Borrows Chester: Social Security (Fraud Measures and Debt Recovery) Amendment Bill — First ReadingText is incorporated into the Bound VolumeBorrows Chester: Social Security (Fraud Measures and Debt Recovery) Amendment Bill — First Reading[Sitting date: 27 August 2013. Volume:693;Page:13119. Text is incorporated into the Bound Volume.]Hon CHESTER BORROWS (Associate Minister for Social Development): I moveThat 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 indifferent 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.