Fraudsters’ repayments no impact on growing debt

Fraudsters are repaying their ill-gotten gains at a snail’s pace while the money they owe has ballooned to more than $106 million.

One 83-year-old woman convicted last year of defrauding social welfare of $215,000 is paying it back at $10.50 a week. It will take her 393 years to clear the debt.

The scale of benefit fraud being uncovered has jumped fourfold since 2008, with 714 people convicted for defrauding taxpayers of a record $23.4m in the year to June 2012.

But while the Social Development Ministry is pursuing fraudsters more aggressively, the trickle of repayments is making little impact on the growing mountain of debt.

Last year only $2.5m was repaid by welfare fraudsters. During the same period, the total money they owed rose by nearly $20m.

The outstanding debt is getting exponentially bigger every year, almost doubling since 2008. This is largely because most fraudsters are paying off their debts in small weekly instalments.

The average repayment for fraudsters still on a benefit – which many of them are – is $13 a week. For those who have found work, it is $22 a week.

The top five offenders last year collectively defrauded the ministry of more than $1m. Four of them are not repaying anything while they serve prison sentences.

Associate Social Development Minister Chester Borrows said the ministry was partly a victim of its own success. ‘‘We are creating a bigger problem for ourselves, but we are responding to it.’’

One of the most common types of benefit fraud was not declaring a working partner – thereby gaining a bigger payment. Mr Borrows said the Government was looking at whether money could be recovered directly from partners.

‘‘Where the working partner has been living on the proceeds of benefit fraud, we are looking at ways we can spread the criminal liability.’’

While some big debts would never be recovered, it was estimated 90 per cent would be eventually be reclaimed, he said.