Social Security (Fraud Measures and Debt Recovery) Amendment Bill

It is a great pleasure to rise in support of the second reading of the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. The National Government promised to clamp down on benefit fraud, and we are delivering on the promise with this Social Security (Fraud Measures and Debt Recovery) Amendment Bill. Welfare fraud is a crime often committed by people for their own benefit at taxpayers’ expense, and there can be no excuse for it.

Before I go on, I would like to address some of the rhetoric from the member who spoke just before me, Jacinda Ardern from the opposite side, who tried to paint us on the Government benches as the nasty people who want to believe that all beneficiaries are committing benefit fraud. That is far from the truth, and she knows it, because it has always been clearly stated that the vast majority of beneficiaries are honest people who do the right thing. Often, people end up in difficult situations where they have to rely on the State for support, and we on this side of the House completely accept that and support that. We are not ogres who oppose welfare. What we are opposed to is the activity of people who purposely and knowingly commit a crime—in this case, welfare fraud. Relationship fraud in 2013 cost this Government more than $26 million—cost taxpayers $26 million. Relationship fraud cases made up one-third of all welfare fraud prosecutions. In most of these cases, one partner, usually the woman, is left carrying the debt that it actually took two people to create. We are fixing that so that it is not just the woman who carries the burden of the debt. I would have thought that all members in this House would agree that that was actually a fair way to deal with it.

Miss Ardern also commented on how this Government was treating welfare fraudsters in a way that is more punitive than for tax fraudsters when there are more tax frauds being committed. I would like to respond by saying that no one in this House—no one—disputes that tax fraud is a bigger issue than welfare fraud. The Government’s priority reflects that. Over the last four Budgets, this Government has invested more than $200 million in new funding for tackling tax fraud, but no new money has gone into fighting welfare fraud. The Inland Revenue Department has an enforcement budget of $142 million, whereas the Ministry of Social Development has only $30 million. This Government has a duty to ensure that taxpayer money is not being taken illegitimately, and to suggest that we turn a blind eye to tax fraud or any other criminal activity is very irresponsible of that side of the House.

This bill makes spouses and partners jointly liable for debt where they knowingly benefit, or should have known they were benefiting, from welfare fraud. If a person is in receipt of a single living alone benefit, like sole parent support, but living in a marriage-like arrangement with a partner or spouse, it is common sense—it is clear to everyone, even in this House—that they are clearly committing a crime and that it is, in fact, fraud. Now they can be fined up to $5,000 or given a jail term of up to a year. Prosecuting partners who benefit from welfare fraud will ensure that both parties who profit from the crime are punished, and will help taxpayers recover the lost money faster.

During the select committee process there were some concerns raised in the Social Services Committee regarding women in violent relationships who may be inadvertently affected by this amendment bill. The law is very, very clear that for welfare purposes, a violent relationship is not treated as a relationship when assessing their entitlement for benefits. That is very important to all of us in this House, as we do not want to remove from women in domestic violence situations financial support that might actually help them get out of the abusive relationship. Ministry of Social Development investigators are extensively trained to spot signs of a violent relationship and will respond appropriately. It is important that the public has confidence in the welfare system, and these measures, along with a range of smaller initiatives included in the package, will give the ministry the tools it requires to achieve that outcome.

We have formalised information sharing, like links between ACC, the Inland Revenue Department, Housing New Zealand, New Zealand Police, and the ministry. Information sharing between the Inland Revenue Department and the ministry so far has identified and stopped more than 5,300 illegitimate benefit payments. This bill brings in new tools to prevent and detect welfare fraud and brings the welfare system into the 21st century. I commend this bill.

It is a pleasure to speak on the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. Clearly, it is this type of bill that demonstrates the difference between the philosophical position of this side of the House and that of that side of the House. Before I get into that, it is clear that we on this side of the House are supporting the bill in order to demonstrate that Labour is not in the business of supporting those who defraud our system. So for that reason we are supporting the bill. But in supporting the bill there is every need to demonstrate the basic difference between the two sides, and the way this side of the House looks at those who are vulnerable, those who are poor, and those who are forced into a stage in their lives where they are dependent on welfare, and their right to be treated fairly. There is nothing that demonstrates that difference more clearly than the language that has been used by the two sides of the House. We can listen to the language of the Associate Minister for Social Development Chester Borrows when he said “rip-offs”, for example. The moment that that kind of language is used as a justification for a particular piece of legislation, it is clear that it is designed to summon all of the negative beliefs one has about welfare. I want to put on record—

💬 Tim Macindoe: What do you call the actions of those who have been convicted of fraud?

I say to Mr Macindoe that there are a lot of people who are very wealthy and who have also been defrauding the State for years. Some have been caught, but many have not. I do not see that member standing up and arguing against them. The member does not. The member is very clear—

💬 Tim Macindoe: I want you to answer my question. The question was what do you call those people who have been convicted of fraud?

I know that that member came into this Parliament for one sole reason, by his own admission—to fix up welfare fraud. That is in Hansard. That is in his speech. That is a pathetic reason to be in Parliament, and if that is all that that member has to go by, to be in this Parliament, and the only contribution that that member wants to make for the vulnerable in New Zealand society, then I just hope that that member does get in touch with his own soul and that his relationship with the most vulnerable—

💬 Tim Macindoe: I’m in touch with my soul; I’m just asking you a question.

I am not so sure, Mr Macindoe, that you have done that yet. Coming back to the point I am making—

💬 Tim Macindoe: I’m in touch with my soul, thank you very much.

If the member wants to interject, I shall take him downtown as well, so I suggest he listens a bit—

💬 Tim Macindoe: I beg your pardon? You’ll what?

I will—well, figuratively speaking of course, Mr Macindoe. I have been with you downtown, and I would not want to talk about that here, but the member knows what I am talking about.

So when Government members talk the language of rip-offs, they are conjuring up that negative impression of those on welfare, and the Government has been doing that for 5 long years. That is the Government members’ raison d’être. They are very quick to pull up all of the ladders that they have to get to where they are, but never to give them back to those who deserve them. Of course, there is any amount of jargon and spin that that side of the House actually proposes to justify its position, but none of it cuts any ice. In the end, these kinds of proposals are quite heartless. They are heartless because of the way in which the Government gains purchase for its argument. The way in which it does that is to undermine a particular section of our society. It undermines the poor and the vulnerable in this particular area. That is not to say that this side of the House condones even for a minute those who defraud the system. But this side of the House would want all of those who defraud the State to be beneficiaries of the same standards as the poor. They are not.

What we do find is that this Government, for 5 long years, has perpetrated a whole series of legislation based on this notion of welfare dependence, which is its own creation, and based on this notion of lifetime costs of welfare, which is its own creation. Paradoxically, the savings the Government makes are based on that particular calculation. Well, nobody on this side of the House is duped by that rhetoric at all. We are still saying very clearly that those who abuse the State ought to be brought to justice. But I ask whether this is the way of doing it—by first conjuring up that image of the poor and the vulnerable, because this is who they are—and I do not think that anybody living in the upper-class suburbs of our society are the targets here.

The targets here are those who have probably got into a position by unfortunate circumstances, whereby they have become dependent on somebody else who has taken advantage of them. These are the people who are our beneficiaries. What the State ought to be doing is showing an exceptional understanding—sorry, Mr Deputy Speaker? OK? I thought that he was giving me a signal. Is it in order for the Deputy Speaker to give me a signal? I suppose it is, yes. I think he was agreeing with me by shaking his head from side to side. I am happy for the Deputy Speaker to support what I am saying. That is much better. Would it not be better for us as a society to show a real understanding of those who are vulnerable, and for those who find themselves in a position, often bringing up children, of being dependent on the State for a period of time to be extended the largesse of our great democratic society and the reasonably enormous wealth we have, to ensure that those people and those children get the best start in life and that they make something of themselves, which is what the system is designed to do? It was designed by my forebears on this side of the House, and now, over the last 5½ years or so, it is being systemically demolished by members on that side of the House. This is another example of where they are trying to do that. But we on this side of the House will still not tolerate those who defraud the system.

There are many, many approaches that the State can take to be kind and generous and at the same time expect the standards that it deserves. This bill does not do that. In fact, the regulatory impact statement alludes to that. There are a number of ways in which those who get caught in these types of confused relationships, and in defrauding the State as well, can be uncoupled, assisted, and regularised, and for money to be recouped from those who have taken it from the State. There are much more humane and reasonable ways of doing it. The Associate Minister and that side of the House know how to do that. But that does not give them the political purchase that they require for their own supporters, because their own supporters have been socialised into—and now have internalised—the language of welfare dependence and welfare fraud.

It is not a huge sum of money that the Associate Minister Chester Borrows is trying to recoup through this mechanism, but what will be its consequences? Those consequences have not been factored in. I just want to talk about this one point. What is a person—say, a woman with two children—to do when they are totally dependent on a benefit and they are at the stage in life where they get into relationships and they get into friendships? The friendships develop into relationships. What if they make mistakes and somebody has taken advantage of their own status? How long are we as a State to allow them to have the space to have relationships that might be regularised and then become a conventional family, if you like? What this bill does is actually point, in a sense, a negative finger at those families—in particular, at those women, I would imagine—who are trying to make something of themselves and who require the largesse of the State. They require understanding and they require an environment to be produced where the children will become good citizens and where they will get a good start in life. But, no, what we are trying to do in this bill is criminalise those offences. A $5,000 fine and 12 months in jail for a mother with two kids who has made some bad decisions—that is the bottom line in this particular bill. How can that be a reflection of our collective soul in this particular State? It is not.

So although we support this bill because of the message it gives about fraud, we do that with a heavy heart. We do that with enormous reservations. We have not been able to convince the Government to do much other than make some provisions in this particular bill, where the Ministry of Social Development is at least required to consider all factors. Thank you.

I am proud to rise and speak on behalf of the Green Party on this second reading of the Social Security (Fraud Measures and Debt Recovery) Amendment Bill, and to express our opposition to this bill, which is an unqualified opposition to the moral redundancy that we see in this bill. We are working for a social security system that provides everyone with enough income to fully participate in their community and to live safe, healthy lives. This would be what a real investment approach would look like, and it would save us money in the long run. We support policies that are sufficient to ensure that vision, simple to understand and access, universal in their application, and equitable within a wider social context. We oppose this bill because it is not consistent with these values or this vision. This bill will, we believe, further stigmatise the most marginalised people in this country and put more barriers in the way of people trying to get out of poverty. We currently have a system that identifies fraud and debt and has options for redress. You can believe that you want to maintain the integrity of this system and fight against fraud and oppose this bill—we do.

Part of the motivation for this bill has been to remove the uncertainty around debt recovery that has been raised by court rulings that have highlighted human rights concerns. This bill removes some of the leniency that exists within the system in relation to debt recovery, 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, despite many people being in debt because the basic benefit levels are too low to enable them to provide the very basics of life.

This bill imposes a new obligation on the ministry to take all reasonable practical steps to recover debt. Over two-thirds of the debt that the ministry recovers is not a result of fraud. Let me say that again. Over two-thirds is not a result of fraud. Much of it is a result of administratively created overpayment. It is the interface between beneficiaries who are working part-time and reporting that work and the systems through the Inland Revenue Department. A significant amount of debt is actually created by a mismatch of those systems, rather than by any doing of the beneficiaries.

Even more worryingly for me, much of the debt is created because benefit payments are too low to enable people to live a normal life and to weather those normal shocks that many of us manage in our daily lives—like an appliance breaking down or a family crisis—and the basic benefit levels are not enough to provide some very basic things. Often, advances are given to people to pay for some of the absolute essentials in life, including things like washing machines, fridges, school uniforms, sanitary items, attending a family funeral, or even food, and the list goes on. This is what we are talking about when we are talking about debt.

I just want to give one example to try to make this real for the House. A woman with her two primary school - aged children ended up on the sole parent payment because when she left her violent partner her children were so unsettled that she needed to leave her job because she did not have enough leave available to be able to be there for them when they needed her. She had lost most of her furniture and most of her personal possessions when she had left that relationship. So she was starting again without a job, trying to ease her children through this transition. She got an advance to get some of the most essential items that she needed to set up her house. That money, the repayment of those costs in setting up her house, came off her benefit each week, which, in turn, meant that she was struggling even more to keep the heating on and to put food on the table. When the children got holes in their shoes, she had to tell them that those holes might just make them run faster, to help them cope with the new reality of their lives on a benefit in this country.

Although she was really struggling, because this was defined as debt and it was being recovered, even if there was a discretion, she would not have challenged it because she saw that as valid in the system. We do not. We believe that those children deserve better, and taking away the ability of the department to have discretion around the recovery of that debt is, I believe, morally bankrupt. Our children deserve better. We have enough in this country to make sure that our children have shoes. We have enough in this country that we do not have to take money out of a tiny budget for those families who are struggling enough already. If we put more money into the system, those families would have a chance to survive. They would have a chance to recover and rebuild themselves, and we would all be better off in the long run.

The rhetoric around this bill seems to have compelled most people to start their comments with the moral acceptance of the need for beneficiaries to repay such debt. The Green Party questions the legitimacy of this, when discrimination is built into the system, as it is at the moment, and so many of our children are living in poverty as a result. We do not support law change to strengthen the ability of the Government to reclaim money from the poorest families who are just trying to provide the very basics for themselves and their children.

We have been advised that there have been some amendments from when the bill first came into this House, and we are grateful for those. I do need to acknowledge that when the bill first came into the House, there was no ability for the chief executive to consider factors outside of ministerial discretion in determining the rate and method of debt recovery. It is pleasing to see that that has been built in, but it does not change the fundamental principle. We have been advised that these amendments will protect against breaches of international human rights obligations, specifically those of economic, social, and cultural rights. But we are still concerned about this and do not have confidence. Part of the reason for that is noting the Human Rights Commission submission to the Universal Periodic Review, which noted “at present economic social and cultural rights are not recognised as fundamental, justiciable rights.”, and therefore we would argue that explicit protection in this bill is required. The refusal to consider the insertion of a clause to guarantee these rights is of considerable concern to us. Being told that the legislation will enable future Ministers to insert such a clause in the directions is not a comfort.

On another point, this bill also allows the ministry to recover a debt from the partner of a beneficiary when that debt has arisen from fraud, where the person knew there was a risk that they were benefiting from that fraud. On this point we are ambivalent. We believe that the current system of reclaiming the entire debt from the beneficiary, usually the woman, even when the partner has benefited from the money directly or indirectly, is unjust.

We are also concerned that, currently, violent partners regularly use the threat of informing on a woman as a tool of abuse. This is easy for them because currently the consequences fall entirely on the woman holding the benefit. However, a significant number of submissions raised concerns around domestic violence in relation to this bill. Although we have had previous Government members assure us that the system is well protected to protect victims of domestic violence, that is not the experience we have had conveyed to us. We oppose this bill with pride.

I want to take up the comments that were made by the honourable Jan Logie when she talked about our children deserving better. Absolutely our children do deserve better. Unfortunately, it is not the children who are at fault. Sometimes—not all the time—adults, through their behaviour, cause the incidences where our children do suffer. The target of the Social Security (Fraud Measures and Debt Recovery) Amendment Bill, as Dr Rajen Prasad said, is fraud. Absolutely, unashamedly, this particular bill is about fraud, but the overall vision of the welfare reforms is a welfare system that supports our people in our community who are in need. That is the intent of the vision. So although the bill is focused on fraud, there is a broader vision that this Government has of ensuring we have a system of welfare that does support our people who are in need.

The comment by Dr Prasad was about the target being fraud. I want to read from the Labour Party minority report: “While Labour supports the intent of this bill to hold those responsible for committing fraud within our benefit system to account, and stopping them from undermining the entire system for those who need it the most”—and I will finish off the sentence—“we do so with grave reservations.” But the part I want to highlight is about ensuring that we have the resources for those who need it most. I have had constituents who have come to my office in Māngere and who have talked to me about how they are in a situation involving this exact issue around benefit fraud. Again, it was an oversight that they had made. In that sort of situation, absolutely I supported them in the process of ensuring that they would get help and that there was discretion in the way that Work and Income dealt with them.

It is not true to say that this Government is a Government that does not care. In fact, it does care. We care every day. We want to make sure, as the minority report from the Labour Party clearly said, that we hold those people to account. Well, it could be the Labour department. It probably feels like that some days, I am not sure. Anyway, the intent of the bill is to ensure that those resources will go to those people who need them most. We do not disagree with that. Absolutely that is the intent of what this bill does.

I also want to pick up on the points that were made by Jan Logie around discretion, because I think they are really important. I think it is important that when we deal with this issue, it can be sensitive. For those who have unfortunately made some decisions and made an oversight, we want to make sure that we do care for them and do help them through this process. Therefore, to ensure effective debt recovery and to address the effect of those court decisions, this bill will amend the Act as follows. Firstly, it imposes a duty on the Ministry of Social Development to take all reasonable, practical steps to recover the debt. Secondly, the Ministry of Social Development has discretion—and I will repeat that: discretion—to determine case by case the method and rate of recovery. Thirdly, in exceptional circumstances, the Ministry of Social Development may defer temporarily the recovery of debt. Fourthly, the Minister responsible for the Act is required to issue directions identifying the exceptional circumstances in which recovery may be deferred temporarily, and identifying the considerations to which the Ministry of Social Development must have regard in setting the rate and methods of recovery of the debt.

I just want to highlight the point that it is important that we are showing discretion and that we do care. This is not about turning round and heavy-handedly going out there and taking from those who, unfortunately through their oversight, have made a mistake. But those who are committing fraud behaviour—and we all agree in this House, because the bill has come back with the majority agreeing—should be held to account. They should be held to account, and that is the intent of this.

I have one last comment before I finish, and that is that Ms Ardern actually talked about the issue of finance and ensuring that we are balancing our view as a Government. Well, we do know that South Canterbury Finance is currently in the dock, before the court, being held to account. This is a Government that is fair. It wants to ensure that those who most need the resources that are needed do receive them, but those who have committed fraudulent behaviour will be held to account. I commend this bill to the House.

Welfare fraud is a serious issue. It does not recognise integrity, which was actually mentioned by the Associate Minister for Social Development, Chester Borrows, in his speech earlier tonight. New Zealand First agrees with those who are voting in support of this bill, the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. New Zealand First agrees with making accountable those who take money they are not entitled to. We need to ensure that, by making them accountable, they are held responsible for taking something that does not necessarily belong to them.

New Zealand First has always been at the forefront of addressing welfare initiatives that will promote the well-being of our people. New Zealand First has a record, of course, of helping New Zealanders, regardless of their race, the colour of their skin, the language they speak, or their age. That is right—that is New Zealand First, especially with regards to the SuperGold card and free healthcare for under-6-year-olds. It is no secret that New Zealand First backed KiwiSaver. We did indeed. It is no secret that New Zealand First put more policemen in the police force and more funding towards Māori wardens.

Earlier today the Minister said that he was offended by those who raised tax avoidance or tax evasion in their minority report. We did not put forward a minority report, but we do have a very strong view in this area. The Minister ought to accept that there is more money owing on tax evasion, or tax avoidance, and his Government should do something about it. Five billion dollars is a lot of money as a result of that. Interestingly enough, we have been waiting for the Government to get on with the job of sorting out the loan sharks. These are the people who have been preying on our vulnerable families and leading them into further debt.

This bill, the Social Security (Fraud Measures and Debt Recovery) Amendment Bill, must deliver for those who are abusing the system. We agree that the Government must be responsible with taxpayers’ money. Why should we not? The Government has a responsibility to ensure that the funding allocated to those who need it the most is administered properly. The welfare system is a safety net for those who need it the most. It is supposed to be a safety net. We totally agree with this.

Sadly, it is true that some dishonest people are treating welfare like a fishing net, and they are taking more than they are entitled to. It is vital that New Zealand welfare reaches the people who actually need it instead of the criminals or the greedy partners who would continue to take what they are not entitled to and, in many cases, use the funds to feed their drug addiction or gambling problem. But this is always easier said than done. After all, Minister Collins could not even confirm whether she should be taking up sign language if she was not able to communicate in the Chinese language to confirm who paid for the dinner in China.

Let us be clear here. We want to ensure that the intention of this bill will be implemented appropriately and with suitable mechanisms in place to ensure that it is carried out properly. This bill aims to make criminally liable the spouses or partners of those committing benefit fraud. “Liable” is actually the critical word here. We accept that. We believe 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 that the penalties contained in this bill are sufficient to deter potential fraudsters from committing benefit fraud. Ordinary Kiwis out there would like justice to be done, and everyone in this House is responsible for passing legislation that delivers justice for all, not just for those on that side of the House.

This bill has identified important areas in current legislation that need strengthening. Relationship fraud is one of those areas. When relationship fraud is involved in more than half of the total debts from welfare fraud, it is clear that something needs to be done. The report from the Social Services Committee stated that the amendments are designed “to make clearer the criteria for liability on the part of a beneficiary’s spouse or partner who, knowingly or otherwise, benefits from an amount obtained by fraud.”

The select committee gave this bill serious consideration around its implementation and definitions. The report continues: “To be liable the spouse or partner must know, or be ‘reckless’ as to whether, the amount obtained is in excess of what the beneficiary is entitled to, and that it is being fraudulently obtained. The bill as introduced is unclear about whether the spouse or partner would also have to know the exact amount involved, or the precise way in which it was obtained. The amendments would make it clear that the spouse or partner would not be required to know the exact amount obtained by fraud, nor the precise way the beneficiary obtained it.”

There are frauds and more frauds and many frauds and uncontrollable frauds. As the Minister himself said, it takes two to tango, and we acknowledge that the bill is providing a way to share accountability among both parties involved in a relationship who intentionally defraud the system. This bill will strengthen the current legislation, which often unfairly punishes just one person. If fairness is expected when the Government is assisting people according to their needs, then it is only reasonable to expect fairness from people when their situation or their circumstances change and improve.

We cannot afford to allow people to exploit the system. There has been too much of that lately in recent weeks in this House by many of those on that side of the House. But in saying all this, it is important to point out again that relationships are never simple and straightforward, particularly for people in broken homes. The bill must be sensitive to this. The changes must not disadvantage women in violent relationships. I am pleased that the Hon Chester Borrows gave an assurance on this during the bill’s first reading. If only the rest of his team and his colleagues would do the same.

The select committee’s reported stated, in terms of amendments to the debt recovery provisions: “We believe that this would ensure that the amendment did not undermine the general public law principle that decision-makers must take all relevant considerations into account. It would also alleviate any concerns about the legislation breaching New Zealand’s international human rights obligations, by ensuring that matters pertaining to such rights could be taken into account where necessary.”

The Government has stated that it is making significant savings by preventing welfare fraud. Yes, savings reached $109 million in the 2012-13 year. This is a welcome result, especially when debts owed to the Ministry of Social Development stand at over $120 million. However, we must always be mindful of being overzealous in searching for savings, because it will almost undoubtedly come at the price of helping someone in genuine need.

We must acknowledge the idea that most New Zealanders would not cheat the system if they felt like they did not need to. The simple fact is that desperation often pushes people to behave in this way. To address this, we have to acknowledge the deeper social problems that rely on the welfare system and rely on welfare fraud. There are no jobs, and many families struggling on low incomes are battling against the high cost of living. Many of those who would be first-home buyers are actually struggling to save the 20 percent deposit on a home or to pay for their children’s schools and uniforms. We have to be sure that targeting the small number of people intentionally taking advantage of our welfare system does not have a wider negative impact on those who are in genuine need. It will be a difficult balancing act. However, the overall intention of the bill ought to be supported, and New Zealand First will support the bill in its second reading. Thank you.

Welfare will always be there to support the people in our community who need it, for as long as they do need it. That is why we have worked hard in the last 5 years to bring the welfare system into the 21st century and to make sure that it is better targeted to those who are in need. Many needed it during that period of the recession. As we have climbed out of the recession, of course, we are now seeing economic growth, and it is a good thing that that system was there.

However, as part of our reforms, we did promise to clamp down on welfare fraud. This Social Security (Fraud Measures and Debt Recovery) Amendment Bill is what focuses our attention on the few, that small percent, who do owe debts to the taxpayer and who continue to undertake fraudulent practices. I think that people have a lot more understanding of how fraud can be frowned upon when you look at the State housing system. We clamped down on fraud in State housing, where people would receive a State house courtesy of the taxpayer, they would not live in it but would live in a house elsewhere that they had not declared, and they then sublet that other property as if they were the landlord and collected the cash.

Under the previous Labour Government, none of those people was picked up. Oh, actually, I believe that over several years it caught 10 people. In recent years—in 1 year, in fact—we got between 300 and 400 State house tenants who were fraudulently subletting their State houses. Labour ignored that; we are focusing on it, in the same way that we are focusing on our welfare system, outside State housing but within welfare. We need to do that. We need to do that for the few people who rip off the system for those many who need it from time to time. I support this bill.

I am a member of the Social Services Committee, but, unfortunately, I cannot remember hearing the submissions on the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. I was not in the select committee at the time, but it is my pleasure to inform the House that Labour does support the bill, which is having its second reading. But we have grave reservations. I want to pick up on what Phil Heatley, the previous speaker, said, which was that we need a welfare system that helps people when they are in need. We actually see this bill as beneficiary bashing, and I will provide a context not only for the House but for the people at home who are listening.

When you look at the problem definition in terms of this piece of legislation, it seems that the problem is that there is $20 million of spouse/partner beneficiary fraud in New Zealand—so that is the context. From our perspective, we have looked at, I guess, a parallel issue, which is tax fraud, which is a deliberate act, and that totals $141 million. So we question why this Government always seeks to attack and criminalise those who are the most vulnerable, which is the point that my colleague Rajen Prasad raised earlier. So from our perspective, this is a piece of legislation that is going to target and stigmatise those who are the most vulnerable. Picking up a statistic from my colleague Jan Logie, who also sits on the Social Services Committee, we are talking of about a third of the fraud that is committed within the social welfare budget.

One of the big issues that we have—and I would like to quote from our minority view in the select committee report, and it actually comes from the New Zealand Law Society—is that “it is fundamentally unjust for a beneficiary’s spouse or partner to be liable for the full excess amount that the beneficiary obtained by fraud regardless of the spouse or partner’s benefit and that limiting recovery to the amount by which the beneficiary’s spouse or partner benefited would provide a more equitable outcome for relationship fraud.” From our perspective, to link the fraud of an individual—because in New Zealand only an individual can receive a benefit—to fraud perpetrated by that individual’s spouse or partner is fundamentally unjust. We say that it is fundamentally unjust because it actually departs from general principles of criminal law. So from a legal perspective, there has to be a positive act to then determine that a criminal activity has taken place, and there has to be knowledge of, or failure to report, another’s offending, which is another ground for it to be seen as a criminal offence. Our contention is that there are already a number of existing criminal offences that cover the criminal liability of spouses or partners of beneficiaries.

Some of the things that beneficiaries’ spouses or partners have to do, in terms of that positive act, include agreeing with the beneficiary that the beneficiary will commit a fraud. So we are actually talking about collusion between two people for a fraud to take place. They have to encourage or assist the beneficiary to make false statements in order to obtain a benefit or rate of benefit by fraud. They have to make false statements for the purpose of assisting the beneficiary to obtain a benefit. They have to omit to inform the Ministry of Social Development when questioned on matters.

This, then, points to the submission by Kay Brereton, who is the co-convenor of the Beneficiary Advocacy Federation of New Zealand, who said: “While we support the idea of making both parties to a fraud liable for any debt relating to fraud where a relationship in the nature of marriage is proven, we are very concerned at the removal of the requirement for investigators to first seek information from the parties under investigation.” So in terms of a natural justice perspective, we are really concerned that there is no investigation now. If we deem that benefit fraud has taken place and if you are the partner of the beneficiary who has committed that fraud, you are all of a sudden linked to that crime and you have no recourse. The presumption of innocence actually is a legal principle, so I do want to highlight that in terms of my kōrero tonight—that the burden of proof should be on the ministry, not on the person who has been charged with the criminal offence.

This, for us, is a deterioration of the relationship that the State has with beneficiaries. People who seek assistance from the State do not do so, I believe, because it is a lifestyle choice. I believe that they need support from the State because they find themselves in circumstances beyond their control, where they need income so they can pay their rent, put food on the table, and fundamentally look after not only themselves but, in many instances, their children. This piece of legislation, I contend, should not have been a priority of this Government. It would have been a much better prioritisation of this House’s resources if we had actually looked at the $141 million in tax fraud that is committed every year. That is a deliberate act by wealthy people to not pay their fair share.

The context of this piece of legislation is the most vulnerable people who are receiving support from this State being penalised for circumstances that they find themselves in. I think that is the biggest critique of this piece of legislation. The biggest critique I can make about this Government is that it likes to kick the most vulnerable. It likes to stigmatise them, traumatise them, and make them feel like they are undeserving.

💬 Tim Macindoe: You know that’s not true, Louisa.

It is, actually—it is. If you look at whether it is a just treatment of beneficiaries or whether this process creates a genuine respect for the people who find themselves needing welfare, the answer is no. It is absolutely no. So the prioritisation of this Government always should come into question when pieces of legislation like this come into the House.

It seems to me that if we wanted to pursue fraudsters, we would go after those who are committing tax fraud. But that is not a priority of this Government because that would be a lot of people it knows—wealthy people—

💬 Hon Trevor Mallard: Their mates.

Its mates—that is right. And that is the issue that I have and that our side has with pieces of legislation like this. At the end of the day, people in need need to be supported. People in need do not need to be further traumatised and stigmatised through pieces of legislation like this. So I will continue as a representative of communities most in need to ensure that we have respectful working engagements with them.

We as a Labour Party are supporting this bill because we believe that those who commit fraud should be held accountable. But the equity that we seek, in terms of holding people accountable, should extend to the fraudsters who are committing tax evasion. Kia ora. Thank you.

My integrity and motives as an MP were attacked earlier in this debate by Dr Prasad. In response to his criticism of this Government and this bill, the Social Security (Fraud Measures and Debt Recovery) Amendment Bill, I asked him a simple question, and that was what we should call those who steal from New Zealand taxpayers by committing fraud to obtain welfare payments to which they are not entitled. Dr Prasad chose to attack me personally rather than answer that question, and his abusive comments are on the record in Hansard.

I want to make it clear to everyone who may be listening that I have always defended our welfare State and argued that it should treat all who genuinely qualify for welfare assistance and their dependants as compassionately and generously as possible. I have always done that. There is nothing punitive or heartless about that position, Dr Prasad. And, yes, thank you, I am at peace with my soul about my concern for everyone in that difficult position. But nor is it punitive to take appropriate steps to detect and prevent planned and intentional fraud. That is not stealing from the nebulous concept of the State, as Dr Prasad would put it, but from every honest taxpayer in this nation, many of whom are also struggling to put a roof over their family’s heads and a square meal on the table. That, Dr Prasad, is what is morally indefensible. This bill strikes a fair and just balance, and I am proud to support it.

Kia orana, Mr Deputy Speaker. Thank you very much. It is my pleasure to take a short call on the second reading of the Social Security (Fraud Measures and Debt Recovery) Amendment Bill, which we support with some reservations. We have reservations because, of course, we are hoping that at some point this Government will realise that the recovery needs to be shared out amongst our people—that we all deserve a fair share of these prosperous times the Government is telling us about.

I believe it is important to be very clear about the principles and the values that you stand on when you debate a serious issue like this. I want to state categorically that fraud and, in this case, fraud of taxpayer-funded institutions is abhorrent. When fraud is proven, those most at fault must be punished. It is important to remember that as a general principle, and that it should be and could be applied in other areas where the taxpayer can be impacted. It is the most basic form of accountability back to the New Zealand taxpayer—that their hard-earned money is being used appropriately and wisely. Thank goodness we have a backstop when we are vulnerable, when we are unable to manage with our current resources, when we need a helping hand. Some of our people need more help than others, and I for one am very happy to live in a country where the vulnerable and those who are having a difficult time are supported. However, we do need a certain level of accountability about how we use State support. When we misuse it, and when that is discovered and proven, then we must ensure that those involved experience the full extent of punishment to remedy the situation.

I want to quote back to Melissa Lee when she spoke a little earlier this evening, when she talked about domestic violence being one of those things tested for. That would mean that people in domestic violence situations, if they come up for these particular offences, will be tested and not have these cases charged against them. Melissa Lee also said the Ministry of Social Development was competent at testing the women who would come under the domestic violence provisions in order to recognise domestic violence. Well, I would want to know what that test actually looks like. Women who present with domestic violence issues are very vulnerable and potentially can be revictimised if they are required to sit a test to prove they are in a violent relationship. I would hope that this House would relook at this particular test and see it as continuing to victimise women who are already under pressure of domestic violence.

I want to quote what the Social Services Committee said. I commend the select committee. It would have been interesting being on the select committee and listening to the submitters who presented. The select committee stated that the amendments were designed “to make clearer the criteria for liability on the part of a beneficiary’s spouse or partner who, knowingly or otherwise, benefits from an amount obtained by fraud. To be liable the spouse or partner must know, or be ‘reckless’ as to whether, the amount obtained is in excess of what the beneficiary is entitled to,”. That requires a certain amount of knowledge, and when I go back and quote situations where people are potentially in domestic violence situations, I would challenge that that is actually a test that could be met by many of our families.

The bill also presupposes that some administrative error or similar has not occurred and caused the beneficiary to be put in a position of being overpaid. We have already heard several members in this House talk about that situation happening, and I understand that the level of administration work required to ensure that the declaration of income data for part-time work is adequately captured in a timely way is actually quite huge. So how can we ensure that beneficiaries are not inadvertently thrown into an overpayment situation? The beneficiary advocate Kay Brereton was quoted as saying that currently the majority of people being punished for relationship fraud were women. I have to go back to my previous statement about how we are inadvertently victimising a section of our community without having good tests to prove that they are actually not being overly pressured by the men in their violent relationships. I want to also quote the Minister Chester Borrows from February 2013—

I rise to speak on the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. I have to start by reiterating what my colleague Jan Logie said earlier this evening. The Green Party is working for a social security system that provides everyone with enough income to fully participate in their community and to live safe, healthy lives, because, ultimately, giving people that freedom and security is going to help us have a more prosperous and sustainable society and country in the long run. We support policies that are sufficient to ensure this, simple to understand and access, and universal in their application. It is incredibly important that they are equitable within the wider social context, and we need to be mindful of that. We are not starting from an even, level playing field. A lot of people are disadvantaged to begin with, and policy needs to take that into account and find ways to build them up and give them opportunities.

This bill, unfortunately, is going to further stigmatise the most marginalised people in this country, and in some cases further entrench poverty, and really for very, very little gain. If I was to ask people at home what they thought the Government should be spending the most time and effort trying to track down, in terms of revenue, they would probably think that it would make more sense to put the focus and effort into getting the $1 billion to $6 billion that is estimated to be owed because of tax avoidance—so that $1 billion to $6 billion is money we are not getting because of tax avoidance—or perhaps the $2.6 billion that is still owing in child support. There are 800 fathers in the country who are earning more than $100,000 a year, and there is $2.6 billion owing in child support. There was $591 million that was tracked down in unpaid fines over 3 years. So we have got these huge sums of money that people are not paying because they are cheating the system and they are cheating their fellow New Zealanders of their contribution.

In many cases, the people who are avoiding taxes and the people avoiding child support are actually people who are pretty well-off and have means to pay and to give their fair share to the rest of New Zealand, and yet this Government is putting all this effort into chasing down a tiny amount of money owing in benefit fraud, which is literally less than 5 percent of the money that is not paid due to tax avoidance. We are not condoning benefit fraud, but let us put it in perspective. Let us put it in perspective and be rational about where we put our efforts, because it is not fair that high-income earners are not paying their fair share and instead we are going to go and target and put all this effort into the small number of people who are committing benefit fraud.

What is incredibly concerning is that during the select committee—I was not on the Social Services Committee for this, but I have got the report here from my colleague Jan Logie—from what she was told, the fraud investigation system is still quite imperfect and quite fraught. Officials said that the evidence they are using is often unsubstantiated. And we are hearing from women in violent relationships that they often feel persecuted through the system as it is at the moment. Previous speakers this evening on the Government side have stressed that victims will be protected, but, in fact, we have very good reason to believe that that is not the case. This bill is not going to protect victims of domestic violence who are not in a position to report on benefit fraud because of their partners. The Green Party believes that the Government needs to develop a policy or legislative response to these problems based on the experience of women and beneficiaries who have been affected that also involves the Women’s Refuge. That is how we are going to get an approach that is fair and that ensures the safety of all involved.

We are particularly concerned, and we share the concern of the New Zealand Law Society, about joint liability, which means that both partners will be liable for the whole debt should both parties be accountable for the debt arising from the fraud. The New Zealand Law Society told us that it believes that this could lead to unfair or disproportionate outcomes. In its view, liability should be shared on the basis of attribution of benefits as per the Criminal Proceeds (Recovery) Act 2009. This has been dismissed, in part due to cost and a potential increase in reviews and appeals, but the Green Party believes that it is essential that our laws are fair and proportionate and open to appeal.

I just want to correct the record. One of the previous speakers, Poto Williams, said that Melissa Lee, the chair of the Social Services Committee, had said that there was a test for domestic violence. That is an entirely incorrect statement. The member never said that at all. I am sure my friends from Hansard will make note of that. Make no mistake about it—

💬 Hon Trevor Mallard: No, no, you can’t correct a statement.

Well, they are recording what I am saying, Mr Mallard, so I am sure they will.

Let us make no mistake about it, most of the people who are on a benefit are actually doing what they should be doing and fitting within the rules, but let us also accept and not beat around the bush that there are some—and they are the minority, but there are some—who abuse the rules and take for granted what the State is doing for them and therefore what the taxpayer is doing for them. There are, unfortunately, some who believe that they have some God-given right or some ability that others do not have to take something that they are not entitled to, and do it in a fraudulent manner.

This bill, the Social Security (Fraud Measures and Debt Recovery) Amendment Bill, is very much about addressing those people, because those people out there know exactly who they are. They know exactly who they are. They know when they are doing something that they should not be doing, and they know when they are actively defrauding the taxpayer. And what New Zealanders expect is that people like us actually do something about that. To raise the argument that white-collar crime is going on so we should not pick on the poor beneficiaries who are defrauding the taxpayer is an absolute nonsense. It is not an either/or; it is an and/and, and that is exactly what the Government expects of us.

So the sort of politics being played out by people like Julie Anne Genter over there and her friend from the “New Zealand Something Party” is just absolute rubbish, because the reality is that if they took some time to get out into the real world and see what is going on there, there are people in this country—

💬 Le’aufa’amulia Asenati Lole-Taylor: I raise a point of order, Mr Speaker. I think it is the rule in this House that people should be referring to a party’s name by its correct name. I have just heard the member saying just before the “New Zealand Something Party”. It is not very—

💬 Mr DEPUTY SPEAKER: I think it was not levelled at any individual.

💬 Hon Judith Collins: They didn’t mind calling my husband by different names.

That is right. I will finish off here, because much has been said about this. It is actually a good piece of legislation. It sends a message, and, actually, all people need to do if they want to avoid the long arm of the law in this legislation is, I do not know, follow the rules and not try to rip off the taxpayer.

The question was put that the amendments recommended by the Social Services Committee by majority be agreed to.