Hon Chester Borrows
Associate Minister for Social Development

14 August 2013

Welfare fraud comparisons misleading

Associate Social Development Minister Chester Borrows has slammed opposition claims that welfare fraudsters are treated more severely than tax fraudsters.

“The Ministry of Social Development (MSD) has a duty to take care with taxpayer money. When they find evidence someone has fraudulently taken money they are not entitled to, they will prosecute, and make no apologies for that,” says Mr Borrows.

“To describe this as being particularly ‘punitive’ is simply wrong. It implies we should ignore welfare fraud, and shows a basic ignorance of the wide range of support MSD provides to New Zealanders.”

Mr Borrows singled out claims that more is spent chasing welfare fraud than tax fraud as demonstrably false.

“This year IRD has a budget of $142 million to enforce tax obligations. This is more than quadruple MSD’s collections and integrity services budget of $29.8 million.”

He also pointed to the use of penalties and interest to illustrate the different approaches taken by MSD and Inland Revenue.

“To focus on penalties and interest written off by Inland Revenue ignores the very different way IRD and MSD operate. Inland Revenue has a tough regime of penalties and interest, whereas MSD only uses penalties in rare cases where dishonest behaviour needs to be sanctioned by a criminal prosecution is not appropriate.

“The numbers clearly illustrate this. In 2011/12 MSD imposed around $144,000 of sanctions on 164 cases – a stark difference to the more than $600 million of penalties and interest IRD imposed in the same year.”

“Making false comparisons between investigation of tax avoidance and welfare fraud detracts from the fact that fraud is a crime It shows a blatant disrespect to taxpayers, whose money we must be responsible stewards of.

“It’s also a slap in the face to the more than 300,000 beneficiaries who are honest and follow the rules, and who shouldn’t be tarred by association with a few criminals hiding among them,” says Mr Borrows.

ends

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