Labour’s lax approach to benefit fraud investigations

By allowing 70 per cent of benefit fraud investigations to be delayed and a critical fraud detection tool to cease to operate for more than a year, Labour has left our welfare system vulnerable to exploitation, National’s Social Development and Employment spokesperson Louise Upston says.

“Billions of dollars was paid out to support many genuinely in need New Zealanders during the Covid-19 lockdown. It was the right thing to do, but we expected the Government to continue to make sure taxpayer money wasn’t been wasted on those committing benefit fraud.”

Normally the Ministry of Social Development (MSD) matches hundreds of thousands of files from Inland Revenue against its own records to detect irregularities that might indicate fraudulent behaviour.

But MSD stopped matching these files for more than a year, the only time in the past 10 years this process has been suspended, while billions of dollars was being paid out.

“While the sheer size of the wage subsidy required resources to be redeployed at MSD, we expected the Government to have properly resourced MSD to make sure one of its sophisticated fraud detection tools could’ve continued, or at the very least restarted much sooner,” Ms Upston says.

“Most people would accept more Police would be needed to investigate crime if our population suddenly increased by 171 per cent. The same principle applies here.

“We’ve already seen Labour’s relaxed approach to prosecuting fraud. By removing this critical tool to detect fraud it has given those cheating the system a free pass to take advantage of the circumstances Covid-19 caused.

“MSD investigators are still splitting their efforts between investigating the wage subsidy and investigating benefit fraud, meaning neither the wage subsidy nor benefit fraud are being rigorously investigated.

“We expect the Government should be detecting and prosecuting those who claim hard working taxpayer money that they are not entitled to. This is a basic step to safeguard the integrity of our welfare system.”

You can find the relevant answers to Written Parliamentary Questions here.