Benefit fraud vs white collar crime

39 comments on “Benefit fraud vs white collar crime ”

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1. One Anonymous Bloke 1

   18 July 2017 at 7:48 am

   Don’t forget that so-called benefit “fraud” includes overpayments made because beneficiaries report income after they’ve received it.

   That pie-chart demonstrates that corruption is present in every sector of the economy.

   Obviously the solution is to defund the SFO (pdf).

   On any analysis, and given the rise and sophistication of economic crime, the current budgeted volume of cases (and related funding) means SFO cannot properly address serious financial crime, and has significant challenges to be viable at the lower volume of investigations.

   Treasury, 2011
2. Ad 2

   18 July 2017 at 8:05 am

   Anthony, the political hypocrisy only exists because it perfectly mirrors the hypocrisy of the general public.

   The public of New Zealand want to see the poor punished and the successful simply smudged rather than burnt.

   This is not due to political leadership gently leading the tone downwards. Nor from the mainstream and digital media. Both simply reflect the New Zealand public and their long term economic circumstance.

   This punitive tone is what you get when the great majority of people in New Zealand are going backwards, far more are in poverty, so they make sure that they police and enforce those who are already on the bottom to stay there: the poor are the floor for the declining.

   The truly poor are the class marker that the declining public need. So they hate on them. It’s a New Zealand condition.
   • marty mars 2.1

     18 July 2017 at 8:17 am

     “The public of New Zealand want to see the poor punished and the successful simply smudged rather than burnt.”

     why do we do that though? Is it that as we pull them down we get uplifted? Is it just fuck them – born from neolib and individualism. Is it the competitive eat anything ethos of capitalism? Embarrassment? Shame? Why do we hate ourselves so much – guilt around the orgy of resource use? Guilt about the pollution, the mess?
     • Incognito 2.1.1

       18 July 2017 at 8:32 am

       Good question: why do we do it?

       Even though it might have been rhetorical I’ll bite anyway.

       My basic & simplistic answer is that we look down on the ‘poor’ and up to the ‘rich’.

       We see many moral and personal failings in the poor despite the many more (obvious) qualities.

       We see many qualities in the rich despite the many more (obvious) moral and personal failings.

       It’s our dualistic view of everything that is the root cause.

       Change our view and we’ll change everything and first and foremost ourselves. [Note the dualism in this statement]
     • One Anonymous Bloke 2.1.2

       18 July 2017 at 9:00 am

       Fear of losing face, of not being “respected”. Yes, we’re a bunch of fragile cry-babies 😈
     • Kevin 2.1.3

       18 July 2017 at 9:54 am

       30+ Years of Neolib bullshit being forced down your that. To many now, that is the only way they know.
   • WILD KATIPO 2.2

     18 July 2017 at 8:24 am

     ‘ The truly poor are the class marker that the declining public need. So they hate on them. It’s a New Zealand condition.’

     I just cant understand that mentality , I have just never understood it.. unless… someone is so full of envy or anxiety about their position in life… but it all seems like such a self imposed prison.

     But man ! – those figures above !!! Wow !!! Even the first opening lines ,…

     ‘ tax evasion costs the economy 33 times more. ( than welfare fraud )

     The research shows tax evasion amounts to at least $1 billion a year compared with $30 million for welfare fraud, but the courts are much harsher in their treatment of welfare fraudsters. …’

     It just seems that poor people are so much more easily badgered and authority’s know they do not have the finance to defend their case . Perhaps this is why they also removed state / court subsidized lawyers for those who have little money to afford one. That is evil.
   • Carolyn_nth 2.3

     18 July 2017 at 9:17 am

     Bashing the poor, separating them into deserving and undeserving, has a long history in British culture. British colonisers brought those attitudes with them to NZ.

     It’s been passed on through the generations to a greater or lesser extent.

     When politicians and major/governing political parties compete to get tougher on beneficiaries, it increases the bennie-bashing tendencies. And Labour and Nats have both been competing in that arena for a couple of decades.

     Time to turn the tide and for some left wing party/ies to show leadership in a truly left direction on this.
     • Karen 2.3.1

       18 July 2017 at 9:42 am

       +1 Caroline
     • CLEANGREEN 2.3.2

       18 July 2017 at 7:14 pm

       yes good blog Carolyn we are living in a corrupt time when to lioe is standard practice in administrative circles.

       Only us must comply with honesty it seems..
   • RedLogix 2.4

     18 July 2017 at 10:08 am

     Chris Trotter uses the The Emperor’s New Clothes fable to explain:

     The interesting thing about Andersen’s fable is that it’s actually supported by a critical element of scientific fact. If people whose judgment we have no reason to doubt inform us that black is white, most of us will, in an astonishingly short period of time, start disregarding the evidence of our own eyes.

     Even worse, if an authority figure instructs us to administer punishments to people “for their own good” most of us will do so.

     Even when the punishment appears to be causing the recipients intense, even fatal, pain, we will be continue flicking the switch for as long as the authority figure insists that the pain is necessary and that we have no alternative except to proceed. (If you doubt this, just Google “Stanley Milgram”.)

     https://www.stuff.co.nz/national/politics/opinion/94799945/chris-trotter-who-will-cry-out-that-neoliberalisms-new-clothes-are-invisible
     • NZJester 2.4.1

       18 July 2017 at 3:13 pm

       No need to google that, just look at President Trump in the US and his hypocrisy as a case study.
   • NZJester 2.5

     18 July 2017 at 3:06 pm

     I don’t think it is the General Public that wants to see the poor punished and the successful simply smudged. It is those that have lied and cheated and stood on the little guy spending money to get the rules written in their favor so they can continue to lie, cheat and step on the little guy without worrying about it affecting them too badly if caught.
     The quality of the layers due to what they can afford to pay tends to get them a better time in court as well being able to block some of the evidence and/or testimony against them because their lawyers have the time to study everything and find the smallest technicality to do that, while the benefit fraudster is normally represented by a lawyer who does not get paid enough to look through all the evidence to find those small technicalities. A good layer also knows how to turn peoples words against them making the testimony of witness look unreliable by using mind games on them by looking into their histories.
3. marty mars 3

   18 July 2017 at 8:11 am

   Good one Anthony – exactly great timing on this post.

   I cannot imagine anyone not being implicated.
4. Ad 4

   18 July 2017 at 8:35 am

   It was great to see the Labour party this morning focus on smacking down on multinational corporates who conceal their profits.

   Sure hope the IRD are ready for an alternative government to this lot.
   • Cinny 4.1

     18 July 2017 at 8:40 am

     Yes ! Super happy about that announcement.

     Well done Labour
   • WILD KATIPO 4.2

     18 July 2017 at 8:47 am

     Indeed. Its game on . In the NZ Herald ;

     Little has written to the leaders of multinational companies setting out his intention if Labour leads the next Government .
     Little has not specified yet how Labour would determine a fair share or what the penalty tax would be , but has announced it would collect an extra $600 million from multinationals over three years .
     If it was introduced, however , the penalty tax would likely be higher than the corporate rate of 28 per cent , as is the case in Britain where , since 2015 , a new diverted profit tax was set at 25 per cent , compared with company tax of 20 per cent . Labour’s extra $600m revenue from the penalty tax has been budgeted to help fund its alternative Budget, which is to be unveiled tomorrow .

     Little said Labour would give the Inland Revenue Department a further $30m in order to collect the extra $600m .

     ” If multinationals aren’t prepared to pay their fair share, Labour will introduce a diverted profits tax , to enable New Zealand tax authorities to impose tax at a penalty rate if they believe that tax has been deliberately avoided . ”

     A diverted profits tax would be an important tool to encourage multinationals to behave appropriately and pay their fair share of tax , like hard-working New Zealanders , Little said . A discussion document issued by the IRD in March estimated that up to $300m of tax a year was being lost because of multinational avoidance . It included proposals that were in line with recommendations from the OECD base erosions and profit-sharing project . Labour said its policy was aimed at collecting all of the $300m .

     …………………………………

     And this is another area beside tax evasion where the pot calls the kettle black when it comes to benefit fraud. There’s good times ahead when Labour gets into power after September 3rd.
     • alwyn 4.2.1

       18 July 2017 at 10:08 am

       You state
       “Little has not specified yet how Labour would determine a fair share or what the penalty tax would be , but has announced it would collect an extra $600 million from multinationals over three years .”.
       How is he so clear on how much is the tax going to be without explaining how it is going to be calculated?
       That’s easy. He is simply going to decree the numbers. That is the approach they are taking these days in South Africa. Just say a company owes you whatever amount you feel like. Don’t bother about the rule of law. Andrew has seen a few to many Westerns and loved the line “I am the law here”.

       No doubt you will get a rebate if you make suitable donations to the Labour Party.

       I am not saying that there is no problem with the taxation of multinational companies. It wasn’t so bad when the goods being traded had a physical existence. It is much more complicated when the goods, such as computer software, have no real physical existence and the main value is the Intellectual capital.
       Even so, unilateral action, based on arbitrary claims as Little is proposing is mad. It is essential that we have universal agreement by all countries if the taxation is to work.

       On Little’s silly idea what is there to stop China copying it and claiming that all the income received by Fonterra sales to their country is taxable. Not just the accounting profit but ALL the income.
       Fonterra expects to reach $10bn in Chinese sales by 2020. Suppose that China simply decrees that all the sales were profit and demands 40% in tax? There goes $4bn/year and the dairy industry collapses.That would be in line with the Little fool’s proposal. Just decree some arbitrary profit.
       What do we do then?

       It is essential that we promote the idea of a internationally acceptable way of allocating profits by multinationals to countries. The ridiculous proposal Andrew is proposing may be popular with the economically illiterate part of the population here but it is madness for New Zealand’s real interests.
       • RedLogix 4.2.1.1

         18 July 2017 at 10:11 am

         And that makes a very reasonable point alwyn.
       • BM 4.2.1.2

         18 July 2017 at 10:13 am

         Well said alwyn.

         Little knows this though and has no intention of following through on any of these proposals like you say the whole thing is just a pitch at the stupid and gullible who have no idea how it all works,

         Pretty dishonest and Trump like if you ask me.
       • Craig H 4.2.1.3

         18 July 2017 at 1:08 pm

         Political parties are not schools, donee organisations or charities, so there is no rebate for donations to them.
       • McFlock 4.2.1.4

         18 July 2017 at 1:13 pm

         meh.

         Call it a “windfall tax”, like the UK did. The sky didn’t fall then.
       • Matthew Whitehead 4.2.1.5

         18 July 2017 at 2:37 pm

         So, firstly, on Multinationals that do trade in concrete goods:

         Little is right. Calls to wait for multilateral action have gone nowhere. It’s time to say that unless multinationals voluntarily pay their fair share, we will impose penalties on them. If they want to withdraw their parasitical limbs from our country and let kiwi businesses take over their markets, fine, that just gives more opportunity to our own entrepreneurs.

         I don’t mind if we have to adjust things later to line up with a different, more internationally accepted approach. The point is that it’s critical to start, or there will never be an internationally accepted approach because Serious Fiscal Types will keep arguing that nobody should do it on their own.

         As for digital goods, I think there really does need to be a volume test there. I don’t mind small outfits selling under a foreign tax regime. But if you’re making millions of transactions digitally with New Zealanders, you should probably be subject to New Zealand taxes whether or not you maintain a physical presence here, the trick will be on how to enforce it in the more difficult cases, and whether it would result in unfair double-taxation. (which isn’t to say double-taxation is inherently unfair, just that it might make big digital outlets essentially pay a tariff compared to small ones if double-taxation isn’t sorted) That’s the kind of case where an international agreement actually is appropriate, because the people involved are usually paying tax in their place of business. (unless they’re tax-dodgers and operating out of, say, Ireland, like Facebook)
       • Ad 4.2.1.6

         18 July 2017 at 2:40 pm

         I have as much sympathy for Fonterra as any multinational.

         Fonterra gets massive scrutiny of its accounts from the farmer suppliers and shareholders. Their profit is not merely decreed.

         And no, you don’t wait for all global rules to be equal before you act.

         What you do is act.
         • alwyn 4.2.1.6.1

           19 July 2017 at 5:54 pm

           You will note that I didn’t say it would be New Zealand that jumped on Fonterra.
           I said it could be CHINA that did such a thing.
           Also I see that I accidentally put the word South ahead of Africa. It should have been just Africa. The country concerned is in fact Tanzania.
   • Draco T Bastard 4.3

     18 July 2017 at 10:38 am

     Sure hope the IRD are ready for an alternative government to this lot.

     This government has been heavily cutting IRD so probably not.

     156 IRD jobs axed
     Inland Revenue reveals details of how it will slash 1500 jobs

     Can’t go round having enough people to catch the rich defrauding us.
     • CLEANGREEN 4.3.1

       18 July 2017 at 7:17 pm

       “Can’t go round having enough people to catch the rich defrauding us.”

       Yes they are banking on this too!!!!!
5. ianmac 5

   18 July 2017 at 8:54 am

   There was some sort of documentary a few years ago, about the imbalance of investigators for benefit fraud against the number of investigators for the much larger fraud like tax evasion. I think there was one tax investigator for every ten benefit investigators.
   My brother rented out a house and claimed pots of paint etc as maintenance when he was really making improvements. In a microscopic way that was fraud.
   A farmer friend built a flash 5 bedroom house on the farm but it was tax deductible as it was recorded as a new barn.
   Must be countless examples of big and little fraud.
   The hypocrisy of the big ones makes me angry.
6. Carolyn_nth 6

   18 July 2017 at 9:30 am

   There’s now an #IamMetiria being used on twitter.
   • Bill 6.1

     18 July 2017 at 11:24 am

     Nice! 🙂

     Must admit that I’m disappointed in the approach or framing of this post. It suggests there is merely a league table of moral or criminal wrongdoing on the part of individuals.

     In doing that it buries the central point- that the system designed to provide social security is unnecessarily onerous and also immoral.
     • Matthew Whitehead 6.1.1

       18 July 2017 at 3:35 pm

       And also, it misses that criminal actions committed to survive under class warfare aren’t simply justified resistance against an immoral law that says it’s okay for the state to abdicate its responsibility to help people survive.

       Yes, some people’s focus is infuriatingly wrong on this issue. But that doesn’t mean we should ever concede that welfare fraud to survive isn’t the right thing to do under the circumstances. I would pick people surviving- Every. Single. Time.
       • Bill 6.1.1.1

         18 July 2017 at 5:29 pm

         I would pick people surviving- Every. Single. Time.

         Absolutely.

         I guess what I didn’t quite get across in my comment above is that, like stealing food when genuinely hungry, much of what gets sold back to us as “benefit fraud” simply isn’t. Yes, by the letter of the law it may be. But by any reasonable moral or ethical code it just simply isn’t.

         So comparing actions that are necessary for survival (social security indiscretions) to actions that are born of greed or a sense of entitlement (tax avoidance) is contemptible bullshit in my book.
         • Korero Pono 6.1.1.1.1

           18 July 2017 at 8:55 pm

           +100 looks like the Greens are the only party that understand the hardship beneficiaries experience, it’s good to at last see progressive policy coming out to tackle the last 30 plus years of backward policy. #IamMetiria
         • RedLogix 6.1.1.1.2

           18 July 2017 at 10:29 pm

           Was this woman caught stealing a loaf of bread? Transport her to the colonies I say !!!
         • Matthew Whitehead 6.1.1.1.3

           20 July 2017 at 2:10 pm

           Yeah, I thought you were on the right path with your previous post but that it deserved expanding on. It is the refusal to admit that class war exists that is the right’s problem on this issue, and its obviousness to anyone who ever listens with empathy to any beneficiary ever is what makes clear the difference between tax fraud being straightforwardly wrong but benefit fraud sometimes morally fraught but ultimately justifiable when committed out of genuine need. (which isn’t to say there isn’t the rare case out there of people who defraud the benefit system for frivolous reasons or just because they think they can get away with it, the question is whether our over-emphasis on those people has lead to a culture where everyone else on a benefit is treated like dirt)
7. web-developer 7

   18 July 2017 at 11:22 am

   It’s just redic. Most of the $80 million will be ‘fake debt’ which is (due to slow processes) is remarkably difficult to clear. For instance: if you are receiving an accommodation supplement as a job seeker and become employed but are still eligible for an accommodation supplement and the Work and Income person doesn’t change you from a ‘benefit accommodation supplement’ to a ‘non-benefit accommodation supplement’, you rack up a debt to Work and Income. This is despite the fact the non-bene AS is paid at the same rate/amount. The only difference is some background administrative title. So, you start declaring your wages to continue receiving the payments. Then, three months down the track and without explanation, the payments stop and the payments you had received (could be anywhere between $200 and $800) are then classified as a debt, and no doubt ‘beneficiary fraud’. It would be hard for anyone to categorise that as a debt or fraud for which the recipient is liable, yet this ‘fake debt’ is still counted as such.

   If this happens 1/20 times to the 300,000-odd AS recipients, that’s nearly $10 million per year added to the $80 million ‘beneficiary fraud’ total.
8. Jlo73 8

   18 July 2017 at 7:02 pm

   If I read this correctly, estimates of tax fraud are $1 billion, but actual benefit fraud convictions are $33 million. Can’t really compare the two.

   Better to compare estimates of tax fraud against estimates of benefit fraud, or actual tax convictions against the $33 mil.

   Also, IRD can gut a person like a fish with with penalties and interest before it goes to court with a conviction.
9. gsays 9

   18 July 2017 at 10:13 pm

   I seem to recall banks getting pinged a few times over the last couple of decades.
   Enormous sums, yet they entered into ‘negotiations’ with ird.
   It is sickening compared with how they treat individuals, e.g. compulsory deductions from wages etc.
10. mosa 10

    18 July 2017 at 11:54 pm

    English gets caught out claiming tax payers money he should never have been entitled to in the first place and he knew he was ” rorting ” the system and Key remarks that it was ” unfortunate distraction ” that pretty much sums up the National party corporate approach.

    Keep stealing until you get caught.

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