Social Security (Fraud Measures and Debt Recovery) Amendment Bill — In CommitteeText is incorporated into the Bound VolumeSocial Security (Fraud Measures and Debt Recovery) Amendment Bill — In Committee[Sitting date: 08 April 2014. Volume:697;Page:16951. Text is incorporated into the Bound Volume.]Social Security (Fraud Measures and Debt Recovery) Amendment BillIn CommitteePart 1 Substantive amendmentsSUE MORONEY (Labour):It is a pleasure to rise and speak on Part 1 of the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. Can I say at the outset that with many many reservations the Labour Party is supporting this bill. Part 1 is where the substantive amendments take place. But I do want to at the outset put on record our unease with what this bill does represent. It is one of those bills—and Part 1 with the substantive amendments I think demonstrates this—where the Government has been all too quick to bring out measures designed to make it look like it is harsh on beneficiaries. This bill is another one of those. This is about welfare fraud measures and debt recovery.But the fact remains that if the Government was actually serious about fraud measures and debt recovery it would go after tax fraud first and foremost because that is where the vast amount of fraud actually happens in this country. Basically the facts speak for themselves. Relationship fraud amounts to around $20 million a year. The Inland Revenue Department estimates that tax discrepancies amount to over $1.2 billion a year and that annual tax fraud is about $140 million at an absolute minimum. So I want to say at the outset that although fraud in terms of the welfare issue is not acceptable—and that is why the Labour Party is supporting this bill—it is dwarfed absolutely dwarfed by the tax fraud that goes on yet we are not taking the same sorts of measures.In Part 1 the sorts of measures that are being taken by the Government are around ensuring that the spouse or partner of someone who has committed benefit fraud is also captured and can be held accountable for that fraud. I listened very carefully to the submitters who came for the Social Services Committee hearing on this bill. There were not very many of them but what they had to say was really important and worthwhile listening to. I was concerned about some of the gender impacts of Part 1 of this bill.We did have a number of women’s organisations that came forward to support the bill. What they said was that quite frequently in their experience although the beneficiaries themselves were female and often sole parents actually they believed that sometimes those women had been forced into committing welfare fraud by their partners. It was not their idea at all. It was an aggressive partner or maybe even sometimes a violent partner who was coercing them into committing this welfare fraud. So it was interesting to hear that sort of gender perspective on Part 1 of the bill. Those women’s organisations were saying that actually they thought that women were unnecessarily shouldering the responsibility for welfare fraud and that often it was their partners who were actually instigating it to start off with.We did agree with those organisations but we also agreed with the Law Commission when it came and raised issues with the select committee around the burden of proof because effectively what this bill does and it does it in Part 1 is that it does not have a very high level of the burden of proof—of whether the partner or spouse of the beneficiary who has committed the fraud was actually at the forefront of that or not. This is a new precedent that is being set by this law and that is what the Law Commission came to discuss with the select committee. It told us of its unease about it.The Labour Party shares that. In fact we said so in a minority report on the bill—that we have some major reservations about it. We are concerned about the departure from the general principles of criminal law that a positive act is normally required to ground criminal liability. This bill for the first time does not require that to be established. There is no requirement for it to be a positive act—that the person actually was an instigator of it. Rather it just says that they needed to have either knowledge of or a failure to report another’s offending for it to be covered under this bill. That is normally insufficient to ground criminal liability. But this bill changes all of that and we are concerned about the precedent that it sets.I will say again that we will probably be a little less concerned about the precedent that it sets if it was actually applied equally. But as this Government is inclined to do it actually wants to take harsher measures against people who are more vulnerable and for people who are committing corporate tax fraud it really does not seem that bothered about them. So it has got loopholes for Africa about what corporate people with lots of resources can do in the area of fraud but when it comes to people who have not got so much then it seems to want to clamp down on them very very hard. I think it demonstrates the—I am not allowed to use that word. I am just trying to think of the word that I can use. The one I wanted to use begins with “h” and I cannot use it. It demonstrates the I will call it ironic approach—let us say—of the Government where it does seem to pander much more to people in our society who have a lot. Let us be frank. The Government is tailoring a lot of its bills and a lot of its policies to help out the people at the wealthy end of the spectrum but it is very very harsh when it comes to people who are at the lower end of the spectrum and this bill reflects exactly that.Just coming back to the issue that was brought forward by the New Zealand Law Society—I should say I think I made an error before saying it was the Law Commission but it was the New Zealand Law Society that brought this issue before the select committee. We do accept the argument by the New Zealand Law Society that in the absence of a positive act which would normally provide grounds for criminal liability the justification for making partners and spouses criminally liable is not apparent. Labour would support amendments to this bill for new provisions that are aligned with the advice from the New Zealand Law Society. So we hope that in the course of this debate we will have a debate around amendments that would actually deal with the issues brought forward by the Law Society because they are important issues.They are important because they not only set a precedent but also in the context of this bill deal with people who are down on their luck. Let us be quite frank about this. People who end up relying on welfare payments to keep them going are down on their luck. People who are committing corporate tax fraud cannot normally be described as being down on their luck. Normally they actually have got a lot of opportunity a lot of options in front of them and what they choose to do is to act fraudulently. There can be no excuse for that whatsoever yet the Government stands completely soft on that level of offending.There is a lot of discussion in this part of the bill about who spouses are and who they are not. There are a lot of discussions and definitions that actually help us to try to make decisions about whether they are captured by this bill which will become an Act or not. But the reality is that we do not have nearly the same amount of liability when it comes to other fraud measures and it is certainly the Labour Party’s view that if we are going to go down this track then we want to be consistent about it. We do not want the cherry-picking that this Government is so well-known for where it is favouring people with lots of resources and rolling out the good old beneficiary-bashing whenever it is in a spot of trouble.That certainly has been the habit of this Government. We have had in just the last week the Minister for Social Development deciding that she is going to release information that would give New Zealanders the impression that loads of beneficiaries are off sunning themselves at Club Med every week. That is another level of benefit fraud that is being committed I think is what she is trying to say. Was it not interesting—and a couple of the provincial newspapers have picked this up—that it was actually irresponsible of the Minister to release that information without divulging all of the information? For example of the people who are beneficiaries who have travelled overseas in the period since July we have no idea how many of them are still away—JACINDA ARDERN (Labour):It is my pleasure to give a contribution on the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. I really concur with the preliminary statements that were made by my colleague Sue Moroney expressing our reservations over this bill generally. I do recall though from the last debate having some discussions with people who heard our contributions and absolutely agreed with the position we had come to but then wanted us to elaborate in a little more detail what elements of this bill did persuade us.There is one in particular that I want to highlight that really does come under Part 1 of this bill. As my colleague Sue Moroney has already articulated currently when we are talking about relationship fraud in particular the status quo means that if that fraud is detected the burden of debt recovery often sits almost entirely—because of the way the law is drafted—on the woman in the relationship. That is where it almost entirely sits and that is due to the fact that often a relationship fraud case involves a couple claiming what was a domestic purposes benefit or a sole parent payment when they were not sole parents but were in a relationship of some description. That is often the basis of that form of fraud and it is most often the woman who is then bearing the burden of paying that fraud debt back when as my colleague has said there are situations—and they were raised with us at the Social Services Committee and also in meetings with groups like even Women’s Refuge if I recall—where those women had often been in violent manipulative situations where a lot of pressure is being placed on them to commit that fraud and then they are left essentially carrying the can. That is something where we are quite happy to see measures introduced that allow that to be apportioned more fairly when another individual has not only been implicit but actually has taken on a role much more overt and put pressure on that individual to be complicit in that fraud. So that is a particular element of the bill that we do see as being not only reasonable but helpful.Having said that our major issue remains the lack of equity in the way that we continue to treat welfare fraud versus tax fraud. We have already tracked and discussed the fact that we are talking relative to one another about roughly $20 million a year for some major aspects of welfare fraud versus fraud within our tax system—tax discrepancies that are up to $1.2 billion a year and annual tax fraud of $141 million as an absolute minimum. So if we are debating measures that are as broad as these—and some of them we were absolutely uncomfortable with in terms of the level of broadness—and if we are discussing them here why are we not currently at the same time discussing similar measures through a bill under the name of the Minister of Revenue for instance? In fact Labour even tried to extend via as I recall the Business Committee the scope of the committee to be able to consider whether these measures should be fairly applied when tax fraud debt is being recovered where an individual or a spouse ought to have known that tax fraud was being committed within their relationship and whether or not their partner was engaged in a business enterprise or what have you. Where tax fraud was being committed and they ought to have known why are these rules not being applied to them? It is a question we will continue to raise. I know that the Minister in the chair the Associate Minister for Social Development Chester Borrows has particular views on it. I would love to hear his contribution.But coming to Part 1 and extending this debate out a little bit on our belief that it is the inequity of the way we are treating fraud that is a major sticking point for us we know that for instance the penalties in this bill will not be evenly applied. How do I know that? We have the research that tells us that. Dr Marriott at Victoria University has done extremely important work in highlighting the inequity of our system. Between 2008 and 2011 for instance 22 percent of tax fraud resulted in custodial sentences. This is relevant because this bill of course talks in Part 1 about extending penalties and the ability to prosecute. So 22 percent of tax fraud resulted in a custodial sentence versus 60 percent of benefit fraud. Sixty percent of benefit fraud cases resulted in an individual landing in prison. You might say that the value of that fraud may have been higher. Not so. The research tells us again that the average value of tax fraud where a custodial sentence was used was $800000; the average for benefit fraud where a custodial sentence was applied was $67000. So if we know that there is an established inequity that is something that I would have thought the Minister would be interested in keeping an overview of because so much of this bill and so many of the rules in this bill leading up to the point where the rules are applied in court and a sentence is handed down are actually handed down at the discretion of the chief executive and it is whether or not discretion is being used fairly across our system as well particularly when it comes to recovery of debt.Recovery of debt is covered in clause 9 which amends section 86. It says that it is the “Chief executive’s duty to recover debt in section 85A”. We had a discussion at the select committee—when I was there in the very very beginning before I unfortunately then left—about how it is up to the discretion of the chief executive as to what level of debt is pursued and whether or not that was reasonable. I have seen letters from Work and Income seeking repayment of a cent—of a cent. So in the suggestion for instance in a case where there might be some rational rhyme or reason or some error that has occurred but it might be determined to be fraud on behalf of Work and Income what we are now being told is that there is a duty for the chief executive to pursue it unless they use their discretion not to. My concern is that I do not believe that discretion has been appropriately applied in the past. Again there is some research to back this up.From a 1-year period from 1 July 2011 to June 2012 for instance if we look at the Inland Revenue Department we see that it wrote off 50 percent of interest penalties and penalties due to overdue tax amounting to $374 million for 1 year. It wrote off 50 percent. It wrote off $435 million in core debt. That represented 11 percent of the entire collected amounts owing. The Ministry of Social Development in contrast wrote off $8 million. That represents 2 percent of its collected debt. So we see a real disparity there again in the use of the discretion of those two departments. I would be extremely interested to know—in fact I asked—whether we could have a comparison of the two obviously different sets of criteria applied by these two departments as to how they make a decision to write off debt penalties and arrears. How do they make that decision? What discretion is used? Is there greater discretion for the Inland Revenue Department than there is for the Ministry of Social Development? No one on this side of the Chamber is denying that when fraud is committed it should be pursued and debts should be paid. But we are also saying that should apply to tax. If there is going to be some discretion in the system let us make damn well sure that it is applied fairly. Time and time again we have seen on this side of the Chamber that that has not occurred when it comes to who are sometimes our most vulnerable members of society. So yes of course fraud is wrong. Of course it should be pursued. We are simply seeking equity in our system and we know from the evidence that has been prepared that it does not exist currently.Whenever you build discretion into your system you are going to have further issues. Currently this bill under Part 1 does include significant amounts of discretion. Sometimes that is very useful. If you do not want to collect that 1c of debt yes you want to use your discretion to make sure that is not happening. But currently it seems that the discretion is not being used in a common-sense way and that is what members on this side of the Chamber are seeking.Hon CHESTER BORROWS (Associate Minister for Social Development):Thank you for the opportunity to speak in respect of this bill the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. I thank the Labour Party members for articulating where they are standing on it and for confirming that they are supporting the bill albeit they have said that they are doing so with some reservation. That was not clear for some time because what we had was that on the day the bill was introduced the leader of the Labour Party voted for it but then said that if Labour is elected into Government it would repeal the bill and it would quash it. So I guess it is nice to have the spokespeople from the Labour Party giving some indication to their leader as to which way he should be voting in respect of this bill. If he is going to change his mind I guess I would ask that the Hon David Cunliffe comes down to the Chamber and tells us that he is going to do that. I also appreciate the way in which members across the Chamber have engaged with my office in respect of the preparation of the bill and the indications that they gave. I had very meaningful discussions with Jacinda Ardern and Jan Logie and also with Tracey Martin the Māori Party and others in respect of the bill.It is also important to point out what we are discussing here. We have heard a number of figures quoted comparing for instance tax debt with welfare fraud. Really as they have been quoted—tax debt in the billions of dollars and welfare fraud at $23 million—we need to just acknowledge that you are sort of comparing apples with elephants there. When we talk about billions of dollars of tax debt established we are talking about overdue tax debt—in other words overdue taxes that have not been paid. A portion of them will be fraud a portion of them will just remain unpaid—as frequently happens within business—and a portion of them will be penalty payments which are not attached to fraud.But when we talk about $23 million in benefit fraud that is fraud that has been established from actual people who have been prosecuted. It is estimated that the average welfare benefit overpayment is established at about $1.2 billion. So you could make a comparison between the established overpayments from welfare being $1.2 billion and the estimated overdue tax being about $6 billion—about five times as much. Then when we start looking at the energy that the Government is putting into recovering that debt it is important to note that we spend about four or five times as much on recovering tax debt as we do on welfare debt. We have put a lot of new money into that. Since we came into Government for instance we have taken the budget up about four times to $138 million of new money in 2014 spent on chasing tax debt. We are operating from a baseline within the welfare budget.I think it is important to make that comparison. Obviously as listeners would have heard the assertion has been made time and time again that the Government is more interested in chasing after welfare debt than tax debt. The energy put into recovering tax debt and the money put into recovering tax debt is well in excess—in fact it is nearly five times as much—of what we are spending on welfare fraud. More and more of those people are being prosecuted and hundreds of millions of dollars is being collected each year from those who are ripping off the tax system. It is very important to note that.Another important issue has been raised around partnership crime. The fact is that when you are talking about new provisions that will criminalise the behaviour of the partners of beneficiaries it is important to recognise that this crime can be committed only by two people in a relationship which separates it somewhat from other crimes where we also use a recklessness type of criminal liability. For instance if someone is receiving stolen property or receiving property known to be obtained by a crime such as run-of-the mill fraud then their recklessness about whether or not that was obtained by a crime is their criminality. Although it is true to say in respect of welfare crime that we have not seen this recklessness aspect of criminal liability applied before in respect of living off the proceeds or benefiting from the proceeds of fraud it is not true to say that this is novel and this is new.Another good point has been made in respect of women living in abusive relationships and the fact that they have been manipulated or forced into committing crime. I can see where the fears are in respect of that. Largely the victims of this type of crime are women. But it is also important to note that the findings of the court have been—and I have made this point previously during questions around the proposals of this legislation—that a woman in a violent relationship is not in a relationship in the nature of marriage which would make her liable to benefit fraud. I just need to restate that.What that means then is that if two people are living in a violent relationship the woman is usually the victim in that violent relationship. If for instance she was accused of committing a benefit crime and it was obvious from that investigation—or she made the allegation and it was substantiated—that she was continuing to live in that violent relationship because of pressure being put upon her by her spouse then she would not fall within the definition of living in a relationship in the nature of marriage which would make her liable under these provisions. We are doing everything we can to ensure then that a woman caught in a violent relationship and being manipulated by a partner who is going on to live on the benefits of welfare crime cannot actually be held accountable in that system.But I would contend quite strongly that this law is about fairness. As it sits at the moment we have a situation where if a woman and a man are living in a relationship and she is receiving a benefit and he has done anything at all to promote the gathering or the obtaining of that benefit—for instance by filling in a statement that they are not living in another relationship giving social welfare investigators another address for where he is living telling lies etc.—he can be charged as a party to that offence now. The criminal liability and the debt travel with him and her equally. But if that partner—generally male—just stays dumb about it and does nothing but quite happily continues to live in that home where he is paying no rent and is contributing nothing to the household but taking the profits of that welfare crime he cannot be touched.What this change in the law does is say that if he lived in that house and he knew or should have known but was reckless as to whether or not his partner was in receipt of a benefit then he is going to carry the whole of that debt as she carries the whole of that debt—they carry it equally—and also the criminal liability for that.I do not believe that there is a person in this Chamber who does not think that that is fair—who does not think that that is fair—and so that is why out on the streets and across the organisations we have spoken to most people are largely supportive of this.What we do have though is the mantra which keeps going back along political lines I guess that says National will favour only those who are rich and will always step on those who are poor. We have heard it so often before we can recite that in our sleep. But the fact of the matter is this: on this day in this Committee we are talking about welfare fraud and in respect of welfare fraud we are going to be fair. Firstly we are going to be fair. Those who choose to vote against this will have to account for that when they go to the public on 20 September.JAN LOGIE (Green):I rise to speak to the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. I want to just pick up on some of the points that Chester Borrows has just been making. I would like to speak maybe a bit later about that point that this is all about fraud when in actual fact it is not; it is also about debt recovery and debt recovery from some of the poorest people in this country. This bill will require the State to recover money that was lent to those people advanced to those people for just the basic essentials of life. We oppose that and are quite happy to oppose that because to us that does not meet the principle of fairness that I believe that most New Zealanders uphold. We are quite happy to oppose that.I want to speak now though to an aspect of the bill that is rather more complicated—and we have a rather more complicated perspective on it—and that the Minister was also covering. This is the recovery of debt from a partner of a beneficiary when that debt has arisen from fraud and they knew—or they knew there was a risk—that they were benefiting from that fraud. Initially the first proposal of this bill required the partner to know the precise entitlement or the nature of the excess amount but this requirement has been removed in this iteration of the bill effectively broadening the scope of it. It is also creating a criminal offence specific to spouses or partners so that it is an offence for them to know or be reckless about knowing whether they are benefiting from a beneficiary’s fraud.There were not that many submissions on this bill—only 13 in total. Some did raise concern around this aspect of the bill on two key points. One is that the changes to make partners and spouses criminally and civilly liable have the potential to increase risks of domestic violence and I will address further the Minister’s comments in relation to this. I know from having worked in Women’s Refuge that the threat of dobbing in a woman for receiving the DPB is a real dynamic in violent relationships. This bill has the potential to reduce that dynamic in the relationships because you are not going to threaten to dob somebody in for something that you may be held accountable for. So that has a very real appeal to me as does that sense of fairness. If somebody is benefiting from an income then it seems fair that there is some kind of joint liability around that but I guess it is just that we do have concerns that it is not that simple and this bill is not necessarily the answer to that problem.We would have much rather seen a collaborative response of the Government going out to say Women’s Refuge and consulting in the first place around how this system is operating at the moment for victims of domestic violence. We know that the courts do not see violent relationships as being in the nature of marriage so therefore technically victims of domestic violence should not be held accountable for a debt in that scenario. However that is not the experience that we are hearing about consistently from women who have been through the system and who have been investigated by Work and Income for fraud.I do thank the Minister for engaging in a conversation around this and enabling us to meet with officials and to talk with them about the debt and fraud investigation process. What we heard from them is that they actually have a fairly high threshold for what they will consider a violent relationship. Also some of the evidence they use for allegations of fraud is untested and includes accusations that have come from partners through Child Youth and Family which it just treats as fact even though it has not been investigated or upheld. This means that currently women now are being subjected to these fraud investigations basically through vexatious complaints by their partners and that might not go away with this process. We certainly have very real concerns about the way that the process is working for victims. When the threshold for acknowledging a violent relationship is as high as it is at the moment that leaves a very significant risk for victims of domestic violence as the process works at the moment.The Salvation Army asked that the debt recovery process be undertaken in a way that ensures the safety and integrity of both partners. Similarly the Beneficiary Education Advisory Service asked that the risk of domestic violence be taken into account when making partners liable. We are yet to be convinced that that thinking has been done. All we have heard from the Minister and the officials is that there is a system in place that acknowledges that and they talk about the court ruling. That is not matching the experiences that we are hearing about from women in the community and we do not have confidence that there are enough protections in place to be able to protect those who need it.We believe that the Government needs to develop a policy or a legislative response to problems based on the experience of women and beneficiaries who have been affected that also involves Women’s Refuge to ensure that the approach is fair and also ensures the safety of all involved. We are saddened that the Government seems to have prioritised this legislation over a comprehensive considered and safer approach but we are certainly open to talking more with the Minister about options for maybe having the investigation process audited by Women’s Refuge to make sure that it is best practice in order to make sure that if we are going ahead with this process—and it seems by the voting that we are—that we are doing everything we can to protect people through that process.I will just speak a little bit more too about the point of this creating an offence. Other concerns were raised by submitters that it is unnecessary and that there is little likelihood of a fine of $5000 being paid by people who are on the lowest incomes in this country. When you are struggling to buy a loaf of bread $5000 is a pretty unimaginable amount of money and it is pretty unlikely that that is going to get paid. So then the jail sentence I guess will come in at that stage and we also have concerns around what that is going to mean for our kids. Those kids may lose their parents because of an attempt by those parents to put more food on the table because the benefit levels are so low. That to us does not really meet the sense of justice and fairness that we expect most people in this country uphold.Again I would like to echo the Law Society’s concerns regarding joint and several liability which means that both parties will be liable for the whole debt should both parties be accountable for the debt arising from the fraud. The society believes that this may 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. This was dismissed through the select committee process in part due to the cost and potential increase of reviews and appeals. Well the Green Party believes that it is essential that our laws are fair proportionate and open to appeal. Those principles for us override any potential slowing-down of the process through legal wrangling. I think most people would prefer to have their rights upheld rather than necessarily have an efficient system from the Government’s perspective.Finally I do want to speak again to that point around the fact that this is not dealing with just fraud. This bill is also dealing with debt recovery and taking away the ability of the State to waive debt.Su’a WILLIAM SIO (Labour—Māngere):Thank you for the opportunity. When I look at the Minister for Social Development and her Associate Minister—very good-looking Ministers and I like them—I am reminded of what the people of Manukau say to Cam Calder when he is out and about. Cam Calder is of course retiring. He is one of 16 National MPs leaving the ship. When the people of Manukau see Cam they say: “Cam you are such a nice guy. You’re such a nice guy but we hate your party because you represent a party that is just heartless when it comes to dealing with people who are down and under.” I look at the regulatory impact statement here and I tell you as a responsible member of the Opposition that the intent of this Social Security (Fraud Measures and Debt Recovery) Amendment Bill is an intent that most people would support. No one in their right mind agrees that fraud is a good thing—no one in their right mind agrees that fraud is a good thing. In fact anyone who commits fraud whether it be in the benefit system or whether it be in our tax system should be pursued and should face the law.But here is the difference from how we in the Labour Party would do things. Although the National Party is intent on politicising this—beating people into hardship beating people who are on the benefit beating people who do not have jobs beating people who are earning the unemployment benefit because they cannot get a job beating people who are single parents and beating people who are on the sickness benefit or the disability benefit—is content to do that sort of thing we are not. The Labour Party will not do that. There is a way of dealing with these things. You have got to implement a culture that recognises that these people have rights—rights that ought to be protected; international rights that are protected in the international arena—and this Government is taking New Zealand in a very very different direction.Let me just take you through a few things and make some responses as I go. The two most common ways people fraudulently claim a benefit according to the regulatory impact statement are firstly failing to declare employment and wages received often by continuing on a benefit after starting work. As much as we want people to be in jobs what is missing here is that when people who are down on their luck for one reason or another have been earning an income they actually need to be supported through the transition period. That is not what is happening here. If you want people to get into jobs we have got to pay them a decent living wage.Hon Maryan Street: That’d be a start.Su’a WILLIAM SIO: That is exactly right my colleague Maryan Street.Hon Tau Henare: What do you mean “we”? When did the Labour Party start paying?Su’a WILLIAM SIO: That is the Government. That is a very good start my colleague Maryan Street says. The second reason is failing to declare a relationship particularly if the relationship starts or resumes while at least one partner is receiving a single or sole parent rate of benefit. The direction that this Government is taking does not recognise the complexity of relationships. It would be interesting for the public to know just how many relationships are in and out of the doors of this building. Do you get my meaning?This Government does not recognise the complexity of relationships and the hardships that many solo parents go through particularly single mothers who have young children to fend for. You saw yesterday how the Duchess of Cambridge walked out of the plane clutching baby Prince George trying to fix her hair. She left everything else to the wind—do you know what I mean—because her priority was baby George. The priority of single parents is their children. They are not going to worry about trying to call up Work and Income to let it know about the circumstances they are facing. Many of those circumstances are private affairs that they do not want to convey to a Government department that is just plain heartless. That is the culture that has been injected by this Government into our system of support for those who are needy.Here is another statement in the regulatory impact statement: “Other ways people fraudulently claim a benefit include incorrectly claiming the wrong number or type of dependants claiming multiple benefits”. In the community that I live in we speak one hundred and—different languages. I cannot remember how many languages but there are 160 different ethnic groups in that community. Their first languages are not English. The Ministry of Social Development under this Government does not seem to recognise that in the Aotearoa New Zealand of 2014 first languages are not English. The ministry needs to recognise that miscommunication and language difficulties are a significant barrier when you are following a form that has big words in the English language. The ministry does not recognise that. The true extent of fraud that the Ministry of Social Development does not detect is impossible to quantify. I will give you some cases that the regulatory impact statement mentions: 10735 cases were investigated resulting in 2139 cases of overpayment. Out of those 2139 cases of overpayment 714 cases were prosecuted.Here is the picture. The Government is painting every person on a benefit as if they were criminals. Based on the 10700 cases investigated 2000 cases were found to have been overpaid and 714 cases were prosecuted. This is lousy politics here. This is a political stunt. I know why the community hates this National Government. It is because it is heartless and it continues to beat people down when all they are asking for is decent jobs higher salaries and to be respected and treated with dignity. Like I said I like the Minister for Social Development. She is young and she is beautiful but the community does not like her politics. She has become the face of this Government and most people thought that she was going to be a nice person who would recognise the hardships. But she has pulled up the ladder of the support that she once got. She is denying every other single parent that kind of support which our State has a responsibility to provide.So I want to say this to her and to the Associate Minister who is ushering this bill through. He said earlier that this is about fairness; it is not. Yes it should have been about fairness but this is really about beneficiary bashing. I say shame on this Government—shame on this Government—for consistently doing this. Every time the polls go down on National’s side—and it has been trending for quite some time—it whips up some emotion from their supporters by pointing the finger at the most vulnerable of our communities. All I can say is shame on the Minister—shame on the Minister—who is ushering this bill through and shame on that Government.I reckon Tau Henare is doing the right thing along with 16 other National Party MPs.They are abandoning this Government. As a westie he does not want to associate himself with a Government that is heartless and does not care about hardship and how hard it is for those who are unemployed those who are receiving a benefit—I see you shaking your head—those who are single parents those who are doing it tough to support their children and young people those who are sick those who are needing health care and requiring support through our social security system those who are disabled those of our young people who are unable to get jobs and educational training and those who are widows. Those are the people who have been lumped together in the way that this Government is treating beneficiaries. I say we will show this Government what we think of it come 20 September 2014.Le’aufa’amulia ASENATI LOLE-TAYLOR (NZ First):I rise on behalf of New Zealand First to speak to the Social Security (Fraud Measures and Debt Recovery) Amendment Bill in the Committee stage. It would be fair to say that the days when people used to say: “Trust us. We know what we’re doing.” have long gone. It is very hard to support anyone who comes up with the same phrase or a similar statement given the fact that it could create difficult situations for others. It is not always so for the same person who actually said it but it is always so for others especially when it comes to benefits. This part of the bill Part 1 focuses on the essence of fraud when that occurs and the other part that is also important. At the same time the bill caters for efforts towards recovering debts. New Zealand First believes that those knowingly and purposely taking advantage of the welfare system should be held accountable for their actions and they should be made to actually show that they are accountable to the taxpayers of this country. At the same time we believe it is important to ensure that we understand the possible circumstances people may be in when they contemplate fraudulent behaviour.Some of the reasons may include No. 1 sudden redundancy or the inability to secure employment. We all know that there are not enough jobs out there at the moment. Let us be clear also that there are not enough jobs because National has not invested enough effort to create jobs for the wider population of New Zealand. No. 2 is changes to family circumstances and that means in the areas of death or relationship breakdowns. Death is something that is uncontrollable but a relationship breakdown is often a result of both parties being unable to agree on a number of areas. Although some might carry on to become good parents or good people others will respond violently. It will often lead to domestic or family violence. No. 3 is unstable relationships where either mum or dad would not like to move in and there is a sense of insecurity for both partners both parties. This is where both parents do not want to be tied to one particular person’s perspective. Most of the time one of the parents is either a gang member or a drug dealer. There are also situations where the mother could be involved with other kinds of job options like prostitution.No. 4 is that huge debt poor financial literacy and a lack of budget management skills or management experience can also be major contributing factors. There is quite a large number of people in this category. These people may have become parents early in their lives or did not necessarily finish their education in order to be able to secure better jobs and therefore they will often find themselves unable to translate or interpret various kinds of legislation especially when it comes to budgeting and spending benefits from the social welfare department. No. 5 is that in some cases serious alcohol and drug abuse or addiction could also be contributing factors. On the other hand there may be mental illness involved. Those are circumstances that are very hard to judge. Legal highs can definitely send someone’s mind completely mad regardless of what the legislators may say.It is important to point out again that relationships are never simple or straightforward particularly for people in broken homes. I heard the Associate Minister for Social Developmen Chester Borrows talk earlier tonight about relationship breakdowns and in particular how the woman in a violent relationship is not liable for the man’s fraud. I want to challenge the Minister in this instance. Often we talk about the situation being that the man is always the violent partner when in some cases women could be the violent partners in a relationship and therefore the father could end up being the victim in any situation. There is that ongoing perception. We need to actually look at shutting down or getting rid of the barrier that is allowing us to think that women are always supposed to be the victims and men are supposed to be the violent partners. The bill must be sensitive to these situations. The changes must be seen to be supportive of either the man or the woman—depending on who it is—who may be in a violent relationship and enable them to make the right decision. In the first reading the Hon Chester Borrows gave an assurance that those in violent relationships will be given fair and serious consideration and that is really good to hear.The Social Services Committee’s report if I can say so stated in terms of amendment to the debt recovery provision that: “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.” This is a part of the actual select committee report that we thought was quite useful for us to accept. It goes on: “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.” I have discussed this bill with a number of our community leaders and a number of our local residents. As you would know a large number of our people in my area Manukau East and South Auckland and also some in Porirua could be in this category and could be affected by this legislation.Welfare fraud is something New Zealand First does not take lightly. In fact it is completely intolerable. Welfare fraud is a crime often committed by people for their own benefit at the expense of taxpayers but the vast majority of beneficiaries are honest people who do the right thing. New Zealand First is mindful that this is not such a clear-cut issue. Despite the bill’s best intentions it still poses huge risks to people in genuine need of welfare assistance. The bill must be accurately targeted towards those who are abusing the system and this is where we have to be careful that we are not pulling up the people who are trying to survive in this current environment where the cost of living is so high and they could be bullied into getting funds from Work and Income when they are not supposed to. It is absolutely vital that New Zealand welfare reaches the people who actually need it rather than those dishonest people who would continue to take what they are not entitled to.I believe that the bill will go a long way towards assisting those who are in real need of support. It is also important that we acknowledge that the savings that reached $109 million in 2012-13 were welcome but there is also $120 million that is still owing to the Ministry of Social Development. Is that going to be taken on board? Are we going to give that some consideration? However we must be mindful that two-thirds of welfare fraud is not relationship fraud. In fact a lot of money is lost in administrative blunders. That comes down to staff and the way they manage their responsibilities in the actual Work and Income offices.If the Government persists in taking this hard-line approach to sorting out our welfare system then it must indeed ensure that there are enough jobs and so on to actually allow beneficiaries to find a way out of the quagmire that is welfare dependency.We must also acknowledge the idea that most New Zealanders would not cheat the system if they felt like they did not need to. Most of them are actually honest if they are in a situation where they do need assistance from the Government. The deeper social problems that rely on the welfare system and rely on welfare fraud ought to be recognised. Sadly there are no jobs and many families are struggling to save the 20 percent deposit for a house at the moment so it is up to us to ensure that our people actually get support.POTO WILLIAMS (Labour—Christchurch East):It is my pleasure to take a call on the Social Security (Fraud Measures and Debt Recovery) Amendment Bill which is about fraud measures but it is also about debt recovery—the recovery of debt from our most poor and vulnerable and the recovery of debt from beneficiaries who actually owe their most significant amount of debt to the Government. It is very interesting that we are talking about recovering debt by the Government when it is actually looking at recovering debt from those who owe the Government the most.We supported this bill with some grave reservations. The reservations we talk about are really around the principles of general law. I want to talk about a couple of specific clauses within the bill itself. However I do want to frame my discussions around one or two principles. The principle of the New Zealand Law Society that many of my colleagues have already talked about—and I want to quote what was said—is that “in the absence of a positive act which would normally provide ground for criminal liability the justification for making partners and spouses criminally liable is not apparent.” So we are taking a departure from the general principles of criminal law. Normally a positive act is required to ground that within criminal activities. So what we are in essence saying is that the person who has actually committed the crime—the responsibility for that crime has actually shifted to another party. I do not know of any other legislation—perhaps my colleagues can help me on this—where in the committing of a crime the responsibility is actually held by another party. Perhaps that does exist; perhaps it does not. But I do not believe that we are talking about something that is consistent with the principles of criminal law.I am pleased that the Associate Minister for Social Development is back in the chair because I wanted to say that it is lovely to see you again Minister Borrows. We have seen you a bit in Christchurch recently along with other Government Ministers and Government MPs. I wonder whether that is because Christchurch is of course one of those touchstone places where the Government realises that it has actually done a terrible terrible job and it is sending the troops in to actually try to recover some of that. It is lovely to see you again. I have seen you quite a bit over the last few weeks.I wanted to comment on something the Minister said around fraud—that it is all about fraud. What I want to question is how much of the actual investigation is around fraud when a large component of what is found is actually administrative errors by the Ministry of Social Development itself. We are talking about quite a significant percentage of error. When we are talking about this percentage of administrative error that occurs we are talking about having the right paperwork within the right time frames and signed in the right coloured ink. We are talking about barriers that are put in the way for beneficiaries to actually find and have access to benefits that they are actually entitled to under legislation. They are entitled to these benefits. However we put all sorts of barriers in their way. When we as the administrators get it wrong they are the ones who have the penalty and I do not think that is right. It is another example of us vilifying the beneficiaries and actually as my colleague puts it beating our beneficiaries yet again.There is no clearer example of this Government being out of touch with what is happening with beneficiaries than—I do not know whether many of you saw the news reports on Sunday of the Young Nats ball where we had the Auckland Action Against Poverty outside protesting. There was this fantastic shot of the Young Nats on the balcony sipping their champagne while they were looking down at the protesters. I mean that is classic “Let them eat cake.” is it not? So here we are with this Government completely out of touch with what is happening with our most poor and our most vulnerable.I want to go to one of the specifics of this bill and that is recovery from the spouse or the partner. I know that there is some debate over what is the definition of partner or spouse. I have not actually seen it clearly articulated. I would like to know what defines a partner or spouse in this type of environment. I know that this has been part of the debate in the past. However we are talking about people cohabitating within the same space within the same house. Who is actually going to define what is a partnership or what is a spousal relationship? Are we going to leave that to the ministry? More forms I guess and more tests.Many of our colleagues have already spoken about the issue of domestic violence in relation to this bill and said that those people—women particularly—who are impacted on by domestic violence will be able to provide a test and then will not be responsible for the recovery of fraud debt. I remember a member across the House speaking about this the last time we were talking about this particular bill. Well here again I want to know who is going to administer this test. What is this test going to look like and will it require the further filling in of forms? Will it require affidavits to be supplied by the women concerned and who is going to be responsible for that? Is it going to be Work and Income which we know by its very culture is very caring and very concerned for our population! I would hate to think of vulnerable women turning up at Work and Income to disclose domestic violence to some of the folk who we have working within our Work and Income environment. I think that is actually an appalling way to treat people.I want to talk about new section 127A inserted by clause 12 regarding a “spouse or partner … knowing or being reckless about whether it is obtained by beneficiary’s fraud”. Here I want to quote my learned colleague Jacinda Ardern when she spoke during one of the readings where she said: “this spouse can still be found liable if they ‘ought to have known’ that they were in receipt of a benefit fraudulently. That is quite a hard test and so it was probed to quite a high degree”. I understand that the Social Services Committee came away with two questions: to what degree the test could be applied to other forms of fraud and whether it should be. I do not think that we have heard sufficient evidence or had sufficient discussion on whether we should be applying this consistently across the whole environment when we are talking about fraud. I want to go back to my initial statements about the general principles of criminal law and the shift of responsibility from the person who actually perpetrates that criminal act to another person and whether we are talking about a real shift in our legislative thinking because who is to say who may not be in danger of falling foul should we want to use this particular principle in another piece of legislation?So just in summing up I would like to know about how we are going to get through this process of disclosure whether there will be organisations that work with vulnerable people that will grapple with the notion of disclosure and whether when they are working with people and these disclosures happen we will require people such as our social workers and our support staff to then disclose the criminal behaviour of people whom they work with. This particular piece of criminal law has the opportunity to impact on many many other pieces of legislation and I for one do not think that is right. Thank you.MAGGIE BARRY (National—North Shore):I move That the question be now put.A party votewas called for on the questionThat the question be now put.Ayes71New Zealand National 59; New Zealand First 7; Māori Party 3; ACT New Zealand 1; United Future 1.Noes49New Zealand Labour 34; Green Party 14; Mana 1.Motion agreed to.Part 1 agreed to.Part 2 Consequential amendments and application savings and transitional provisionsSUE MORONEY (Labour):Thank you for the opportunity to speak on Part 2 “Consequential amendments and application savings and transitional provisions”. The intent of this part of course is to go about the implementation of the clauses that we have just been debating. So this is the part of the Social Security (Fraud Measures and Debt Recovery) Amendment Bill that will bring about what we on this side of the Chamber think is quite a precedent-setting issue around not having that high bar of proving criminal liability when it comes to being involved in social security fraud or being involved in the part payment of debt that has come about from someone being in receipt of a benefit.I think as some of my colleagues quite rightly pointed out that actually the fraud and the debt parts should be treated quite separately. I thank Jan Logie for raising that in the Part 1 discussion. Obviously when it comes to social security debt can actually and often does—and this is something I am hearing about on a daily basis now—come about because of a mistake that has been made by the department itself by Work and Income. Quite frequently that is the case that I am certainly hearing about on a daily basis now in my role as the spokesperson for social development for the Labour Party.So these consequential amendments and the transitional provisions are actually very important because we are transitioning to a situation that is unprecedented. I heard what the Associate Minister for Social Development Chester Borrows said in his contribution to the Part 1 debate. He does not believe that there is a great precedent being set here but that certainly was not the view of the New Zealand Law Society. I think it was quite right in bringing forward its concerns about how these amendments to a range of other Acts of Parliament and these transitional provisions are actually a departure from what we have had before. Its concern in particular was the departure brought about in these consequential amendments to other Acts of Parliament that will for the first time—so the society thought and we agreed with it—lower the bar of proof that a person was actively engaged in committing the fraud or accumulating the debt because remember this bill deals with both.When Work and Income does overpay someone that person may not know about it. Can we really expect the person in a relationship with them to know about a mistake made by the department? That is what this bill is actually saying we ought to transition to under Part 2. The transitional provisions will actually transition to a place where the partner of the person who has been overpaid because of a mistake made by Work and Income does not even have to know. We would not even have to prove that they knew there had been an overpayment as the fact that they have benefited from that overpayment would be enough with regard to their criminal liability. That I think is quite a departure.So we are transitioning in Part 2 to deal with issues of welfare fraud and welfare debt but the Government despite its protestations is not taking a consistent approach when it comes to tax fraud. I think that is completely wrong. It is completely wrong that we have got a Government that is prepared to—Hon Paula Bennett: You can’t keep saying that.SUE MORONEY: Well Minister I can keep saying it because it is the truth. The truth is that these measures here in this bill are not being taken with regard to tax.Hon Paula Bennett: That’s not the truth.SUE MORONEY: Where is the bill? Where is the bill that actually takes these same measures against people who commit corporate tax fraud?Hon Paula Bennett: Considerably more is spent collecting tax than it is doing this.SUE MORONEY: Well all the Minister can talk about is how much this Government spends. I would rather that Minister spoke about how much work this Government is doing on finding jobs for these beneficiaries instead of actually attacking them all the time. That is what the Government should be spending its time doing and should actually be focusing on. I would welcome much more transitional provisions that were actually transitioning beneficiaries into jobs. That would be real relief actually. Unfortunately what is happening is the opposite. This Government instead of focusing on getting people off benefits and into jobs and actually helping to create those jobs is instead putting all its energy into trying to deal with welfare fraud as if that is the big issue—as if that is the big issue.Of course none of us accept any level of fraud particularly when it is fraud that is against the taxpayer—and that is both tax fraud and welfare fraud by the way. Both of those measures are fraud against the taxpayer. No one in this House accepts that that is OK. But I would much rather that this Government and that Minister put their energy into actual social development because that is what the name of the portfolio is and into developing people’s opportunity to be socially engaged and were not spending all their energy on this area here which is all about proving that people who are welfare dependent are actually the bad guys—that they are the bad guys and the job of the Government is to catch them out. Well look that is a small part of what the Government should be doing but the big part of what the Government should be doing is actually helping people get off benefits and into work. Sadly not enough effort is being put into that area but an awful lot of effort is being put into blaming beneficiaries and an awful lot of effort is being put into trying to make it seem as if welfare fraud is the big bogey that this country faces. This is not the big bogey that this country faces.However I want to put it on record again that the Labour Party is supporting this bill because we do not accept that fraud against the taxpayer at any level is acceptable whether it be tax fraud or whether it be welfare fraud. So we are supporting it on that basis. We were also very much swayed as I said when I spoke on Part 1 by what women’s organisations had to say about the gender impacts of welfare fraud. Having heard the submissions we think and we do strongly believe that this will actually make it more equitable where there is relationship fraud that is being committed. Part 2 deals with the amendments to other legislation that will help to bring this about. It should be that if two people have been benefiting from that fraud then there should be more equality in what they pay in restitution towards that. So we absolutely agree with that. We think that that should be more equitable. We believe that women who are in these situations—which as we said before could very well be violent situations—should be protected as well. That is important and this bill does go some way towards that.But let us not imagine for a minute that this bill addresses the big problems that this country faces the big problems that could have been resolved if this Government had been working in the interests of beneficiaries rather than just trying to trip them up and attack them at every opportunity.If this Government really had the interests of beneficiaries at heart then we would not have largely immigrant labour rebuilding Christchurch at the moment for example. That is something that the Government should have had its eye on. It should have been training people and it did not. It failed to do that. It would rather focus on the fraud measures in debt recovery from beneficiaries instead.I am going to conclude this speech by saying that the Labour Party will support the provisions in Part 2 as we did in Part 1 but we urge the Government to not just take the simple way out with this. The Government may feel that it is OK to attack beneficiaries and actually put these measures on them but we want to see some equity in this. We want to see the provisions in Part 2 and Part 1 applied to tax fraud and particularly to corporate tax fraud as well. Thank you.JACINDA ARDERN (Labour):There is considerable debate in this Committee on the Social Security (Fraud Measures and Debt Recovery) Amendment Bill as to whether or not more resource is applied in the recovery of tax fraud or even debt versus welfare fraud or debt. Of course the scale of one is significant versus the scale of the other. Anyone who is in employment is covered by PAYE. People have more contact with tax requirements than with welfare payments. But even taking that into account scale in and of itself actually justifies why we should be putting significant resource into ensuring that everyone is paying their dues when it comes to tax. The point has even been made by Dr Marriott at Victoria University that “More resources were applied to collecting welfare debt than tax debt”. Here is that statement again. After the comparative work that she has done between the two she says: “More resources were applied to collecting welfare debt than tax debt”. As much as the Government wants to claim that that is not the case that is what was produced by the work of Victoria University. So not only do we know that the scale is larger; we also know that the penalties you are likely to incur are going to be higher.For instance you are more likely to get a custodial sentence if you are convicted of welfare fraud than if you are convicted of tax fraud even though on average tax fraud where a custodial sentence is being applied amounts to roughly $800000 versus $67000 when it comes to welfare. There is inequity in our system right down to the amount of resource applied in recovering debt and we should all be interested and concerned by that. All fraud is wrong. All fraud in some way affects taxpayers because it is all coming from the collective pie. All of it should be pursued. That is what we are highlighting—that it should be that all of it is pursued and with equal vigour. Our point is that it appears that not only is there a disparity but actually the penalties that apply are different. The degree to which you will get some kind of discounting on arrears is likely to be different and none of that strikes us as being fair. We are discussing in Part 2 some of the ways in which the Ministry of Social Development has the ability to recover debt.We know though that a taxpayer can apply for financial relief via the Inland Revenue Department. You will find that that is rarely the case when it comes to welfare. And I want to add overpayment—not just fraud but overpayment—because that is a frequent occurrence in our system. The ability to seek financial relief is somewhat limited. You will be paying down regardless of the amount that you owe. There will be a deduction applied almost always if there is an overpayment directly from the next benefit payment you receive. When your discretionary income is incredibly low that has a significant impact. I am not just talking about fraud here; I am talking about the recovery sometimes of the Ministry of Social Development’s own mistakes. As my colleagues from the Green Party have pointed out overpayment often occurs without any mischievousness on the part of the beneficiary. It occurs simply because of the way our system works.Let me talk to that point briefly. We know that many of the recipients of welfare payments in this country are working but that they simply do not earn enough to survive. They might be in precarious work working a few hours a week which is then topped up by the Ministry of Social Development. They might have a job where one week there is work and another week there is not. Many of us will have seen cases like this before. In those cases an individual is required at the end of the week on a Friday to call Work and Income on the phone line and report in how many hours they have worked. Obviously to anyone who has worked on a payslip system—like when I was back in the old supermarket—there are delays. You would not get your payslip with how many hours you had worked that week and what your pay was until some time after. So we are requiring Work and Income clients to make a best guess of the hours that they perceive that they worked and they call that into Work and Income.That does as you can imagine lead to some potential discrepancy and it was I believe the reason that when the Inland Revenue Department and the Ministry of Social Development recently started sharing information you suddenly saw this increase in what they determined to be discrepancies. “Discrepancies” is a word I want to highlight. It was at that time presented by the Government as the Government having discovered all of this new fraud in the system—not so. Simply what it had discovered was the inefficiency of our own systems. It discovered that someone who calls through and says: “I believe I worked 6 hours.” actually may have worked 7 hours. They may have worked 5 hours but that extra hour was not counted not registered over time. Discrepancies like that are not an uncommon thing. They are not deliberately fraudulent. They are just different errors perhaps even on the part of payrolls. But it all shows up as something that the recipient then needs to be if a calculation is based on those hours either topped up if there was an inaccuracy or something paid back—and it happens. When that however is calculated it gets lumped into overpayment and is then deducted from the beneficiary’s future payment.You can see how this occurs. It all gets lumped in together. When that happens people pay it back. That is how the system works but there is often little relief when through no fault of their own they are having these deductions made from what is a very small discretionary income. If we jump then to their paying it back where it might have been more deliberate there was some discussion at the Social Services Committee as I said earlier over the consideration that the chief executive makes when determining the level at which someone is paying it back or determining whether or not there are any special circumstances involved. They are required to determine the payment rate and whether or not any financial hardship will result but there is still very little leeway there. That is not to say the debt should not be recovered; it is simply that we think common sense should apply and that if someone in the process of paying back their debt is left in a position where they cannot survive well that serves no one at the end of the day.We do have some differences in the level of discretion—the quite liberal way the Inland Revenue Department is able to determine leniency in that regard compared with the much more rigid approach the Ministry of Social Development is required to take. That probably explains why you are seeing a greater write-off of arrears in our Inland Revenue Department system than you are seeing in our Ministry of Social Development system.One last thing that I want to come to and I also want to touch on Part 2 equally and this was pointed out in Victoria University’s research as well is that the Ministry of Social Development can recover debt from delayed redundancy retirement payments compensation and damages—from basically anything. If you get any form of income even if the ministry has to wait a number of years it will then be able to recover the debt from that place. We can debate whether or not that is right or wrong. My question simply is this: does the Inland Revenue Department have that same power? It is a simple question because if we are doing it here it should apply to that system as well.One final point I wish to make. We have not discussed this in great detail but this bill also changes the ability of the Ministry of Social Development in its investigations to conduct a thorough investigation without first informing the accused.That might seem like a strange thing to do. Why would the Ministry of Social Development tell someone they were being investigated? Well for the very simple reason that some people sometimes report beneficiaries for vexatious reasons for mischievous reasons. We know it happens. That probably explains why in 2010 of the 16000 allegations of benefit fraud 2000 resulted in a debt and 14 percent of those were found to have warranted prosecution—quite small proportions when you look at how many allegations are being made. Why would we want to then remove one of our mechanisms to determine whether or not something mischievous is occurring? If you ask the questions of the individuals sometimes there are entirely plausible explanations and that is where it ends. Instead we are allowing resources to go into an investigation that actually may not be required not to mention the privacy issues that come with that and the ability to undermine someone’s employment by going straight to an employer in an investigation rather than to the individual accused.LOUISA WALL (Labour—Manurewa):Kia ora Mr Chair. Thank you very much for the opportunity to contribute to this Committee stage of the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. We are speaking on Part 2 of the bill which very much focuses on the debt recovery part. Part 1 is about the fraud measures; Part 2 really is about the amendments and provisions to enact those fraud measures.What I specifically want to focus on—and I do have a couple of questions for the Minister in the chair Associate Minister for Social Development Borrows—is I guess the integrity of a social security system that contains our most vulnerable societal members. That is the context of this piece of legislation. It is a context where the most vulnerable New Zealanders seek help from the Government. The Government helps those members of our society. Within the context of this bill we are talking about $23 million worth of fraud that is perpetrated within our social security system. There are approximately 700 fraud cases every year. Within that context 200 of them are specific to relationship fraud which is the whole focus of this piece of legislation.The question I had for the Minister came after reading the regulatory impact statement dated 8 November 2012 which essentially outlines a problem definition and the intervention logic. What I found really interesting within that paper was that in 2012 there was a $485 million debt to the Ministry of Social Development. In context of that amount of money $106 million was due to fraud which was 22 percent of the overall amount that was owed to the Ministry of Social Development. The actual percentage of relationship fraud I have got no idea of. There was $176 million worth of overpayments which actually is about the administration by the Ministry of Social Development. So it is actually the ministry’s internal processors who overpay people and then beneficiaries who have been identified as getting too much money have to enter into a repayment scheme with the ministry. Then there was also $203 million worth of advances which was the bulk of the provision. These are beneficiaries who have requested assistance from the Ministry of Social Development. They want assistance.The reason I bring these issues up is that it seems to me that we have gone down a really punitive path in terms of relationship fraud specifically and that we are wanting to criminalise a group of people. The punishment contained within Part 2 of the legislation is very much about fining people who are beneficiaries and then actually saying that if they have not got the money the worst case scenario is that we are going to send them to jail which actually does not make sense to me. What would have been maybe a more pragmatic response is sharing the debt. I believe that there are women particularly and specifically who end up in debt through relationship fraud and who end up having the whole of the liability of that debt that the Government says it is owed because they are in a relationship where their spouse is earning too much money they have got an accommodation supplement they were not entitled to or they have got a whole lot of entitlements they were not entitled to. This piece of legislation is saying: “OK we’re going to share the burden. Their partners have enjoyed the Government’s money and we believe that a fraud has been perpetrated so they must pay.” My question to the Minister would have been around the fact that there is an administrative cost in terms of now creating a new regime around dealing with fraud and I just wonder why we could not have treated—for the women and for the men actually—aspects of this particular legislation as advances and then just integrated the $106 million worth of fraud into existing systems. Why are we creating a whole new system when in fact we could have just added value to what was already there?I am particularly passionate about this area as a member of the Social Services Committee because whom we are dealing with are as I said before our most vulnerable members of society. Many people have talked about the context of relationship fraud. It is mostly women who are getting the DPB. What I found staggering actually in this regulatory impact statement is that there was not a gender analysis because I think that what we are actually talking about is debt that women have. There was not an ethnic analysis. We do not actually know how many Māori or Pacific or other New Zealanders are affected by this particular issue.You know frankly what we have tried to highlight tonight is the prioritisation by this Government of trying to recover what amounts to a very small amount of money that beneficiaries owe. What we have said is that the opportunity cost for that time in terms of a bill would have been much better spent looking at the up to $6 billion worth of tax evasion that occurs in the country. The whole reason and rationale for highlighting that to New Zealanders some of whom will be watching tonight really is trying to underline the prioritisation of this Government of making sure that beneficiaries pay back money that they supposedly have defrauded our Government of. As I said before these are New Zealanders who would have got too much accommodation allowance or too much other support which actually has enabled them to survive and live in this country within the context of no work or the work that they do have actually not paying them enough to live on.Another question I have for the Minister is around the commencement date because that has changed. This Act was supposed to come into force on 4 November 2013—The CHAIRPERSON (Lindsay Tisch): Part 2. We are on Part 2.LOUISA WALL: Sorry Mr Chair. The question really is about communicating this piece of legislation if the House consents to it being passed to the social security community so that it understands the implications of this bill. The only thing I can see out of it that could be positive is that the ministry is going to engage with people—I would target those on the DPB—to make sure that they know that there are new requirements within the context of this legislation that could have huge implications for their relationships. It obviously has huge implications for how they live their lives. It is just to make sure that they are fully informed and can make an informed decision about how they live and how they meet the requirements of being a recipient of the Ministry of Social Development support. Lest we forget the people we are talking about are those who are unemployed. They are those who in most cases have children so they have dependants. They are people who without the State’s support actually have not got a home and have not got food on the table. Fundamentally at the end of the day it means that our children do not have a solid base from which to be able to go to their local school to learn and be the productive members of society that we all want them to be.My challenge really to the Minister in the implementation of this legislation is that hopefully there will be some empowerment in the process because I do see aspects of this that are really positive. Leaving women in debt and having to pay off $5 a week for the rest of their lives with it actually compounding if they owe and take advances because they need other forms of support just means that the poorest and most vulnerable end up being revictimised and stigmatised to a point where life is too tough and where even getting out of bed and making sure their kids get to school is a struggle. So Labour is supporting this piece of legislation. Obviously we do have reservations. The big question we would ask this Government is why it has prioritised this when there is a whole lot of other income that the Government could be getting. From our perspective this is a perpetuation of the stigmatisation of beneficiaries which appals us. Kia ora.Part 2 agreed to.Clause 1 agreed to.Clause 2 agreed to.Clause 3 agreed to.Bill to be reported without amendment presently.