabric. Equally, anyone who can work, should be in work, or looking for a job should do so. Our reform of the welfare system in the last 2 years will bring into the 21st century what we believe has been an outdated system. Labour—Ms Ardern and her mates—might have turned a blind eye to fraud in welfare, but National has promised to clamp down on welfare fraud, and with this bill we are delivering on that promise.

Namaste, Mr Assistant Speaker. Thank you very much. It is a pleasure to take a call on the Social Security (Fraud Measures and Debt Recovery) Bill. As my colleague Jacinda Ardern has already said, we will support this bill to the Social Services Committee, but I personally will want to be convinced at the select committee that what is being proposed here will achieve the goals that the bill has set out and will not do more damage to our vulnerable families. The way this bill was presented, the genesis of the bill, and the way these ideas were announced were very cynical. It was at a time when National’s dodgy Skycity deal was getting a rough time in the media. Right in the middle of that, the Hon Chester Borrows announced this notion of major fraud amongst beneficiaries, mainly former domestic purposes beneficiaries—so it was cynical. It was a cynical way of introducing that. This is not part of a programme to really address this issue; this was something that was whipped out of the air.

The way in which the chairperson of the Social Services Committee, Mr Sam Lotu-Iiga, has articulated the provisions here really shows that he has become a poster boy for this Government’s punitive provisions around the most vulnerable. This is just another step in a long line of steps that this Government, since 2009, has taken by heaping obligation after obligation on the most vulnerable. It is not really designed to achieve the best out of the most vulnerable, although that is the language the Minister uses, but it is designed to pander to the members of that particular party who are really hostile to benefits, generally. All of the language is fine, saying that welfare will always be there and we will always support those who are most vulnerable, but the way that this Government has gone after the most vulnerable in reform after reform really demonstrates its true intent, and this one is no different.

Jacinda Ardern identified very, very clearly that, clearly, this Government is not worried about the amount of money, because if it was, it would go after the $1 billion to $6 billion tax problems we have in this country. It would go after that, or it would go harder after those who are tax dodgers at the present time, but it does not do that. It does not do that. It goes for the most vulnerable. The rate of taxation fraud is 150 times more than the rate of welfare fraud, so here it is not convincing that there is a major problem, because the major problem here is actually a moralistic one. There is something about the morals. We question the morals of those who seemingly take advantage of the welfare system, and this side of the House has no sympathy for those who abuse the welfare system—we have no sympathy for those people—but the way in which it comes about also needs to be reflected on.

The way in which Sam Lou-Iiga talked just then about welfare fraud amongst domestic purposes beneficiaries, which is the former title, really shows very little understanding of how this actually works. Anybody who has worked in this area or who knows this community well knows how quickly it is possible to give to a person—maybe a mother looking after two or three children who is dependent on a benefit—going about normal life, and how quickly others can malign that as an abuse of the welfare system because that person might be wearing good clothes, might be having a drink, might have a colour television, etc. Anything that person does that gives the impression there is a relationship that that person has creates this notion of setting family against family. We begin to attack those who are trying to get on with their lives as sole parents dependent on a benefit, doing the best they can, and doing those things that most people in this House would consider normal, such as forming relationships.

The Minister did say in his preliminary remarks that he was particularly worried about relationship fraud. That essentially means that if you a person who is dependent on a benefit and have children, you virtually have no right to have relationships. That is what it comes down to, and what is the morality of that? Would we not want our sole parents bringing up children to have the normal relationships that any adult would have? How does it work? We can just think our way through this. If a person is a sole parent who has children and who is doing their best forms a friendship with somebody, they might see that person a few times a week, and then that may develop over a 4 or 5-month period into something a little bit more than that—maybe visits to the home. In another 3 or 4 months’ time there may even be a night that that person might spend at the home of the person who is on a benefit.

At what point does that become a relationship for which the other person—the person not on a benefit—is then responsible financially? At what point does that happen? This happens in the glare of public life. If you live in a neighbourhood that is hawkish about others, and if you have people who are hawkish about a particular person, then this creates an environment in which those bringing up our children in vulnerable environments, vulnerable situations, and who are dependent on limited State funding are really made more vulnerable by these kinds of provisions.

It is not as if there are no other ways of doing this. Every person on a benefit has a case manager. There are many, many opportunities for conversations, there are many, many opportunities for asking questions, and yet the way in which these provisions have been brought to the House—the way in which the notion of relationship fraud is talked about in this particular bill—is something that I personally find objectionable. I personally find it divisive and I personally believe that it will set our families against each other. This happens, Mr Assistant Speaker Robertson. You know the environment in which people in your electorate survive, where there are many more people in these kinds of situations. That being so, we do know what happens. So I believe that the provisions are awful. I believe that they are not well-thought-through.

What is more, it has gone on to criminalise the activity, so that the other person, the person whom the beneficiary is having a friendship with or a growing relationship with, is now accountable. If he or she carries on in that particular situation for any period of time and if the amount of payment grows, that person is liable to a fine of $5,000 or liable to imprisonment. When you compare that with the way in which tax dodgers are fined, there are any number of cases that show that for similar crimes the vulnerable are sent to jail and the rich get home detention, and that will be for defrauding amounts of money to the tune of three times more. A welfare beneficiary with a $70,000 crime, if you like, will be sent to jail for a year or two—18 months, I think, is the case that I am thinking about—whereas somebody owing $200,000 to $300,000 gets sent home on home detention. Where is the fairness in that? When is this Government going to address those kinds of things as well?

This is part of the Government’s programme of welfare bashing, and in the select committee we will want to see what the evidence for this measure is. I would have expected some of the members of the select committee to be much more aware of this. I cannot imagine how Alfred Ngaro can support something like this, because he knows from his own work in the community about many of these families and about how these processes develop. I hope to see robust discussion. I personally am not supporting this bill after the next stage unless I am convinced that the safeguards are in place, because I personally find this absolutely abhorrent. Thank you.

Tēnā koe, Mr Assistant Speaker. The Green Party has a long tradition in this House of advocating for employment law and a social security system that provides everyone with enough income to fully participate in their community and to live safe, healthy lives. We support policies that are sufficient to ensure this, simple to understand and access, universal in their application, and equitable within a wider social context. We will be opposing the Social Security (Fraud Measures and Debt Recovery) Amendment Bill today as it is not consistent with these values or this vision. This bill will, we believe, further stigmatise the most marginalised people in this country. It will remove some of the leniency that exists within the system, which will result in less money in the hands of the poorest New Zealanders. It will treat debtors to the Ministry of Social Development more harshly than debtors in other parts of our system and our society are treated.

I would like, though, to acknowledge the Associate Minister for Social Development the Hon Chester Borrows, who has brought this bill to the House, for taking the time to talk with me through this bill, and for allowing us access to officials as well, in order to discuss our concerns and check out our position properly.

This bill makes a range of changes to accountability and culpability for benefit fraud and debt recovery by the Ministry of Social Development, including imposing a new obligation on the ministry to take all reasonable, practical steps to recover debt. That is a very important point. And it allows the Minister for Social Development to issue directions on when the ministry may temporarily defer debt repayment and what it can take into account when setting the rate and method of debt recovery. Currently, this is the responsibility of the ministry, so it is shifting that from within the agency with the knowledge and experience and moving it into the political realm. In terms of debt this will enable the ministry to hold partners of beneficiaries liable when benefit fraud is committed. It will allow the recovery of up to three times the amount paid in excess in cases of fraud, and it introduces a new offence of partners knowingly or recklessly benefiting from fraud committed by their partner, punishable by a fine of up to $5,000 or 12 months’ imprisonment. It introduces a new system for working with people who decided to be dishonest with the ministry in the past, regardless of whether they have a conviction.

I really need to put those changes in context for those considering the bill and to point out that two-thirds of debt that the ministry recovers is not a result of fraud. So when we are hearing in this House that this is about fraud, actually two-thirds of the system is about debt, not fraud. Much of it is a result of administratively created overpayment, and our Labour colleague Jacinda Ardern, I think, quite clearly articulated how that happens. It is the interface between beneficiaries who are working part time and reporting that work and the systems through the Inland Revenue Department. It is actually often just about a mismatch of those systems rather than any intent at all. In fact, for most of these people in this situation it is absolutely not in their interests to end up with a debt or an overpayment and they would much prefer to avoid that situation. But our system does not work to enable that.

Also, what is recorded as debt in the system is often from advances given to people to pay for some of the absolute essentials in life, including things like fridges, washing machines, tampons, food, sanitary pads. Absolute basic essentials are part of what we are talking about when we are talking about this bill and the recovery of debt. It is also, I think, important in the context of this to recognise that beneficiaries are routinely being denied their legal entitlements. This debt pretends that that is not the case. Auckland Action Against Poverty is seeing an emerging gatekeeper culture within Work and Income. It has reported that people are often now being told no, as the first response from Work and Income staff, and that at least nine out of 10 people with whom its advocates work have been incorrectly or unfairly denied assistance. This is from those people being misinformed about their entitlements, whether it be a special needs grant, whether it be their eligibility for a benefit to begin with, or whether it be about coverage for disability costs or extra assistance for food—a huge range of things.

We are hearing these reports all over the country and this raises the question of why this is happening, because we have been hearing these stories for a while and they are increasing, and there does seem to me to be a pattern. This Government and the one before it have focused their attention on saving money from the Budget. The latest law changes that we have seen have stigmatised beneficiaries further, sending the message that they are job-avoiding, drug-taking poor parents and criminals. You cannot send those messages and not have them influence staff and organisational culture.

Further, the legislation is far too complicated. It has been amended 131 times, it includes 422 sections and 31 schedules, and there are 50 policies that are at the discretion of the chief executive of the ministry rather than being enshrined in law. This makes this so hard for staff to know what people are actually entitled to. When you combine that with a loss of funding to so many of the benefits rights organisations that are able to provide advocacy for people going into the system—and the cuts to legal aid for beneficiaries wanting to appeal their lack of entitlement—we have a very dangerous system where the most vulnerable people in this country are having the food taken out of their mouths or the tampons in their trolleys illegally taken off them through a lack of entitlement. Yet the Government’s focus is to bring this bill, which is focused on the recovering of the debt from the few people who have managed to get their entitlements to be able to feed their children, to be able to have a fridge in their house.

💬 Mike Sabin: Well, they just have to remain law abiding and it’s all good.

This is not about criminality, Mr Sabin. This is about debt that is created through inefficient systems and people being ripped off by the system. And the Government chooses to focus, rather, on a very small group of people and not its own actions, which I would suggest is where the most harm is being done.

I will note that there is an aspect of this bill that the Greens do support, or are interested in hearing more around, in relation to fraud, which is a small percentage of what we are actually talking about, and that is relationship fraud. I do note Dr Rajen Prasad’s contribution. But I would note, from having worked in Women’s Refuge, that I have seen so many cases of women being threatened by their partners, whereby their partners would threaten to dob them in to Work and Income. I do see that this provision of sharing the consequences of any dobbing in will have an impact that will be very positive for those women, that this may no longer be able to be used as a tool by those abusers. That is a very positive aspect of this bill that we do support.

However, the fraud investigation system is still quite fraught. Officials said that evidence they are using is often unsubstantiated, and we are hearing from women in violent relationships that they are often persecuted through this system. We do not support this bill.

Ahn nyung ha se yo, Mr Assistant Speaker. Tēnā koutou katoa. It is a pleasure to rise in support of and talk about the Social Security (Fraud Measures and Debt Recovery) Amendment Bill in its first reading. Before I actually begin, I would like to just remind members that this bill brings in new tools to prevent, detect, and catch welfare fraud. I know that members opposite have talked about many things, including their notion of what this Government is all about in terms of welfare. Let me remind the members opposite that Labour, in its 9 years of Government, did nothing about welfare reform and this Government is spending more than $536 million in 3 years to reform welfare.

Those members talk as if the National Party and this Government do not care about people on welfare and they talk about beneficiary bashing. Let me actually remind the members that if that was in fact the case, why are we still providing welfare for the most vulnerable in this country? It is the misconception that Opposition members like to tell the public so that they will be misinformed, as though we did not care about people. We on this side of the House do care about people. That is, I would have thought, a given, considering that we are doing something and spending a lot of money on welfare. [Interruption] We are. For example, welfare will always be there for people in our community who need it. It will be there for people who actually need it, but anyone who can work should really go out and look for a job. That is what we are saying. We are not saying that people who cannot work should work. People who cannot work, who actually need to depend on the benefit, will get the benefit. There should be no misconception about that.

This bill creates an offence for those spouses or partners of beneficiaries who have knowingly benefited from a beneficiary’s fraud, and will allow the Ministry of Social Development to recover those debts more successfully by information sharing between Government agencies. Previously, what actually happened was that if the ministry suspected there was fraud, it had to tell the people whom it was investigating. The Ministry of Social Development was required to tell a person that they were being investigated for welfare fraud, and that person was required to provide the necessary information. Imagine that. If I was on welfare and someone had come and told me that I was being investigated, if I was an honest person—which I am—I would actually say “Welcome. Investigate me.”, but often they are not. A lot of people were given the opportunity for the fraud to be covered up and evidence often destroyed. That is not how it should happen.

This bill provides the ministry with the tools to investigate people who are actually offending. It is a criminal offence. They are defrauding the taxpayers of $128 million a year. That is no small sum that we should laugh at. Imagine how much more we could help people in vulnerable circumstances with that $128 million that is currently being defrauded. Partners of beneficiaries know of such fraud—and often they do. They are living in the same house, often as husband and wife. They must know that their partner is on welfare. They must know that they are, actually, drawing from the Ministry of Social Development a sole parent benefit, for example. If they are living in a relationship that is like a marriage, they should not be drawing that benefit, and they are committing a fraud. If they know about it, they will be fined up to $5,000 or given a jail term of up to 12 months.

This bill also provides for review and appeal rights for spouses and partners. However, the vast majority of people declare their true circumstances and comply with their obligations. I think that is actually something we should expect of everyone. I know that Opposition members have also said it is only a small percentage of people who are on welfare who actually do, in fact, create this situation that tars everyone with the same brush. I think we need to make sure that we show them that it is not acceptable to defraud the taxpayer and that it is about time they changed. This is a great bill. I commend it to the House.

Tālofa lava, malō le soifua ma le lagi e mamā i lau afioga a le fofoga fetalai.

The ASSISTANT SPEAKER (H V Ross Robertson): Talofa lava.

Just before I start my speech here today, I want to perhaps respond to the comments by the member who has just taken her seat, Melissa Lee. The question she asked was why we are still paying benefits and welfare. Why are we still paying welfare? Well, the answer is that there are no blimmin jobs. There are quite a number of low wages. We also have broken promises, of course, poor legislation, and an incompetent Government. Is that enough to answer your question, Melissa Lee?

So let me now come back to the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. The bill is seeking to amend the Social Security Act 1964 to make spouses and partners, including beneficiaries, accountable for any fraudulent behaviour.

💬 Mike Sabin: Is the member’s microphone on? I can’t hear!

That is all that member can do—he is chatting away in the corner. He has not got anything better to say. That is all he is good at. At the same time the bill will allow the Ministry of Social Development to recover debts.

There is no doubt that welfare fraud is a serious matter. Something definitely needs to be done. Something needs to be done to combat fraudulent behaviour and tighten measures relating to debt recovery. Over $20 million was taken in the past year—in fact, to be exact it was $23.4 million—as a direct result of relationship fraud. Over $20 million is a lot of money. That is over $20 million of taxpayers’ hard-earned money. OK, it is not as much as the $176 million that was taken by some directors of some finance companies from their stakeholders, but $20 million is still a large amount of public money that could have been made available for job creation. Over $20 million would certainly buy a lot of condoms for prostitutes or recreational items like the tampons or sanitary pads that the Minister for Social Development has been trying to defend lately. It would also be fair to say that half—only half—of that $20 million would certainly help those homeowners in Christchurch who have been badly affected by the earthquakes and are being given the run-around by the Government and insurance companies.

However, New Zealand First is pleased to see that the National Government is perhaps trying to listen to the strong call from ordinary New Zealanders whom it has ignored for the past many years, although it seems it is far too slow in addressing the issues amicably. It was Thomas Jefferson, I believe, who said: “Experience hath shewn, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny.” Given recent mishaps and broken promises by the National Government, I think we could afford to say to the Hon Chester Borrows that he is heading in the right direction.

Our current legislation makes the person receiving assistance liable for prosecution. It ignores his or her partner or spouse, which means he or she would be cleared of any wrongdoing, despite potentially having knowledge relating to fraudulent behaviour. This bill will ensure that the persons receiving assistance and their partners or spouses are liable. In other words, they will all be liable to be prosecuted for intentionally misleading the Ministry of Social Development—or shall we say the welfare system—in order to benefit from inheriting what they are certainly not entitled to.

Given these reasons, there are questions that need to be asked. How will the debt be recovered? Are Chester Borrows’ staff now going to force them to hand over funds in order to pay for it and subject their children or tamaiti, if any, to poverty? How is the Government going to ensure that money being lost through benefit fraud will be returned in a reasonable time frame or a reasonable manner? If this bill is to pass, the member in charge needs to be more transparent as to how it will be implemented and what the appropriate steps will be, just like the Labour MP Jacinda Ardern was referring to earlier on, about different earnings, different times, part-time work, and so on.

Just last week a caregiver pleaded guilty to defrauding the benefit system by almost $274,000—54-year-old Beverley Malzard evaded disclosing information relating to her employment and was able to obtain a benefit in the process. Cases like this paint a very bad picture. That picture unfairly reflects on honest Kiwis out there who have genuine reasons for receiving benefits and who have taken reasonable steps towards employment.

Benefit fraud is something New Zealand First does not take lightly. Benefit fraud is completely—completely—unacceptable. We want to ensure that the intentions of this bill will be implemented appropriately and with suitable mechanisms in place to ensure that they are carried out properly. This bill aims to make spouses or partners of benefit frauds criminally liable. We accept that that is fair. It will lead to a fine not exceeding $5,000 or imprisonment not exceeding 12 months. Ordinary Kiwis out there would like to see the penalties contained in this bill sufficient to deter potential fraudsters from committing benefit fraud.

The concerns that we do have over this bill include, first of all, how it will be rolled out; two, whether the proposed measures will be enough to deter fraudulent behaviour; three, whether it could potentially conflict with privacy laws; and four, whether it could foster a discriminatory environment on certain groups of people. Attempts definitely need to be taken so that public faith can be restored in the welfare system.

There is also a need to acknowledge that there are countless reasons behind benefit fraud. We need to ensure that we understand the possible circumstances that people are in when they contemplate fraudulent behaviour. Some of the reasons may include sudden redundancy or the inability to secure employment; changes to family circumstances—for example, death or relationship breakdown; unstable relationships; and, perhaps, huge debts, poor financial literacy, and lack of experience in management and looking after their budgets. Let us face it: there are a few out there like that, and I do wonder whether Winston Churchill should be blamed for saying that perhaps it is better to be irresponsible and right than to be responsible and wrong. In some cases, serious alcohol and drug abuse—or shall we say addiction—could also be contributing factors, while on the other hand there may be mental illnesses to be considered.

💬 Mike Sabin: Go on. Get off the fence!

I was discussing this bill with some of our community leaders, and Mike Sabin will actually learn something if he listens. They believe that it is timely that the law was reviewed to address benefit fraud. It is also fair to say that not everyone who is committing this kind of crime comes from low-income circumstances as well.

For these possible scenarios I believe that it is important that the Social Services Committee be given the opportunity to examine the bill carefully. New Zealand First will support this bill going to the select committee so that the public of New Zealand can be given the opportunity to submit on it, because they deserve the opportunity to be heard and they deserve to see democracy being given a fair go in this House. Thank you.

I rise in support of the Social Security (Fraud Measures and Debt Recovery) Amendment Bill, and I look forward to it coming to the Social Services Committee, which Sam Lotu-Iiga chairs. It has been a worthwhile exercise looking at this whole issue, and I would like to congratulate Chester Borrows on all the work that he and his department have done in actually tracking down cases in point where benefit fraud has occurred.

It is true that the New Zealand First Party can identify the odd case where fraud has occurred or, I should say, some sort of overpayment of benefit amount has occurred and it has been unfair that those people were pursued for fraud, because it was accidental or for reasons outside common dishonesty. However, $128 million is what was recently recovered through the efforts of Chester Borrows and his department. I know that in State housing it is not tens of houses that have been freed up for those genuinely in need because those inside were illegally in the State house, but hundreds of State houses have been freed up for families genuinely in need because those hundreds of houses were found to be occupied by fraudsters and others who were involved in illegal behaviour. So it is worth pursuing this particular matter.

It has to be noted that, yes, the High Court has questioned how the Ministry of Social Development applies discretion to recover welfare debts. Some of them are racked up by fraud or the improper obtaining of benefits. But to ensure that there is effective debt recovery, we have made it clear in this bill that it imposes a duty on the Ministry of Social Development to take all reasonable practical steps to recover the debt. There is discretion to determine on a case by case basis the method of recovery so that we can take into account people’s circumstances, as outlined by the Green Party and called for by New Zealand First, and in exceptional circumstances the Ministry of Social Development may defer temporarily the recovery of debt. So there is a whole lot of heart as well as good financial management and good financial responsibility that is going to be undertaken under this legislation.

Again, I look forward to the bill hitting the select committee, our looking at it in detail, and taking submissions from those who receive the benefit, those who administer the benefit, and those who work with those who are in need of such benefit support. Thank you.

Talofa lava, Mr Assistant Speaker.

The ASSISTANT SPEAKER (H V Ross Robertson): O a mai oe?

Manuia fa’afetai.

The ASSISTANT SPEAKER (H V Ross Robertson): Fa’afetai lava.

Thank you. I found the earlier remarks by two of the Government backbenchers quite upsetting. They made wild and unsubstantiated claims about the welfare reforms, which to me revealed too much about themselves. It revealed their disconnection with the wider community. It also revealed that they have not read their own regulatory impact statement on the Social Security (Fraud Measures and Debt Recovery) Amendment Bill, which says that their reforms have gutted the welfare system. I would ask them to take some lessons from their own Associate Minister for Social Development Chester Borrows. He is a Minister who knows what this is all about. I agree with the Minister when he says that the New Zealand social security system has largely been a system that most Kiwis are proud of. I think for our country we have this view that we work, we pay our taxes, and through those taxes there is a safety net, so that when someone is unemployed, when someone is sick, when someone is disabled, or when someone reaches a certain age where they are too old or weak to work—like some of the members of this House, without mentioning names—at least there is a safety net. That has been the legacy of our social security system. I accept that it is only then natural that when someone rips off our system, absolutely we get upset, absolutely it is the wrong thing. So I think people need to understand the context of why some of us do not agree necessarily with the arguments that that Government has put up.

Let us make it quite clear. Labour will support this bill in its first reading so that the appropriate committee, the Social Services Committee, can then do its work and call for submissions and have the advantage of at least listening to the organisations and people who are working on the ground, who are having to deal with these issues on a day-to-day basis. But, in saying that we support this to the select committee, we do have some very, very strong reservations.

I think people need to understand the context as we debate this bill. For the past 5 years we in the Opposition have been attempting to hold this Government accountable for the current economic and social woes the country has been experiencing. We have asked questions of this Government about critical areas where there is a need for significant action by this Government to address things such as the need to create more jobs to address high unemployment, and the need to have higher incomes to address the needs of our communities who are struggling. There are needs around housing, where many families are paying a huge chunk of their income on rent, and homeownership is becoming a distant dream for the majority of New Zealanders. That is the context. So when a Government, which is clearly failing to reduce the growing inequality, comes up with these particular proposals, and when a Government continues to use the excuses that it is unable to do anything about the growing inequality because of the global financial crisis or the Christchurch earthquake, then, really, that causes problems for the public who are listening to this debate. It becomes harder for people to accept that there is a genuine need for this Government to make the amendments that it is proposing, considering the context that I have just outlined. Most people then start thinking about whether this is genuine, or whether this is really just a cynical move by this Government to take the heat off itself when it is failing to address the more pertinent issues that the people of New Zealand are facing.

Let me just give some views on some of the areas that people are discussing and that I think it is important for the select committee to consider. A few weeks ago a Victoria University associate law professor released her research, and her research showed that the Inland Revenue Department was more likely to write off unpaid tax, whereas the Ministry of Social Development would often keep welfare debt on its books, sometimes until people died or retired. I want to raise that research because the regulatory impact statement on this bill makes reference that the group of people that is being targeted through this particular bill is very, very small. Here are some numbers that I got out of the regulatory impact statement for the 2011-12 financial year. The number of cases of fraud that the ministry investigated was 10,735. The number of cases in which the ministry was able to establish that overpayment was made was 2,139, but the number of cases that it could substantiate and prosecute for fraud was 714.

The regulatory impact statement also identifies that the overpayments were not the fault of the beneficiaries but the fault of the department. So I would hope that the Social Services Committee, when it is deliberating this, digs deep into the causes and whether the money that we are going to spend as a Parliament in attempting to find fraud is worth the effort that is being put into it. I am not saying that we deviate from prosecuting those who have committed fraud. I said at the beginning that we do not like that sort of thing. Anybody ripping off the system is wrong. But I am suggesting that, based on the report, the research by Victoria University, this Government is failing to look at fraud generally on an equal basis. Again, here is what the research says: tax debt totalled nearly $6 billion while welfare debt was about $1 billion. There appears to be no basis for treating debtors to the two Government agencies differently. The study indicated that tax debtors got off more lightly. The researcher said that the Inland Revenue Department was more likely to negotiate with debtors, collect core tax, and write off penalties and interest. Between 1 July 2011 and June 2012 the Inland Revenue Department wrote off nearly 50 percent of interest and penalties applied to overdue tax, amounting to $374 million. This study showed that it wrote off $435 million in core debt, reflecting 11.6 percent of collectable debt. The Ministry of Social Development, on the other hand, wrote off $8.7 million in core debt, or 2.1 percent of collectable debt.

The study also showed that in the same period the average value of outstanding tax debt was $14,479 per taxpayer in debt, while the average value of outstanding welfare debt was $2,523 per beneficiary in debt. What the research noted was that more resources were applied to collecting welfare debt than tax debt. The Ministry of Social Development would collect debt from beneficiaries’ payments. The point of the whole research that has been highlighted is that there is a difference in treatment by this particular Government, or by the two agencies, towards those who owe debt to the Inland Revenue Department and those who owe debt to the Ministry of Social Development. The other difference is that there are much bigger sums, or amounts of money, involved in Inland Revenue Department debt, as opposed to a smaller amount of debt in social development and welfare. That also is substantiated by the Government’s own regulatory impact statement. That is why I am asking the question.

I would hope that the select committee looks deeply into this. The argument has been put forward that in creating this new offence to punish the spouse or partner of the person who committed the offence, surely the spouse or partner would have known about it. Well, I have doubts. Only 2 weeks ago the court found somebody who defrauded the department guilty as charged. It also charged his wife, and, after charging her, she was not prosecuted at all. This causes the problem of charging people without having evidence and then having egg on your face. I would hope that the select committee looks seriously at all those angles. Lastly, the appeals rights need to be looked at.

It is an honour to take a call this afternoon on the Social Security (Fraud Measures and Debt Recovery) Amendment Bill in its first reading. The speeches this afternoon on this bill have truly been a good western—a combination of the good, the bad, and the truly ugly. In saying that, I want to make a comment about New Zealand First member Le’aufa’amulia Asenati Lole-Taylor, who quoted Winston Churchill. This is what she said: sometimes it is better to be irresponsible and right than be responsible and wrong. I find it very interesting that that member worked in the prison system with prisoners in rehabilitation, knowing very clearly that the system was that those who were punished for doing wrong need to be in that right place. If you do the crime, you do the time. I find that very interesting and very confusing. That is probably something that confuses the member herself. She probably has not read the bill or the regulatory impact statement either.

The previous speaker, Su’a William Sio, was talking about the whole aspect of this bill and the importance of the bill. The bill brings new tools to prevent, detect, and catch welfare fraud. It is pleasing to hear that members on the other side, as Jacinda Ardern said, support the intent of the bill. I think that there is common support for the intent of the bill, which is that those who are defrauding the system should be held to account. As one who has really read the regulatory impact statement, I say that the consultation has been wide. All Crown entities have been consulted, which is the reason why it is going to the Social Services Committee. Then there will be further public consultation to hear the proposals at the select committee consideration of the bill as well. This becomes very important.

The vast majority of people who are on welfare—we want to say this—do declare their true circumstances. There is only a small minority who choose and have the intent to defraud the system. In the regulatory impact statement it is really quite clear that in 2011-12, there were 10,735 cases that were investigated, resulting in 2,139 cases of overpayment being established. That is significant because that is a figure of $18.4 million of debt that was established. What we are trying to say is that those who have caused this offence should be held to account.

We are also being careful, because there have been some concerns about those who are vulnerable in the system, especially in regard to domestic violence. There is a stronger focus on ensuring that we protect them. The law is very clear that for welfare purposes, a violent relationship is not treated as a relationship when assessing their entitlement to a benefit. This will be good news to those who work in refuges, and to those women who have, through no fault of their own, been in a relationship where there clearly is domestic violence. It is also important as we do not want to remove financial support that might help a woman who has extracted herself from an abusive relationship. This is an important bill.

I want to address some of the issues in this debate around the comparison of welfare fraud with tax fraud. There has been a lot made of this. In fact, the concern raised on the other side is that the Government treats welfare fraudsters in a way that is more punitive than it treats tax fraudsters. That is far from the truth. Our key message as a Government is this: the welfare and tax systems operate in different ways, and it is misleading to attempt to compare them. The Government has a duty to ensure that our taxpayer money is not being taken illegitimately. To suggest we turn a blind eye is irresponsible. No one is disputing that tax fraud is a bigger issue than welfare fraud, and the Government’s priorities reflect this.

Over the last four Budgets, the Government has invested almost $200 million of new funding into tackling tax fraud, but it has put no new money into fighting welfare fraud. The Inland Revenue Department has an enforcement budget of $142 million, while the Ministry of Social Development’s enforcement budget is simply $30 million. There is concern that welfare reform costs are $23 million a year while tax fraud is at $1 billion, but the response that we want to form—so that there is some clarity here—is that no one is denying that tax fraud is a bigger problem, but this comparison is definitely misleading. It intends to compare welfare fraud that we caught and that we could prove beyond reasonable doubt and prosecute, with an academic estimate of what tax fraud may exist.

It is also important that we declare that the tools that are also here allow there to be joint accountability. We have heard the Greens talking about this and reporting the facts—the one thing that they do agree with. No longer can it be used just for a spouse in a violent relationship to then dob in the other spouse. This time, there will be shared accountability and responsibility for those who are found in this situation.

I want to wrap up my speech. There was a comment that was made that we on this side are benefit bashing. In fact, we have never used those words. You can check all of the Hansard. On this side of the House, we have never used those words. We have never used those words. In fact, what was also of concern is that the Opposition members were appealing to us to look at our experiences of working in communities. I can honestly say that I have had a constituent who has come to my office, over in Māngere, and sat down with me. Through no fault of their own, they were in a circumstance where they were being investigated. We sat down together, we worked through the issues, and I am pleased to say that we are coming to a resolution in this situation. What that proves is this: the system that we are seeking to reform is one where those who are in circumstances through no fault of their own can be given a way of mitigating their circumstances. We are doing that. The system allows for that, because this is what has been set up.

Finally, I just want to say that this system of checking out and catching out those who have defrauded the system is part of this Government’s way of looking at welfare. We will always be there to support our people in our community—those who need it—but anyone who can work should be in work, or looking for work and employment opportunities. It is a comprehensive reform of the whole of the welfare system. I commend this bill to the House.

I rise to support the Social Security (Fraud Measures and Debt Recovery) Amendment Bill, but I do so with a very heavy heart and significant reservations. When I was on my first campaign in 1999 in New Lynn, I was door knocking on Northall Road. It is a small street just off Titirangi Road. Not far down that street, I happened to knock on the door of a home where a young mother was bringing three small boys home after school. We got talking and it turned out that one of those kids had just come back from the doctor and was calcium deficient. Talking to me about it, the young mum broke down in tears. I said: “What on earth is the matter? Are you worried about your son?”. She said: “I can’t afford him milk. I can’t afford him milk.” I have never forgotten that moment and the despair in the eyes of that young mother.

Here we have the National Party’s best pitch to solve the problems of welfare dependency: beat up on the beneficiaries—beat up on the beneficiaries. The Rev. Dr Alfred Ngaro is, I confess, an MP whom I respect. He has earned his stripes out in the community, and he should know better. From his theological training, he would remember the verse about not taking the speck out of your neighbour’s eye or your brother’s eye when there is a mote in your own—that is a big log of wood, right? I do not know whether the folks on TV can see, but I have a graph here that has two bars. There is a big long bar here for the amount of tax debt, and there is a tiny little speck here. That is benefit debt, right? Here we have the National Party—not wrongly, which is why we are supporting the bill—picking first on beneficiaries and going after $39 million worth of debt.

But there is $1,000 million of debt in white-collar evasion and back taxes that the Government is leaving. The Rev. Dr Ngaro has said: “OK, we’ve juiced up the IRD to chase some of it down.” That is good as far as it goes, but the Inland Revenue Department told the Finance and Expenditure Committee that it gets a return on investment of $6 back for every extra dollar that it spends chasing white-collar tax debt—$6 back for every $1 invested. Why has the Government not gone after the rest of it? There is $1 billion there, which is 150-odd times more debt than there is in beneficiary fraud. So why is it not doing 150 bills on white-collar criminals and fraudsters before it does this one? The answer is that it knows where its bread is buttered. It does not want to shake the foundations of the white-collar community. It is protecting its big business mates—sorry, not “protecting”, because I know it is illegal. It is not prioritising the crackdown on its own.

Kiwis are sick and tired and sick and tired of hearing about the better future and finding more of the same. They are so disappointed in this visionless, lacklustre, John Key - led National Government.

I am very interested in an article on Stuff, when the bill was introduced, entitled “Fraud investigation measures raise concerns”. It says in response to the announcements of the changes by the Associate Minister for Social Development Chester Borrows: “Concerns have been raised about the plans to investigate people without their knowledge as the Government introduces measures to prosecute the partners of benefit fraudsters.” This is part of an ongoing trend. The Government does not like local democracy in the Auckland Unitary Plan, so it passes the Housing Accords and Special Housing Areas Bill, which steamrolls over the top of it. It does not like the Ombudsman interfering in the privileges of executive Government, so it starves it of decent funding increases. It does not like Kiwis having the privacy of communications, so it passes in a tick a Government Communications Security Bureau bill that means that it can read every email that every New Zealander has ever sent and intercept any phone call at the drop of a hat. And now it is investigating the partners of beneficiaries with criminal charges and criminal powers because those beneficiaries are a few steps behind in their payments.

All right, fair is fair—here is the Labour Party’s position: go after fraud wherever it is. One law for all, fair day’s work, fair day’s pay, fair suck of the sav—OK. OK. It is not wrong to collect beneficiary fraud. That is the right thing to do. But it is 150 times more right to chase down white-collar tax debt—150 times more right. Even if it did this in the middle and it just chased down 75 tax bills before it did this one, that would be a fair thing. We see the National Party’s true colours. It is so blue that it is black. Kiwis are getting dark on National, and we will find out next year.

Tēnā koe, Mr Assistant Speaker. Thank you very much. I am honoured to speak for the Green Party and to be voting against the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. It is very important that the Green Party stands here today and votes against this bill. I would like to honour all the people who struggle on the benefit, because the benefit itself has now become a fraud. The benefit once was truly a safety net, but now people cannot live on it. We can live on our comfortable wages, but many, many people out there cannot live on what they are receiving on the benefit. If they could get a job, they would, because who wants to be stigmatised? Who wants to be investigated? Who wants to be humiliated? It is no fun to stand at a Work and Income office and receive that treatment.

I would like to acknowledge the beneficiary advocates, a group of people who are dwindling in the recession. They have pointed out to me that what happens in a recession every time—many of them are veterans of the system—is that there are bills passed through this Parliament to increase the pressure on and the scapegoating of the vulnerable. It is a great system. Of course the Government is not going to go after tax dodgers. That is hard work. They have got lawyers. Well, I tell you what—sorry, Mr Assistant Speaker, not you. I will tell the House my own experience of working with the benefit fraud team. There is already a system of investigating benefit fraud, and it is not very pleasant, because what it does is it picks on the large percentage of people who either did not realise they had created a debt or are in trouble for various reasons with the department, and it now investigates them secretly. It creates an incredibly punitive regime.

I have sat at meetings with young parents who did not know that they had to prove they were the parents. The department decided that they were not really with their child enough, and they were going to go to court and possibly go to jail. A lot of young women who are in prison are young women who have been done for benefit fraud, so their kids are really benefiting from this punitive system now! And this bill is going to make it worse.

We do salute the part of the bill that will require more responsibility from partners, though I think some of it is going to be an enormous waste of money. Some people will get work out of it. There may be some more jobs in the benefit fraud unit, but I cannot actually see it being very effective to try to squeeze more blood out of the vulnerable stones at the bottom of our society, which is what this bill is about.

So how does the ministry collect a $5,000 fine from people who already do not have any money, and from people for whom English is a second language and who have come to the benefit support agencies I have been part of, saying that they do not know what Work and Income is telling them and they are not sure what they are entitled to? We often then find out that they have not got their basic entitlement but they are being accused of fraud for various reasons beyond their control. So there is the super-vulnerable people at the bottom, and we are increasingly seeing mental health survivors become part of the investigation of fraud, which is what this bill will target. So let us get on to those mental health survivors, let us put them through the system, let us investigate them, let us threaten them with fraud, and let us see how much money we can squeeze out of them! We will get not very much money, not very much human dignity, and not too much respect.

I sat with a benefit fraud investigator one day, and she said to a woman: “How many times have you had sex with your neighbour? Don’t you diary your sex life?”. There was no shame in talking to beneficiaries like that—no shame whatsoever. I said to the benefit fraud investigator: “Do you diary your sex life?”. And guess what? She did not, but it is OK to talk to those people like that, because they are at the bottom and they have got issues, and because they are not justified like the tax people! They are the bad people and we can treat them like dirt, because dirt is how we treat them! But that does not work. It does not work for recovering money, it does not work for inspiring people to do better, it does not create jobs, and it does not protect human rights.

One of the reasons this is a bad bill is the fact that it does not acknowledge that out there in the community some people are trying to get our human right to a decent income and food for our kids, even if they are in debt. It does not allow that. The ministry will decide what is reasonable, and the ministry will fail because the ministry is failing now. We need to go back to the first principles of the Social Security Act. Much like ACC, where we have abandoned the Woodhouse principles, we should go back to the fundamental principles about protecting people. Wasting money like this on creating more and more squads of people to investigate more and more other people when it is a small percentage of genuine rip-off merchants is a shame and a disgrace. Let us review the system. Let us do it properly, rather than base it on punishment. We are very proud to oppose this bill.

I am pleased to take the last call on another very good piece of legislation from the Hon Chester Borrows. He is doing some very good work in this space and working very well with the Minister for Social Development, Paula Bennett. Has this Government not made a huge impact in the welfare space and a very positive impact for New Zealanders? The question I would have for the pervious speaker, Catherine Delahunty, is this: is it not the Government’s first obligation to ensure that the taxpayers of New Zealand are well supported in the provisions by which they pay their tax to serve this country, and that we meet those provisions and that we meet the obligations of those individuals? And where it is clear that citizens who are reliant on the goodwill of the State and the finances of the State by virtue of those taxpayers are taking advantage of that, and are defrauding their fellow neighbours and taxpayers and community, the Government should do all that it can to respond to that on behalf of those taxpaying New Zealanders. First and foremost, that is what the Social Security (Fraud Measures and Debt Recovery) Amendment Bill is doing. It is saying that we take those responsibilities very seriously.

Although I know the Greens are very proud to oppose something like this, they will never be a party in Government as long as they maintain that attitude. Although they can dilly-dally around some fringe sort of watermelon patch ideas and ideologies, and disguise themselves as a party that is there for the environment but is really there to socially engineer in a Marxist fashion, New Zealanders actually can peel back the layers—

💬 Hon David Cunliffe: Ah, you Friedmanite.

Well, Mr Cunliffe may want to be very careful about the comments that he makes about the Green Party, because if he goes on to be successful in his leadership bid against Tweedledum and Tweedledee there, of course, that party, the Green Party, is the very party that he is going to have to be cuddling up to if he ever fulfils aspirations of being the Prime Minister. Mr Cunliffe is an intelligent political operator. He is intelligent enough to know that cuddling up to the Green Party is akin to cuddling up to a cactus, because there are a lot thorns and there are lot of prickles with that particular party.

💬 Hon David Cunliffe: It’s not going to work—no, we’re a Government in waiting.

If it is not going to work, Mr Cunliffe, then the member will never be the leader—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! We are actually on a different debate, so I would ask the member to come back.

Certainly.

💬 Hon David Cunliffe: I seek leave for the member who is on his feet to yield the balance of his time—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! No, you cannot do that. [Interruption] You cannot do that. The member will sit. You cannot do that.

With this particular bill, I will just reflect on some of my previous life, before coming in here, as a police officer. Although everyone in this House knows—and certainly this Government, which has to make responsible decisions, knows—that it is not a case of everyone on welfare committing welfare fraud, what I saw as a police officer—

💬 Hon David Cunliffe: Stranger in the House.

Listen up, Mr Cunliffe. The member might learn a little bit about his constituents and the lives they are living out there in the big wide world. What was very clear to me is that there are, unfortunately, a significant number of individuals who do pair up in domestic relationships and who are profiting from the fact that they are living in a relationship in the nature of a marriage or a relationship that would see them ineligible for the additional support, and they take that quite knowingly. They certainly do it in a manner that is reckless as to whether or not that would be the case. Time and time and time again, I saw a situation where that was occurring. The frustration that I felt not only as a police officer but as a member of the community was that it was not good enough that the people who were reliant on their neighbours for support were actually taking those neighbours for a ride in doing so. Although there will always be some genuine cases of confusion or misunderstanding, it is not a case that this Parliament should be making legislation that is targeted simply at that tiniest nuance. It must be accommodated for, but ultimately the legislation that we should be looking to pass is to send the right message that the community, the taxpayer, and the Government says what is acceptable and what is not.

At its heart, that is exactly what this legislation is doing. It is saying that to the $26 million worth of welfare fraud committed by beneficiaries in relationships in 2013. That is one-third of all prosecutions. It is saying that that $26 million is not theirs. Taxpayers are not paying that money simply so that those beneficiaries can benefit by pulling a swindle. This legislation will, in fact, tackle that.

I just want to touch briefly on, before my time expires, overpayments and the recovery of debt. In terms of people who have committed fraud, $128 million is languishing. That money has not been recovered. A recent High Court decision made it very clear that there was some confusion, and clarity is needed. This legislation brings that clarity on a legislative footing so that it will improve the duty and role of the Ministry of Social Development to take all reasonably practicable steps to recover that debt. It also gives the Ministry of Social Development the discretion to determine on a case by case method how that recovery occurs, and in some exceptional circumstances it could be deferred. Giving that legislative clarity, sending that message, and providing the Ministry of Social Development with those tools is an integral part of readjusting what is a significant amount of welfare fraud. I believe that the taxpayers of New Zealand deserve that. This Government gets on and does what needs to be done. I note the challenges of the Opposition—the Labour Party and the Greens. Although the Labour Party is supporting it, it is a David Shearer support. It is the old “Oh yes, we certainly support it, but actually behind the scenes we are supporting and thinking about something else and steering down a different course.” That is what members opposite do. They say: “We support it, but we don’t like it. We’re going to throw it under the bus anyway.”, because they want a dollar each way. New Zealanders do not want a dollar each way. They want clear legislation, a good Minister, and a good portfolio where a lot of good work has been done.

The Government has indicated that it does not wish to progress further business under urgency. The House therefore stands adjourned until 2 p.m. on Tuesday, 3 September.

The House adjourned at 5.01 p.m. (Thursday)