Children harmed by 19th century approach to welfare debtors

Child Poverty Action Group says hundreds of young mothers with young children are being hounded for repayment of debt to Work and Income NZ when tax debt costs the country much more.

A beneficiary living below the poverty line goes to the High Court today to challenge a Ministry of Social Development decision to make her repay a $117,000 debt.

This is the money the beneficiary (who has name suppression) was alleged to have been paid wrongly over a four and a half year period when she was on the Domestic Purposes Benefit with three children. She was accused of living in a relationship with a man, even though he lived in another city and only visited some weekends. She has always denied the relationship or that he supported her.

The hearing is not about revisiting the original conviction for her alleged fraud. Her lawyer is arguing that the government is breaching human rights obligations under the Economic Social and Cultural Covenant by reducing its support of a beneficiary when she already lives below the poverty line and especially because she and her children have already paid a high price in her incarceration.

She was sentenced to 15 months for the fraud and served 6 months in prison, even though she had a five year old child at the time. Now the government wants to take a weekly amount from her benefit to repay all of the $117,000. She says she cannot afford to pay back anything. Her benefit does not cover her basic costs and she has to borrow for the basics that she needs.

Economist Dr Brian Easton has given evidence before the Social Security Appeal Authority that her income was $70 below what it needed to be before she would be said to have an adequate New Zealand standard of living.

The government used the evidence of her former partner who dobbed her in when she reported him to the police after her children reported he had been abusing them. He worked in another city at the time and she lived in a home he owned, paying off the mortgage. His role in benefiting from the alleged fraud has not been investigated at all.

Child Poverty Action Group Spokesperson, Associate Prof Susan St John said, "A repayment of $10 per week will take her 226 years to repay. A repayment of $20 a week will take her 113 years to repay. The balance will come from whatever estate she leaves."

"The government puts so many resources into collecting every last dollar from people living below the poverty line, even if they have children to support, but operates a very different and far less punitive policy with tax debt which, at $6 billion, is six times larger than welfare debt. It negotiates with tax debt including by writing off debt in the short term."

Hundreds, if not thousands, of New Zealand mothers with young children are hounded for repayment of debts to Work and Income. Some of these debts are departmental errors or inadvertent overpayments. Retribution for so-called ‘relationship fraud’ is often exacted by punitive prison sentences, home detention, and/or community service. When children are involved the harm of imprisonment of the mother can be incalculable. When she finishes the sentence full reparations must still be made depressing the family’s standard living yet further.

Download CPAG's 2014 report on outdated ideas on relationships in the welfare system here: The complexities of "relationship" in the welfare system and the consequences for children.