Zero tolerance on Benefit Fraud

12 October 2007
For Immediate Release

Ministry of Social Development Chief Executive Peter Hughes today reinforced the organisation's zero tolerance of benefit fraud.

Just hours after 48 year old Wayne Patterson was sentenced to 8 years for multiple benefit fraud involving $3.4 million, Peter Hughes fronted up to media, to outline measures the Ministry is using in its ongoing fight against benefit fraud.

"The scope and scale of Patterson's offending was simply breathtaking," said Peter Hughes. "But to put it into perspective, the Ministry administered more than $36 billion in benefits to more than 800,000 people over the three year period of offending. The money stolen by Patterson represented 0.008 percent of New Zealand's total benefit-spend over that time.

"Since the Ministry of Social Development was established in 2001, considerable resources have been invested in the prevention, detection and reduction of benefit fraud.

The Ministry's action against fraud occurs across a vast volume of transactions that includes 20,000 face-to-face interviews, 23,000 calls to our contact centres and $58 million in benefit expenditure each working day," said Peter Hughes.

Leading its efforts to combat benefit fraud, the Ministry's Integrity Services Group employs 90 fulltime investigators throughout the country. Its extensive programme to detect and prevent fraud includes over a one year period:

• 119 different data mining programmes, profiling against known fraud parameters, to analyse more than 40 million different benefit records for fraud.
• More than 346 data matching programmes run with 48,000 cases identified.
• Home visiting of more than 17,500 clients profiled at high risk of committing benefit fraud.
• 39,000 individual investigations.
• 95% success rate in prosecuting benefit fraud.

"Our efforts appear to be working. We are using more sophisticated methods of detection and we continue to increase our checking activity every year. The result of this is that the number and value of overpayments, including cases of substantiated fraud, is reducing. We are doing more, doing it smarter, and finding less and less fraud," said Peter Hughes.

"In addition, a more active employment and income support approach within Work and Income means we are having more personal contact with our clients, reducing the risk of fraud.

"The Ministry's zero tolerance approach to benefit fraud means we will take action in respect of every case. The Ministry seeks the toughest penalty appropriate including:

• For substantiated fraud where we can prove a person's intent to defraud, the Ministry seeks criminal prosecution, imprisonment, and the seizure of assets.
• The establishment of overpayments in every case where people have received money they were not entitled to but we cannot prove beyond reasonable doubt their intent to defraud.
• Imposing penalties of up to 300% on overpayments, up to a maximum of $5,000.

"Debt recovery of overpayments for fraud continues throughout a person's lifetime. Payments are deducted from all future earnings, benefits and superannuation until the debt is repaid or a person dies. We can also make claims against peoples' estates.

"The Ministry takes extremely seriously the integrity of the benefit system. I am keenly aware that taxpayers need to be able to trust our stewardship of their money.

"With an annual expenditure of $17 billion we will always be a target. Nevertheless I am confident that it is a matter of when rather than if we catch benefit fraudsters as the case of Wayne Patterson so clearly demonstrates," said Peter Hughes.

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Media inquiries: Bronwyn Saunders, Chief Media Advisor, ph 04 916 3447 or 029 916 3887