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Govt defends 'cynical' beneficiary crackdown

Thursday 21 Feb 2013 8:24 a.m.

The Government's plan to prosecute the partners of beneficiaries caught cheating the system has been called a "cynical, political ploy" designed to deflect attention from controversy surrounding the Sky City convention centre deal.

Labour leader David Shearer told Firstline this morning the new legislation, aimed at reducing the annual $39 million lost to benefit fraud, was ignoring the "big money" found in white collar tax evasion.

"I don't like anybody defrauding New Zealand and our system as much anybody else does, but then let's be fair about this," says Mr Shearer.

"This is $20 million. We know that tax fraud is $120, $140 million, absolute minimum, so let's do the same thing to those bankers who have partners who knowingly know (sic) about tax fraud, and let's say you guys can go to jail as well. Why don't we do that?"

On the other hand, Associate Minister of Social Welfare Chester Borrows says the Government is serious about eliminating tax evasion and fraud, wherever it may occur.

"[Labour] is suggesting then that we should just turn a blind eye to something that's costing the taxpayer $40 million because of perceived inadequacies in other areas," he told Firstline.

"We've put $200 million into extending our reach to tax evaders over the last two 'zero' Budgets, so the Government is concerned about tax evasion, but my portfolio is associate social development, and I'm working on this at the moment, and this is what we're doing and the public love it."

Mr Borrows said criticism around the legislation focusing on women in violent relationships was misguided.

"A couple that's living in a relationship where there is violence, battered women and those sorts of things, is not considered a relationship for these purposes by the court. So people who have concerns that women are, for instance, intimidated into making fraudulent benefit claims by their abusive partners, the courts have found that is not a relationship for these purposes, and so they would not be affected by this piece of legislation."

He says there won't be an amnesty for people who want to fess up before the bill becomes law.

"They should contact us before we come and see them. No one gets prosecuted for mistakes."

Mr Shearer didn't say whether his party would support the bill or not, and while he agrees "anybody that's ripping off the system" should be prosecuted, the timing and focus of the bill was "cynical".

"We laugh sometimes when this happens, because every time the Government is in trouble – look at ACC, or the GCSB, all those scandals around that, and now Sky City – the Government pulls off the top shelf something that attacks welfare.

"If you're going to be doing that, okay, that's fine… but then let's crack down on the big money, which is the tax fraud that is not being targeted at the white collar end of the spectrum."

Green Party co-leader Metiria Turei yesterday said beneficiaries break the rules because they don't have enough to live on.

"This is a crackdown on beneficiaries because they are beneficiaries, and we consider that to be unfair."

The Maori Party has also said it won't be supporting the bill.

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