These units use an intelligence-led approach to respond to risks of benefit fraud and abuse. This approach involves:
This approach allows the efficient and effective targeting of clients who are most likely to commit benefit fraud or to abuse the benefit system.
The Ministry is focused on ensuring clients receive their correct entitlements to benefits. There is a multifaceted approach that responds to suspected fraud and uses our detection capabilities in the most efficient manner.
MSD does not tolerate any form of benefit fraud. In every case, the Ministry will seek to:
The Ministry defines fraud as those cases where a client has been prosecuted. In the majority of cases, the investigation results in the benefit being adjusted or cancelled, and an overpayment established. The client may also receive a monetary penalty or a warning.
The risk of benefit fraud is dynamic and tackling it is an ongoing priority. The Ministry constantly reviews its practices, processes and procedures to ensure the best deployment of resources to make the most gains. We have a centralised process, which means all fraud allegations from the public and suspicions from case managers are assessed for risk by the Integrity Intervention Centre (IIC).
If the risk is assessed as low or medium, the suspected fraud case is managed through the Integrity Intervention Centre. If the risk is assessed as high, it is forwarded to the National Fraud Investigation Unit (NFIU) for a full investigation and for prosecution when appropriate.
The number of cases has continued to trend downward since 2006/2007, but the value of overpayments is increasing
Although the volume of cases reviewed reduced between 2007/2008 and 2011/2012 (see table IS.1), the dollar value of overpayments in 2011/2012 exceeded the levels reached in 2007/2008.
Overpayments increased from $39.8 million in 2010/2011 to $41.8 million in 2011/2012, an increase of $2 million (5%). This brought overpayments back to the levels established in 2006/2007.
These results are attributed to:
Allegations and suspicions of benefit fraud are allocated to either a desk-based review at the Integrity Intervention or a full investigation at the appropriate National Fraud Investigation Unit. Cases assessed as at high risk of benefit fraud and investigated through the National Fraud Investigation Unit have high value overpayments, as the fraud is more likely to have been committed over a longer period of time.
In 2011/2012, just over 43% of the investigations were related to a relationship fraud and 27% of the investigations were related to people who were working but continuing to claim a full benefit.
table IS.1: Fraud and abuse investigations and reviews completed, and overpayments identified1
|Financial year2||Number of investigations and reviews completed||Number of overpayments established||Value of overpayments ($)|
The number of prosecutions completed increased in 2011/2012
Following a decrease in 2010/2011, completed prosecutions increased from 690 to 742 in 2011/2012, an increase of 52 (8%). The prosecution success rate is at 96%.
Patterns in the number of prosecutions completed may reflect the patterns in both the volume of cases investigated and the serious nature of benefit fraud cases referred for a full investigation.
There can be a lag between when a fraud debt is established and when the associated prosecution is completed. This means comparisons cannot readily be made between fraud prosecutions completed in a year and the fraud debt established in the same year.
table IS.2: Fraud prosecutions completed
|Financial year1||Number of prosecution cases of benefit fraud completed|
The Integrity Intervention (which encompasses the National Data Match Centre) provides services to minimise errors and fraud in, and abuse of, the benefit system. This is done in part by matching information about Work and Income clients with information held by the following agencies:
Cases completed decreased between 2010/2011 and 2011/2012, while overpayments established increased
This result largely reflected significant changes made to enhance the Inland Revenue (IR) match.
Although the number of IR investigations decreased by 50% in 2011/2012, the quality of the information exchanged improved. This led to efficiency gains and improved productivity.
In addition to the improvements to the match, work-related allegations are now diverted through the IR match, making use of a process that is streamlined and more efficient than contacting employers directly.
The other matches are each performing well, with an increased focus on the New Zealand Customs Service match leading to more timely responses and reduced overpayments.
Overall between 2010/2011 and 2011/2012, there was a 33% decrease in the number of cases completed (from 106,408 to 71,629), but a 35% increase in the overpayments established (from $34 million to $46 million).
table IS.3: Data-matching cases completed, and overpayments identified
|Financial year1||Number of cases completed||Overpayments established – amount ($)|
The Ministry manages three main categories of money owed by clients:
Most clients with balances owing owed small amounts
At 30 June 2012, 58% of clients with balances due owed less than $1,000.
The Ministry works hard to minimise overpayments, by focusing on preventing overpayments in the first place. These prevention activities involve:
A high proportion of MSD clients with balances owed are making repayments
At the end of the 2011/2012 year:
Repayment guidelines are in place to help clients repay their balances owed in appropriate timeframes. Repayments are accepted at a level the client can afford without causing financial hardship. To ensure repayment, a range of activities is undertaken, including:
Recoverable assistance loan expenditure in 2011/2012 declined compared to the previous year
In 2011/2012, recoverable assistance loan expenditure was $146.7 million (see table IS.4), a decrease of 10% ($16 million) compared with the previous year.
The decline in expenditure reduced the amount recovered in the 2011/2012 year. The amount recovered in 2011/2012 was $147.0 million, a decrease of 7% ($11.8 million) compared to the previous year.
table IS.4: Recoverable assistance loans established and recovered
|Financial year1||Recoverable assistance loans established and recovered ($m)|
Overpayments include balances established through data-matching activities, fraud investigations, fraud prosecutions, and from clients changing their circumstances.
The value of overpayments established in 2011/2012 increased compared to the previous year
The value of all overpayments established in 2011/2012 was $231.8 million (see table IS.5), an increase of 6.5% ($14.2 million) compared with the previous year. The increase was a result of increased overpayments detected by fraud investigations and data matching. Overpayments established other than by data matching or fraud investigations fell by $2.0 million.
The value of overpayments recovered in 2011/2012 was $142.4 million, an increase of 0.4% ($0.6 million) compared with the previous year.
table IS.5: Overpayments established and recovered
|Financial year1||Overpayments established and recovered ($m)|
Other balances (see table IS.6) are those not associated with overpayments or recoverable assistance loans, such as Liable Parent Contribution, Maintenance and Major Repairs Advances. These programmes are no longer current and MSD is responsible for recovering the remaining balances owed.
Balances owed at the end of each year continue to decrease.
table IS.6: Other balances owed and recovered
|Financial year1||Other balances owed and recovered ($m)|
The number of clients with balances owed increased from 2007/2008
The number of clients with a balance owed has increased since 2007/2008. This is a result of increased recoverable assistance loans established (between 2007/08 and 2009/10) and overpayments established (since 2008/09).
The number of clients owing Liable Parent Contribution or Maintenance declines each year as these programmes are no longer current.
table IS.7: Numbers of clients with balances owed, by category
|Financial year1||Number of clients with balances owed (000s)|
|Current clients2||Former clients3||Student4||Liable Parent Contribution5||Maintenance6||Other7||Total8|
Half of the balances were owed by current clients
Fifty-one percent of balances owed were owed by current clients and 44% by former clients (see figure IS.1).
Of the balances owed by current and former clients, 39% were due to recoverable assistance and 61% were due to overpayments (including fraud).
figure IS.1: Composition of all balances owed at 30 June 2012