Benefit fraud grows as repayments trickle in

19:34, Jan 25 2013
Wayne Patterson
ENTITLEMENT: Wayne Patterson is fighting to keep the assets earned from his benefit fraud.

Benefit 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 Ministry of Social Development is more aggressively pursuing fraudsters, 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 incurred by benefit fraudsters 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."

New policies were being developed to improve early detection of fraud and speed up repayments, he said. 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 eventually be reclaimed, he said.

"We are going to drag that money back in again. The public expects it."

Labour social development spokeswoman Jacinda Ardern said that although benefit fraudsters should be vigorously pursued, their misdeeds were small compared with those of tax dodgers, who did not face the same level of scrutiny.

"The magnitude of that fraud is significant and is just as wrong."

She noted that, while fraud debt was rising, the Government had reduced funding to the ministry's fraud unit.

The ministry's deputy chief executive for integrity services, Iona Holsted, said most benefit fraudsters were repaying their debts.

The growing debt level reflected an increasing number of beneficiaries and improved fraud detection, she said. "We take every effort to recover all debts established through benefit fraud, no matter how small."

Ministry figures show the most common welfare fraud is not declaring work, followed by not declaring a partner. Last year, 31 people were also convicted for gaining a bigger benefit by lying about having dependent children.


2007, Auckland: Wayne Patterson, 53, is sentenced to eight years and nine months in jail after using 123 identities to steal $3.4 million from social welfare. The Crown recovered $3.5m from Patterson and is seeking assets deposited in Austria, worth about $3m.

June 2009, Hamilton: Kirsten McIver is sentenced to eight months' home detention for benefit fraud. She defrauded social welfare agencies of $66,032 by failing to declare she had a partner. She and her partner were also repeated rent dodgers, owing $30,000 to a string of landlords.

March 2011, Auckland: Jeanette Ford, 41, dubbed the "face of greed" by the Ministry of Social Development, is jailed for three years for defrauding Work and Income of more than $231,000. She used stolen identities, and forged driver's licences and birth certificates to steal the money over 13 years.

May 2012, Hamilton: Mia Horne, 52, is sentenced to six months in prison after defrauding social welfare of nearly $100,000 over eight years. She lied to Work and Income about having a partner and repeatedly applied for special needs grants.

March 2012, Auckland: Colin Diedrichs, 82, is imprisoned for more than three years after using the identities of two dead babies to defraud social welfare of $447,000. The fraud was carried out over 22 years, lasting so long that one of his personas claiming an unemployment benefit switched to superannuation. Most of his money was hoarded rather than spent. The ministry is expecting to recover about $357,000.

November 2012, Tauranga: Eileen Farquer, 83, is sentenced to a year's home detention, appearing in Tauranga District Court for using several fake identities to defraud social welfare of $215,000 over 25 years. Her offending was uncovered only after she was involved in a car crash and police at the scene checked her identity.

Contact Ben Heather
Social Issues reporter
Twitter: @BHeatherJourno

The Dominion Post