Welfare fraud targeted more than tax evasion

8:09 pm on 21 June 2016

White collar criminals get a better deal than welfare fraudsters because the system is biased before they even get to the courts, a lawyer says.

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Research by Victoria University shows 10 times more welfare fraudsters were prosecuted than tax evaders even though tax evasion costs the economy 33 times more.

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.

Associate professor Lisa Marriott has been researching the topic for several years and said nothing had changed.

In most years 800 to 1000 people were prosecuted for welfare fraud, but only 60 to 80 people for tax evasion, she said.

"So, for tax evasion we're really seeing only the most serious of offences being criminally prosecuted, whereas for welfare fraud we see prosecutions being taken at a much lower level."

Criminal barrister Jeremy Bioletti, who has defended a number of high-profile white collar offenders, said he saw the inequality every day in court.

The problem stems from the investigation phase before the matter gets to court, he said.

"If you move back earlier to see who is investigated and who is prosecuted, you'll see the same bias operating. In welfare fraud, there's a bias against women, there's a bias against Māori people generally, and there's a class bias."

The system has operated that way for hundreds of years, Mr Bioletti said, adding he doubted it would change.

Ms Marriott said figures for tax evasion over six years showed average offending of $229,000. The tax evaders who were criminally prosecuted had an 18 percent chance of receiving a prison sentence.

"If you contrast that with welfare fraud over that same time period, for average offending of $76,000 - quite a bit less - the welfare fraudsters had on average a 67 percent chance of receiving a prison sentence. So for about a third of the offending, there's almost three times as much chance of receiving a prison sentence."

Court records showed in most serious financial cases only 5 percent of the amount was repaid but for cases like welfare fraud, the offenders were much more likely to repay all the money.

Ms Marriott said despite the higher cost of tax evasion, people who committed welfare fraud were judged more harshly because society had little sympathy for people on welfare.

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