Claim benefit fraud unfairly targeted
The Ministry of Social Development is one of the country’s most aggressive prosecutors, behind only police and the Corrections Department.
New figures provided to the attorney-general have raised questions about whether the ministry is being too tough on benefit fraudsters, compared with the actions of agencies such as ACC, or Inland Revenue’s targeting of white-collar tax avoidance.
The figures, in a briefing by Crown Law on the public prosecutions systems’ efficiency, show the ministry made 670 prosecutions in the year to March 2015, while ACC made only four.
Crown Law wrote: ‘‘An interesting comparison is emerging between ACC and MSD, both of which investigate comparable offences . . . but appear to have very different approaches to the decision to prosecute.’’
ACC did not prosecute anyone under a $20,000 offending threshold, whereas MSD prosecuted ‘‘based on sufficiency of evidence alone’’.
A Victoria University accounting expert who studied attitudes to blue-collar and white-collar offending found beneficiaries stole lesser amounts but tended to be more aggressively pursued and more harshly penalised. Lisa Marriott found some benefit fraud prosecutions were taken over sums as little as $1000.
The latest Crown Law figures have been revealed in the wake of an inquest into the death of Lower Hutt beneficiary Wendy Shoebridge, who is suspected to have killed herself after receiving a letter from MSD threatening to prosecute her for benefit fraud.
After her death, MSD downgraded the amount it alleged she stole from about $22,000 to $5500, then later concluded she had not committed fraud at all.
The inquest in late 2016 heard allegations of a chaotic MSD office, and of key performance indicators for beneficiary prosecution rates.
The coroner is also investigating how MSD handled Shoebridge’s case, and others concerning clients at risk of suicide.
But Shoebridge’s mother, Barbara Cooke, believes her case shows beneficiaries are aggressively targeted: ‘‘More resources are [being] put into beneficiary fraud. I think a lot of it is certainly unnecessary.’’
Crown Law’s briefing said MSD had a 94 per cent conviction rate.
The amount of benefit fraud uncovered dropped from $41 million in 2013-14 to $24m by 2015-16. In that same period, MSD spent $49.5m investigating benefit fraud and overpayments.
By comparison, Inland Revenue uncovered $1.2 billion in tax ‘‘discrepancies’’ in that period, recovering $349.1m from tax noncompliance, and $13.7m from fraud. It spent $169.77m on investigations in that period.
An ACC spokeswoman said it found issuing formal warnings, enforcing ‘‘disentitlements’’ and overpayment penalties, were more cost-effective than court action.
Marriott’s 2014 research compared the worst cases of white and blue-collar frauds, finding the average amount taken by tax avoidance was $230,000, compared with $77,000 among the most serious comparable cases of benefit fraud.
She found that two-thirds of the worst-offending benefit fraudsters went to prison, whereas tax evaders in the same bracket were more likely to receive home detention.
‘‘These two crimes are very, very similar.’’ – Fairfax NZ