Sio William: Social Security (Fraud Measures and Debt Recovery) Amendment Bill — First ReadingText is incorporated into the Bound VolumeSio William: Social Security (Fraud Measures and Debt Recovery) Amendment Bill — First Reading[Sitting date: 27 August 2013. Volume:693;Page:13131. Text is incorporated into the Bound Volume.]Su’aWILLIAM SIO (Labour—Māngere): Talofa lava Mr Assistant Speaker.The ASSISTANT SPEAKER (H V Ross Robertson): O a maioe?Su’aWILLIAM SIO:Manuiafa’afetai.The ASSISTANT SPEAKER (H V Ross Robertson):Fa’afetai lava.Su’aWILLIAM SIO: Thank you. I found the earlier remarks by two of the Government backbenchers quite upsetting. They made wild and unsubstantiated claims about the welfare reforms which to me revealed too much about themselves. It revealed their disconnection with the wider community. It also revealed that they have not read their own regulatory impact statement on the Social Security (Fraud Measures and Debt Recovery) Amendment Bill which says that their reforms have gutted the welfare system. I would ask them to take some lessons from their own Associate Minister for Social Development Chester Borrows. He is a Minister who knows what this is all about. I agree with the Minister when he says that the New Zealand social security system has largely been a system that most Kiwis are proud of. I think for our country we have this view that we work we pay our taxes and through those taxes there is a safety net so that when someone is unemployed when someone is sick when someone is disabled or when someone reaches a certain age where they are too old or weak to work—like some of the members of this House without mentioning names—at leastthere is a safety net. That has been the legacy of our social security system. I accept that it is only then natural that when someone rips off our system absolutely we get upset absolutely it is the wrong thing. So I think people need to understand the context of why some of us do not agree necessarily with the arguments that that Government has put up.Let us make it quite clear. Labour will support this bill in its first reading so that the appropriate committee the Social Services Committee can then do its work and call for submissions and have the advantage of at least listening to the organisations and people who are working on the ground who are having to deal with these issues on a day-to-day basis. But in saying that we support this to the select committee we do have some very very strong reservations.I think people need to understand the context as we debate this bill. For the past 5 years we in the Opposition have been attempting to hold this Government accountable for the current economic and social woes the country has been experiencing. We have asked questions of this Government about critical areas where there is a need for significant action by this Government to address things such as the need to create more jobs to address high unemployment and the need to have higher incomes to address the needs of our communities who are struggling. There are needs around housing where many families are paying a huge chunk of their income on rent and homeownership is becoming a distant dream for the majority of New Zealanders. That is the context. So when a Government which is clearly failing to reduce the growing inequality comes up with these particular proposals and when a Government continues to use the excuses that it is unable to do anything about the growing inequality because of the global financial crisis or the Christchurch earthquake then really that causes problems for the public who are listening to this debate. It becomes harder for people to accept that there is a genuine need for this Government to make the amendments that it is proposing considering the context that I have just outlined. Most people then start thinking about whether this is genuine or whether this is really just a cynical move by this Government to take the heat off itself when it is failing to address the more pertinent issues that the people of New Zealand are facing.Let me just give some views on some of the areas that people are discussing and that I think it is important for the select committee to consider. A few weeks ago a Victoria University associate law professor released her research and her research showed that the Inland Revenue Department was more likely to write off unpaid tax whereas the Ministry of Social Development would often keep welfare debt on its books sometimes until people died or retired. I want to raise that research because the regulatory impact statement on this bill makes reference that the group of people that is being targeted through this particular bill is very very small. Here are some numbers that I got out of the regulatory impact statement for the 2011-12 financial year. The number of cases of fraud that the ministry investigated was 10735. The number of cases in which the ministry was able to establish that overpayment was made was 2139 but the number of cases that it could substantiate and prosecute for fraud was 714.The regulatory impact statement also identifies that the overpayments were not the fault of the beneficiaries but the fault of the department. So I would hope that the Social Services Committee when it is deliberating this digs deep into the causes and whether the money that we are going to spend as a Parliament in attempting to find fraud is worth the effort that is being put into it. I am not saying that we deviate from prosecuting those who have committed fraud. I said at the beginning that we do not like that sort of thing. Anybody ripping off the system is wrong. But I am suggesting that based on the report the research by Victoria University this Government is failing to look at fraud generally on an equal basis. Again here is what the research says: tax debttotalled nearly $6 billion while welfare debt was about $1 billion. There appears to be no basis for treating debtors to the two Government agencies differently. The study indicated that tax debtors got off more lightly. The researcher said that the Inland Revenue Department was more likely to negotiate with debtors collect core tax and write off penalties and interest. Between 1 July 2011 and June 2012 the Inland Revenue Department wrote off nearly 50 percent of interest and penalties applied to overdue tax amounting to $374 million. This study showed that it wrote off $435 million in core debt reflecting 11.6 percent of collectable debt. The Ministry of Social Development on the other hand wrote off $8.7 million in core debt or 2.1 percent of collectable debt.The study also showed that in the same period the average value of outstanding tax debt was $14479 per taxpayer in debt while the average value of outstanding welfare debt was $2523 per beneficiary in debt. What the research noted was that more resources were applied to collecting welfare debt than tax debt. The Ministry of Social Development would collect debt from beneficiaries’ payments. The point of the whole research that has been highlighted is that there is a difference in treatment by this particular Government or by the two agencies towards those who owe debt to the Inland Revenue Department and those who owe debt to the Ministry of Social Development. The other difference is that there are much bigger sums or amounts of money involved in Inland Revenue Department debt as opposed to a smaller amount of debt in social development and welfare. That also is substantiated by the Government’s own regulatory impact statement. That is why I am asking the question.I would hope that the select committee looks deeply into this. The argument has been put forward that in creating this new offence to punish the spouse or partner of the person who committed the offence surely the spouse or partner would have known about it. Well I have doubts. Only 2 weeks ago the court found somebody who defrauded the department guilty as charged. It also charged his wife and after charging her she was not prosecuted at all. This causes the problem of charging people without having evidence and then having egg on your face. I would hope that the select committee looks seriously at all those angles. Lastly the appeals rights need to be looked at.