OIA Request points to beneficiary beat-up by Minister Chester Borrows

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In National’s on-going war against the poor; the unemployed; solo-mums; widows; etc, Associate Social Development Minister, Chester Borrows, recently trumpeted “new” developments in the campaign against “welfare abuse”.

He proclaimed  “new” measures by this government to detect and deal to (alleged) fraudsters,

“The information sharing, which compares MSD records with Inland Revenue data to identify working age beneficiaries who have not accurately reported their income to Work and Income, started in March this year.”

Source: Information sharing continues to stop fraudsters

However, as I pointed out in July of this year, Borrows appears to be somewhat “loose with the truth”. The MSD has had the ability to share information with other government departments going back to 2001 – if not  earlier (see:  Benefit fraud? Is Chester Borrows being totally upfront with us) .

The initial evidence for this fact lay with two letters  from an acquaintance, who luckily keeps every piece of correspondence from government departments.

The other evidence was a startling admission from Borrows – detailed later in this blogpost – in an OIA request lodged with the Minister’s office in July.

The first of two letters was from 2009,

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[Published with permission.]

The letter clearly states,

“We regularly compare our records with other government agencies…”

and,

“The Inland Revenue records indicate that you commenced employment: 16 March 2009…”

(Note; the over-lap that so concerned the MSD was a matter of two weeks, and centered more around confusion as to when the WINZ “client” was deemed to start work.)

Obviously, the MSD had data-matching with the IRD going back to at least mid-2009.

The second letter is from 2001,

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[Published with permission.]

Even in 2001 – twelve years ago – WINZ and the NZ Customs Service (not Immigration Dept as I mistakenly wrote) were comparing information.

So for Borrows to claim that “information sharing, which compares MSD records with Inland Revenue data to identify working age beneficiaries who have not accurately reported their income to Work and Income, started in March this year ” – shows either that he has poor knowledge of departmental policy, or is wilfully misrepresenting the truth.

If Borrows is lying, it would be part and parcel of National’s disturbing agenda to demonise welfare recipients and make them the scapegoats of this Tory government’s failure to create jobs.

On 19 July, I lodged an OIA request with Borrows’ office.  I asked ten questions from the Minister through the course of two emails. Here are the questions and responses I received on 12 September;

1. Over what period of time were these 3,139 cases detected?

Borrows replied; “From 18 March to 14 July 2013 the information sharing agreement detected 3,139 cases of benefit fraud which resulted in the cancellation of a benefit.”

2. When did IRD and WINZ begin sharing information?

Borrows; “In May 2012 an Order in Council was passed that allows for Inland Revenue to share information with the Ministry of Social Development. To support this a memorandum of Understanding was signed by the Chief Executive of the Ministry of Social Development and the Commissioner of Inland Revenue.

This has led to a new programme of work in which Inland Revenue provides the Ministry of Social Development with income and employer information for all working age people in receipt of a benefit. In September 2012 a test of the information sharing agreement was undertaken to ensure data integrity and system compatibility. Full information sharing for the detection of undeclared earnings commenced in March 2013.”

However, further on in Borrow’s letter, he presents this chart of two government departments and the dates they commenced data-sharing with the MSD,

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Note the years given for the IRD (1992) and NZ Customs Service (1996). This ties in perfectly with the letters from WINZ and MSD above.

3. Does WINZ and the Dept of Immigration also share information on WINZ beneficiaries who travel overseas whilst in receipt of a benefit?

According to Borrows; Yes. Though with NZ Customs, not the Immigration Service. My bad.

4. When did that WINZ/Immigration Dept arrangement, in respect to Q3,  begin?

According to Borrows; from 1996 onward.

5. What other government ministeries, departments, SOEs, and other bodies does WINZ share information with?   6. When did those arrangements, in respect in Q5, begin?

Borrows listed the following as data sharing with the MSD; ACC (2005), Corrections Dept (1995), Department of Internal Affairs (2004 onward), Housing NZ (2006), Inland Revenue (1992 onward), NZ Customs Service (1996 onward), and Ministry of Justice (2013)

7. Of the 3,139 illegitimate benefits  found, what was the time period involved with people receiving a benefit and earning income from another source?

How many were within the following periods;

– 1 week

– 2 weeks

– 3 weeks

– 4 weeks

– 2 months

– 3 months

– 6 months

– Over 6 months – under one year

– Over one year

This was probably the most pertinent question, and Borrows point blank refused to answer it, stating;

“Your request for information about the amount of time a client was in receipt of a benefit whilst earning income from another source is refused under section 18(f)  of the Official Information Act.This would require the Ministry to undertake a manual search of each of the individual  client’s files to collate the information. As such I am refusing this part of your request as responding to it would require substantial collation or research.”

This is an unbelievable response!

For one thing, it indicates that the Minister has no information as to how long a welfare recipient was earning both a benefit and other income.

Was it one week? Or one year? Two weeks?  Or two decades?

There are many cases of a brief overlap, as the 7 July 2009 letter above shows (where the over-lap was a fortnight before the recipient advised WINZ). There was a gap of  just over a week between the job interview and job offer, and the person’s first induction course.

Borrows simply has no knowledge of how long these over-laps were. If the majority were one or two weeks, this can be put down to human error or a mis-understanding of employment start-dates – not planned fraud.

Worse was to come.

8. How many prosecutions have been undertaken of all nine cohorts listed above?

Borrows replied,

“Information about the number of prosecutions undertaken is refused under section 9(2)(f)(iv) of the Official Information Act. This part of the Act allows me to refuse your request as the Ministry is still in the process of deciding whether to prosecute these individuals, therefore this matter is still under active consideration. While I understand that there is a significant public interestin the functions of the Ministry, I believe that in this case the public  interest does not outweigh the necessity to protect the Ministry’s investigation and prosecution process.”

I take it from his response that “as the Ministry is still in the process of deciding whether to prosecute these individuals, therefore this matter is still under active consideration” – that no prosecutions have taken place up until the time of the letter being written.

Not one single person out of the  3,139 cases was prosecuted.

Not. A. One.

So the alleged fraud was either of an insignificant nature (one or two weeks) – or the cases were so flimsy and ill-defined that a Court would have thrown out the charges.

Or they weren’t “fraud” at all.

9. How many have been convicted?

Borrows’ response,

“Prosecutions stemming from these cases are still in progress, and I am advised that none have yet been resolved. As such there have been no convictions to date.”

No convictions?

So much media hype surrounding 3,139 cases – and not a single prosecution or conviction.

It seems apparent that this was little more than a propaganda exercise and useful only to beef up National’s ‘tough-on-welfare-abuse” image. Any serious fraud is never countenanced by any government and prosecutions are relentlessly pursued,

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Source

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And lastly, I asked,

10. How many were in actual employment whilst receiving a welfare benefit, as opposed to some other source of income?

Borrows replied,

“In every instance of the 3,139 alleged benefit frauds, those in receipt of these were also employed.“

Note the Minister’s use of  “alleged”. Without a single court case leading to a single conviction, nothing has been proven. There was no fraud, as such, because no one has been convicted of any such offence.

We have only a  politician’s word that this has happened.

And thus far, Mr Borrows seems to be lacking in any credibility whatsoever.

It is also interesting to note that whilst Borrows knew the answer to Q10 – he had no data on Q7.

If the mainstream media had the time or inclination to delve further behind the press releases, they might uncover the same situation I have; that this has been part of a propaganda exercise by government ministers to boost National’s reputation as being “tough on welfare cheats”.

New Zealand has a dark side to it’s much vaunted “fair go”. We can  be quick to judge; easy led to indulge in prejudice; and punitive to a nasty level.

National’s strategists and spin-doctors are well aware of this nasty side to our collective psyche and play it like a maestro.

We may not force jews to wear the yellow star of David and ship them off to death camps – but when a Tory government re-victimises the poorest and most vulnerable in our society, simply to gain a few polling points, and seemingly gets away with it – then you know that this is a country that is willing to be led into darkness.

And all the while with a complicit media, only too eager to be the government’s unquestioning, obedient, mouthpiece,

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Source

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Whatever happened to journalists looking behind government utterances?

Or is the new policy Don’t Question Authority?

At the very least, journalists like Susan Wood should have expected payment for her blatant  towing of the National Party-line.  She has shown herself to be a Good Citizen. Obedient. Unquestioning. Loyal.

So when do we start shipping welfare beneficiaries off to work camps?

Would that satisfy that subconscious, punitive urge for New Zealanders?

Or would that finally – finally – be a step too far?

And in the meantime, how many more times will gullible New Zealanders fall for National’s get-tough-on-welfare-fraud propagandising?

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This blogpost was first published on The Daily Blog on 6 December 2013.

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References

OIA letter from Chester Borrows

Scoop media: Information sharing continues to stop fraudsters

Radio NZ: Thousands stopped from getting benefits not entitled to

Dominion Post: House call plan to nab benefit fraudsters

NewstalkZB: Susan’s Editorial: Benefit fraudsters stealing from you and me

NZ Herald: Alleged identity theft for pension

Additional

Gordon Campbell: Ten Myths About Welfare – The politics behind the government’s welfare reform process

TV3: Courts tougher on benefit fraud than tax dodging – study

Previous related blogposts

Benefit fraud? Is Chester Borrows being totally upfront with us?!

A letter to the editor…

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= fs =

Advertisement

Election Eleven – Tuesday

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Now this is just downright creepy:  right wing blogger, David Farrar, is now investigating private individuals who have appeared  as part of TV3’s audience for their Leader’s Debate last night? A screenshot from his Blog,

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I have blanked out the names that Farrar has published and I have not linked back to his article. I have no wish to aid his witch hunt against three individuals.

But I think it is the height of hypocrisy that Farrar and his right-wing colleagues criticised Labour non-stop for “Nanny State” policy – and now he is identifying private individuals for their (supposed) political activities.

Is this to be the new standard set by right wing blogs?

It now appears that if  a New Zealand citizen is even remotely politically active, that they may be subjected to what is essentially an online, public,  “name & shame” campaign. This can only be viewed as a none-too-subtle form of intimidation. Another term is cyber-bullying.

Does this have any place in New Zealand society? Is this the direction of future politics in this country? And what will it do to getting people more involved in politics?

This isn’t “Nanny Statism”. Nope, not at all.

It’s Big Brother – and Big Brother (aka David Farrer, et al) is Watching You!

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I’ll say it now: there is no place in politics – or any other part of our society – for behaviour like this,

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Whilst I disagree with Ms Barry’s politics – she has a democratic right to go about her business without being abused like this.  I sincerely hope that anyone knowing who this man is, take him aside, and tell him that such behaviour is utterly repugnant and unacceptable.

Ms Barry is an intelligent, articulate woman who has achieved much in her life. Disagree with her if you will – but respect her for her accomplisments; her willingness to participate in the democratic process; and for simply being a human being.

Politics is a contest of ideas – not a spitting game that juveniles might indulge in.

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Taken by an observant reader, and sent to me ten minutes ago,

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Hmmmm, I’m guessing that for the Nats to state that “Your vote is crucial this sat”, that they are starting to panic? Something has definitely spooked the back-room National strategy boys…

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… and yet more fear  mongering from John Key,  about Winston Peters? I now believe that National’s internal polling is showing that they are bleeding voter support and that they are probably somewhere around 46-48% – if not lower.

Otherwise, why would Key be wasting his time with the leader of a near-non-existent party that isn’t even represented in Parliament?!

National is right to be worried.

There are National supporters who view John Key’s scheme to sell state assets with considerable unease – if not downright hostility. Such voters are loathe to vote for a left-wing alternative such as Labour or Greens. But NZ First is a “soft Tory” alternative.

Expect Peters to return.

Expect a new Labour led coalition.

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Oh dear. It seems that National is making election promises regarding matters that are already law,

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Someone in the National camp really should check their facts. Promising to implement policy that has been a law for well over a decade seems pointless. Mind you, it is rather a cheap way to make election promises.

They won’t cost anything.

They’ve already been implemented,

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” Fraud Investigations

Fraud Investigation teams nationwide work to preserve the integrity of the income support system by preventing and detecting benefit fraud.

Fraud Investigation teams work closely with the National Data Match Centre. The Centre shares data with other government agencies including:

• Customs
• Inland Revenue
• Corrections
• Housing New Zealand
• Accident Compensation Corporation
• Internal Affairs. “

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And being already implemented – National can take credit for it!

What a cunning plan!

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Whoopsie! Isn’t it a bugger when a photo-op comes back to bite you?

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Key explains,

“Lots of young people decide to go for an OE – I don’t know how long she’ll last. I’m not in a position to go into too much; hope she comes back.” Source

Ummm, John… She’s sixteen. She’s hardly likely to be going on her OE, and probably leaving  with her family. Probably long-term migration.

She and her family are joining 84,400 who have also left New Zealand in the last year.

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That was Then, this is Now #6

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National Party policy quote: http://tinyurl.com/6zm3mo2

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Previous Blog post

That was Then, this is Now #5

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Greed is good?

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As we look back on the last 25 years of neo-liberal “reforms”, including User Pays; the canning of “Labour’s” superannuation savings plan in 1975 (by Muldoon – after being elected into office with his infamous “Dancing Cossacks”  TV ad); and National’s continuing high popularity in the polls, despite their avowed proposal to sell-down 49% of several State assets,  – it seems abundantly clear who has been  pulling the “strings”.

No, it’s not Washington. Nor the Bilderbergers. Nor the UN/New World Order/Illuminati.

The answer is mind-numbingly far more prosaic:  it’s us – the Baby Boomer generation. The 1960s and 1970s rebellious youth  weren’t just an “aberration” – they were a clear signal that the Baby Boomers had arrived; could be inclined to  incredible selfishness (hence the term the “Me Generation”); and we voted individually for personal gain – on a collective basis.

Yep. We have seen the “enemy” – and it’s us; graying; self-centered; resentful of the young (who we’ve well and truly shafted);  and looking back at ourselves in the mirror, wondering where it all went wrong.

The case of  Surgeons Ian Penny and Gary Hooper, who tried to rort the tax system using Trusts  and companies – even though they had graduated BEFORE student loans and fees were implemented in 1992 – is the clearest example ever of our collective unbridled selfishness.

To re-cap;

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A court battle is over for two surgeons who challenged Inland Revenue over claims they tried to avoid tax bills worth tens of thousands of dollars.

The Supreme Court has ruled unanimously against Ian Penny and Gary Hooper, saying they underpaid themselves from their own businesses to avoid the top personal tax rate.

The issue arose after the previous Labour-led Government raised the top personal tax rate to 39%, compared to the company rate which was then 33%.

The orthopaedic surgeons openly paid themselves a lower salary than the market rate, arguing that they had a choice about how they operated their business.

They tried to challenge a Court of Appeal decision that found in favour of Inland Revenue, which said the surgeons had paid themselves salaries too small to be commercially realistic.

It said they were therefore able to avoid paying the top tax rate, while the balance of their businesses’ profits went as dividends to family trusts.

The trusts funded items such as a loan for one surgeon, and a holiday home for the other.

Inland Revenue said using those business structures to create artificially low salaries amounted to tax avoidance, saving each man between $20,000 and $30,000 a year for three years, beginning in 2002.

Supreme Court Justice Blanchard on Wednesday delivered a judgement supporting that argument, ordering Mr Penny and Mr Hooper to pay Inland Revenue $25,000 in court costs.

Mr Hooper told [Radio New Zealand ]Checkpoint the court has created a salary benchmark that is higher than the one countless private practitioners have been using.

He says they have been following Inland Revenue advice and calculating their salaries based on public hospital rates.

An Inland Revenue deputy commissioner welcomed the ruling, telling Checkpoint it clearly states and reaffirms what the department’s commissioner felt was the case all along. Carolyn Tremain says IRD has yet to fully absorb the implications and consequences of the ruling.

PricewaterhouseCoopers John Shewan, who appeared as a witness for the surgeons, said the case is important for individuals and firms. He said tens of millions of dollars may now be claimed by Inland Revenue from cases it still has open on this matter.

Source:  Radio New Zealand

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Specifically,

Surgeons Ian Penny and Gary Hooper set up companies, owned indirectly through trusts, to buy their surgical services and paid themselves artificially low salaries.

After 2000, Hooper’s personal income fell from $650,000 to $120,000 a year. Penny’s dropped from $302,000 to $125,000, and then to $100,000, while the income of their companies grew.

Source:  Dominion Post

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What makes this case of case of tax avoidance stand out is that none of it was ever necessary in the first place.

Dr Ian Penny received his Bachelor of Medicine Bachelor (MB ChB) of Surgery from Otago University in 1981.  He became a Fellow of the Royal Australasian College of Surgeons in 1990.

Dr Gary Hooper received his Bachelor of Medicine Bachelor (MB ChB) of Surgery  from Otago University in 1978 and became a Fellow of the Royal Australasian College of Surgeons in 1985.

In simple terms, they graduated as doctors in the late ’70s and early ’80s. Tertiary education then was still nominally free. Plus,  student allowances were available to most students,

“Up until 1992, nearly every student (86.4 percent) studying at a public tertiary education institution in New Zealand received a living allowance or grant while they studied.

 Prior to the mid 1970s, student support was based on a system of bursaries and scholarships. In 1976, a new system of government-funded tertiary bursaries was introduced. This included a study or living costs grant that was available to most students.”

Source: NZUSA

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Student fees and student loans came into effect in 1992, during the Bolger-led National Government, when Ruth Richardson was Minister of Finance (and coincidentally the same year that Shortland Street came on air).

In simpler terms, Dr Penny and Dr Hooper enjoyed the benefit of near-free tertiary education before fees were raised in 1992. They had no student loans to repay, as  medical students currently do, and may well have benefitted from receiving a Student Allowance.

Contrast their free tuition with that of medical students, in the 21st Century:  “on average medical students will graduate with around $80,000 of debt and nearly 90% will have a student loan“, according to the  New Zealand Medical Students’ Association in April, last year.

So with a free education; in receipt of student allowances; and no student loan; Dr’s Penny and Hooper were, as Revenue Minister Peter Dunne stated;

“… the important thing about this decision is to bear in mind the scale of what was happening. This wasn’t people minimising their income because they were reinvesting in their business. This was people minimising their income because they were actually minimising their tax liability but still enjoying the full benefits of the income they were in reality earning.“

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So not only did these gentlemen benefit from a free education – but they were now minimising their income because they were actually minimising their tax liability [whilst] still enjoying the full benefits of the income they were in reality earning.”

God, you’ve no idea how sick this incident has  made me.  Let me explain why.

Prior to the introduction of “Rogernomics” in 1984 (and National’s addition from 1990 onward),  education in this country had been free (or as close as possible to free) to nearly all New Zealanders. Education whether at Primary School or University was funded by the previous generation; our Mums & Dads; Grandmothers & Grand dads. The idea was terribly simple; education was a right, and not to be determined by ability to pay.

In turn, as we graduated from schools and Universities, we – my generation, the “Baby Boomers” – were to fund our children through their education, through our taxes.

Except, it did not quite happen that way.

In 1984 we unknowingly elected a Labour Government that had been taken over by a secret cabal of neo-liberals, conservatives, and proponants of the Free Market. A raft of  radical changes were implemented throughout the economy and impacting directly on society.

Despite public objection; mass protests; and even vocal opposition from within the Government by some Labour MPs such as Jim Anderton, Labour was re-elected in 1987.  Curiously, they had increased their majority from 55 to 57.

During Labour’s two terms (1984 to 1990), they cut taxes twice, and implemented a new tax in 1986, called GST.

National followed, implementing User Pays in tertiary education whilst  cutting taxes in 1996 and 1998.

In 2008, despite evidence that the world was plunging into a global recession, John Key promised that National would again cut taxes. As New Zealand went into deep recession; unemployment rose; businesses closed down – National cut taxes in April 2009 and October last year.

Most of the public, it seems, will swallow User Pays if they stand to reap a benefit from tax cuts.

The social contract therefore, was well and truly broken between our (the Baby Boomers) generation, and our parents/grandparents.

We had taken their gift – that of free education which they had paid for – but we decided not to pass it on to our children. Instead, we accepted one tax cut after another. And social services were either cut or User Pays applied, to pay for those tax cuts.

To my generation of fellow Baby Boomers, I say this; we’ve well and truly  shafted our own children. We denied them the very same opportunities of a free education that our parents had bequeathed to us. Instead, we voted ourselves seven  hefty tax-cuts; instigated User Pays; and left our children saddled with $13.9 billion in student debt.

Is it any wonder that our children our leaving New Zealand in greater and greater numbers? They’re not just emigrating to seek better paying jobs – they’re sticking it to us for our unmitigated greed. Whether consciously or sub-consciously, our children realise what our generation has wrought, and by god, they are not happy.

No doubt there are some folk who will cheer on Drs Penny and  Hooper. These people  feel that paying taxes is “unfair” and that it is unreasonable for the State to take the money that they have worked hard for.

Perhaps I should take a moment to remind these people what their taxes were, and in many cases  are still, used for…

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Inter-island Ferry, Aramoana

Dams and other power generation projects

Our first television broadcast system

Roading and highways

Hospitals

University education

Dental care for our Children

Our Police and justice system

Railways and other public transport

Schools

State Housing

Infrastructure such as power transmission lines

Social welfare and superannuation

Bridges

Postal and telecommunications systems

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Many of these assets no longer reside in public ownership – but they were originally built and maintained by previous generations of taxpayers; our parents, grandparents, et al.

As the Baby Boomer generation, what have we built and left our children?

$13.9 billion in student debt?

No wonder they are departing our shores…

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But I leave the last word to this expat Kiwi, now living in Australia,

A Victorian-based Kiwi with a student loan debt, who did not want to be named because he did not want to be found by the Government, said he did not intend to pay back any of his student loan.

The 37-year-old’s loan was about $18,000 when he left New Zealand in 1997. He expected it was now in the order of $50,000. The man was not worried about being caught as the Government did not have his details and he did not want to return to New Zealand.

“I would never live there anyway, I feel just like my whole generation were basically sold down the river by the government. I don’t feel connected at all, I don’t even care if the All Blacks win.

“I just realised it was futile living [in New Zealand] trying to pay student loans and not having any life, so I left. My missus had a student loan and she had quite a good degree and she had paid 99c off the principal of her loan after working three years.”

Source: Dominion Post

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Further Reading

Greed of boomers led us to a total bust

New Zealand’s wealth gap widens

Over-55s own most of NZ’s wealth

 

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