Ardern Jacinda: Social Security (Fraud Measures and Debt Recovery) Amendment Bill — Second ReadingText is incorporated into the Bound VolumeArdern Jacinda: Social Security (Fraud Measures and Debt Recovery) Amendment Bill — Second Reading[Sitting date: 18 March 2014. Volume:697;Page:16774. Text is incorporated into the Bound Volume.]JACINDA ARDERN (Labour):I am pleased to be able to follow the Associate Minister for Social Development the Hon Chester Borrows and just flesh out some of the accusations—for want of a better word—that were made about members on this side of the House and the way that they have approached the legislation he has brought before us. The take-home message overall from Labour members obviously given that we are supporting the Social Security (Fraud Measures and Debt Recovery) Amendment Bill is that of course no one on this side of the House believes that we should ever condone or facilitate or allow individuals to defraud the welfare State. It is an incredibly important principle for Labour because we do not want anything to undermine the importance of social security in New Zealand. We established it. We believe in it.We worry however that the language that sits around the welfare State has slowly chipped away at New Zealanders’ notion of what it is and whom it is there to serve. Our concern has been that the continual approach of generally assuming as the first principle that most people on social security potentially do not need to be there or are abusing it in some form erodes the very purpose of that safety net in the first place. That is the kind of language we hear from that side of the House all the time. So that is why we generally approach proposals like this with a very sceptical eye. We want to do everything we can to prevent fraud yes but will it be the overwhelming way in which we frame and discuss social security? No because overwhelmingly people who access it are not defrauding it. They are in genuine need but every time—every time—the front agenda about welfare is about fraud or is about the Minister’s social obligations.If we want to recap the last changes Minister Bennett the Minister for Social Development made to the welfare State said that you can have your benefit docked if you do not enrol your child in school if you do not have your Well Child checks for your child if you are running from the law or if you fail a drug test. Look in and of their own right some of those may have some merit to them but what message does it send New Zealand? What message does it send New Zealand if the only time we hear the Government talking about social security is to say that people who are on it are potentially running from the law smoking dope not enrolling their children in school and by the way are probably defrauding it as well? No wonder we are a bit cynical every time the Government raises proposals because that is the context in which it talks about social security.So yes we want to prevent fraud but no it is not our overwhelming perception that that is the biggest issue facing social security. Yes we have raised welfare fraud in the context of tax fraud—rightly so. The scale of tax fraud in New Zealand should cause all New Zealanders concern and should be fought with the same vigour as those who defraud the welfare State. But there is a difference. Relationship fraud in New Zealand costs us about $20 million as taxpayers. We should pursue that. Tax fraud tax discrepancies amount to $1.2 billion a year—that is an estimate as close as we can establish. Annual tax fraud the established tax fraud that we know about is $141 million at an absolute minimum. Yes we will call on the Government to do more about tax fraud because as far as we are concerned Government members spend far less time in this House talking about what is a much more costly problem. Victoria University has I think done us a great favour in raising to the fore that tax evasion is up to 150 times more likely than benefit fraud and also that the Inland Revenue Department is more likely to write off what could be considered tax fraud or discrepancies than it is for benefit fraud and yet the dollar values attached to each are often significantly different. A much higher value is often written off in the tax domain.Yes we will raise this and we will keep raising it because we think it is a valid point. We will raise it in the context of the way that these changes work too because what the Associate Minister has ultimately done is change the threshold for when a partner can be brought in to relationship fraud. I think it is fair to ask that if we are going to change the threshold of knowledge or even the test for benefit fraud why do we not change it for tax fraud? Clearly when tax fraud occurs it often benefits a spouse. It can certainly raise questions in a household. You could argue that a partner ought to have known that tax fraud was occurring. That is the test we are introducing for welfare fraud. Why are we not introducing it for tax fraud as well? In fact we sought for this bill to be able to consider that extension for tax fraud all in one go. Unfortunately my understanding is that it was a request that was turned down.I think my time is about to expire. I look forward to coming back and sharing my further views in the remainder—The ASSISTANT SPEAKER (Lindsay Tisch): Keep going.JACINDA ARDERN: Oh you are not going to stand up. I will just keep going. Just to go into a little more detail on the test that the Associate Minister was talking about where he claimed that we were not doing anything particularly new—Sitting suspended from 6 p.m. to 7.30 p.m.Mr DEPUTY SPEAKER: The House has resumed. Members the House when it rose for the dinner break was debating the second reading of the Social Security (Fraud Measures and Debt Recovery) Amendment Bill. Jacinda Ardern has the call. She has just over 4 minutes remaining.JACINDA ARDERN: I will use my 4 minutes as wisely as I can. Before the House rose I was beginning to talk about some specific elements of the bill—in particular the fact that we now have an amendment to the legislation that means that a spouse of someone who is accused of welfare fraud who has not undertaken what could be considered a positive act can be held liable for that fraud also. This is a point that was particularly raised by the Law Society. Its argument its contention was that a positive act is normally required in order to establish criminal liability.Just to be really clear it is not as if a spouse of someone who commits welfare fraud—in particular relationship fraud—cannot be held liable currently. I would not want anyone to be left with that impression. In fact they can if for instance it could be established that they agreed with the person who ultimately committed the fraud that that is what they would do and that they would be complicit in it; that they encouraged or assisted them to make false statements in order to commit the fraud to obtain a benefit or a rate of benefit they were not entitled to; that they themselves made false statements by asserting for instance that they were not in a relationship when they were; that they omitted to inform the Ministry of Social Development of information when asked; or that they attempted to conceal any particular information. So there are a number of ways that if an individual is committing welfare fraud through relationship fraud the other spouse can be held liable as well.What this bill does is say that actually if none of those things is present 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 by the Social Services Committee. Two of the questions we still came away with were to what degree that test could be applied to other forms of fraud and whether it should be. If we are going to raise the bar on welfare fraud—and yes there may be an argument to do that or there may not—why are we not raising it on tax fraud? I still maintain that that is an absolutely legitimate question to raise. As I said in my first contribution of course we are opposed to welfare fraud because it undermines the social security system as a whole—it adds a negative perception of those who genuinely require the welfare State—but in this House we are constantly debating welfare fraud when tax fraud is of a much higher value to the taxpayer.One final statement I wish to make is that it has been seen from this side of the House that the Government tends to talk about welfare overpayment as being welfare fraud. It is not the same thing. In fact a large bulk of the money that the Ministry of Social Development is often trying to recoup is not fraudulently obtained welfare payments; it is payments made in error. It is overpayments because people are in precarious work and unfortunately their hours which they have to report in weekly are not always in alignment with the hours that are on their payslip because they are having to guess before they have a payslip in front of them. That is a flaw of the system not necessarily of the individual. But I look forward to debating that in greater detail at the next stage of this bill.Debate interrupted.