Firm on fraud frees up 1000 houses

August 19, 2013

Housing New Zealand’s firm line on criminal offending and dishonesty has freed up 1000 houses since the Government changed its policy in 2008, Housing Minister Dr Nick Smith said.

“State houses are heavily subsidised by other taxpayers and tenants abuse this support when they are dishonest about their living situation or income, or use the home for criminal activity like drug manufacturing. We need to take a firm approach to such abuse to be fair to the vast bulk of honest tenants, to ensure public money is supporting improved social outcomes, and to ensure our state houses are available to those most in need of housing support,” Dr Smith says.

“Housing New Zealand expanded its fraud unit and started taking a firm approach on the change of Government in 2008. This has seen the number of tenancies terminated for fraud or criminal offending grow from 42 in 2008/09 to 292 in the year ending of 2012/13. A total of 1001 tenants have been evicted as a result of fraud investigations since the new approach was adopted.

“Housing New Zealand also takes a zero tolerance approach to state houses being used to manufacture and supply drugs. Four houses were used as meth labs in the 2012/13 year, as compared to seven in the previous year. It is an appalling breach of faith for tenants, generously provided with a home by other taxpayers, to then use that home to manufacture and peddle drugs. I am hopeful that the decline in the number of state houses being used as drug houses is a sign that the message of zero tolerance is getting through.

“The work by Housing New Zealand investigators resulted in 129 criminal convictions and the identification of $11 million of rent subsidies tenants were not entitled to.

“While the vast majority of Housing New Zealand’s 62,000 tenancies on income-related rent are in legitimate need of housing, a small minority are rorting the system. I make no apologies for the hard line taken to make sure state housing is freed up for those who actually need it.

“Housing New Zealand investigations for fraud arise from tenancy manager observations, anonymous tip-offs, information from other government agencies and inconsistent information from tenants themselves. 22 per cent of investigations result in no further action because of honest misunderstanding or mistake, insufficient information to prove dishonesty, or other exceptional circumstances that negated what appeared fraudulent.

“Housing support fraud will become more difficult with the Government’s social housing reforms that bring together the administration of financial support for housing and welfare. Many of the people defrauding Housing New Zealand were also committing benefit fraud and it makes sense for both sorts of financial assistance to be considered together.”

A thousand out of 62,000 is not a large number but state houses are supposed to be for those who need them, not those rorting the system or indulging in criminal behaviour.

Last week Victoria University accounting and commercial law associate professor Lisa Marriott said that Inland Revenue was more likely to write off unpaid tax than the Ministry of Social Development  was to write off welfare debts.

MSD would often keep welfare debts on its books, sometimes until people died or retired.

Tax debt totalled nearly $6 billion, while welfare debt was about $1b, she said.

“There appears to be no basis for treating debtors to the two government agencies differently,” Marriott said.

The study indicated tax debtors got off more lightly, she said.

Inland Revenue was more likely to negotiate with debtors and collect core tax, and write off penalties and interest, Marriott said. . .

Associate Social Development Minister Chester Borrows said those claims were misleading.

“The Ministry of Social Development (MSD) has a duty to take care with taxpayer money. When they find evidence someone has fraudulently taken money they are not entitled to, they will prosecute, and make no apologies for that,” says Mr Borrows.

“To describe this as being particularly ‘punitive’ is simply wrong. It implies we should ignore welfare fraud, and shows a basic ignorance of the wide range of support MSD provides to New Zealanders.”

Mr Borrows singled out claims that more is spent chasing welfare fraud than tax fraud as demonstrably false.

“This year IRD has a budget of $142 million to enforce tax obligations. This is more than quadruple MSD’s collections and integrity services budget of $29.8 million.”

He also pointed to the use of penalties and interest to illustrate the different approaches taken by MSD and Inland Revenue.

“To focus on penalties and interest written off by Inland Revenue ignores the very different way IRD and MSD operate. Inland Revenue has a tough regime of penalties and interest, whereas MSD only uses penalties in rare cases where dishonest behaviour needs to be sanctioned by a criminal prosecution is not appropriate.

“The numbers clearly illustrate this. In 2011/12 MSD imposed around $144,000 of sanctions on 164 cases – a stark difference to the more than $600 million of penalties and interest IRD imposed in the same year.” . . .

Revenue Minister Todd McClay says there can be good reasons to write some tax off.

“Businesses that are finding it a little bit difficult to meet their obligations can stay in business and keep employing New Zealanders,” says Mr McClay.The Minister says comparisons between the two Ministries are unhelpful, partly because there are under half a million kiwis on benefits, but more than 7 million tax customers. . .

Fraud is fraud and taking other people’s money is wrong. But simple comparisons between the way the MSD and IRD treat debt is misleading.

The $1b written off by MSD will be a much larger percentage of benefit payments than the $6b written off by IRD is of tax payments.


State houses not for life

December 8, 2012

Housing New Zealand has suspended 75 former tenants from applying for a state house since the introduction of its suspensions policy a year ago, Housing Minister Phil Heatley said.

The policy, introduced on 30 November 2011, allows Housing New Zealand to suspend former tenants from applying for a state house for one year after their tenancy ends, as a result of serious breaches of their tenancy agreement.

“The policy applies only to the most serious breaches – such as unlawful or anti-social behaviour, fraud or significant vandalism, not one-off incidents like breaking a window, or missing a rent payment,” Mr Heatley said.

“Neighbours are sick of some of the behaviour that they have had to put up with and we know that a strong line on this is very welcome in our communities.

“Housing New Zealand is the country’s largest landlord. It has a responsibility to ensure its tenants are safe and secure in the neighbourhoods they’re in. That also means tenants have an obligation to behave responsibly and respectfully.

The only surprise in this is that the policy was only introduced a year ago.

State houses shouldn’t be the tenants’ for life and they certainly shouldn’t be for anyone who who abuses their tenancy with unlawful or anti-social behaviour, fraud or vandalism.


Fairer policy for state housing

June 30, 2011

Changing the way state houses are allocated is both fairer and more sensible.

Housing Minister Phil Heatley said those in greatest need (A and B) will be eligible for a state house, those with lower needs (C and D) will be helped into other types of housing.

“All applicants (A’s, B’s, C’s and D’s) will continue to be recorded on a Housing Needs Register so that we maintain a clear picture of wider housing need” says Mr Heatley.

“But whereas once C and D tenants would languish on the waiting list with no real prospect of getting a state home, they will now be given assistance to find a home outside state housing, and we think this is a positive,” he said.

“Housing those not eligible for state housing means working very closely with third sector providers of niche, social and affordable housing to significantly grow the volume of social housing available.

“We want to ensure that tenants with the greatest need have timely access to a state home for the duration of their need,” says Mr Heatley.

The first priority for state help should be those in greatest need.

Under the current system those with lower needs would be on the waiting list even though there was little if any chance of ever getting into a state house. The new system will stop the pretence that there might be something available one day and give them help now.

Another welcome change is the introduction of reviewable tenancies for all new tenants from 1 July.

“A tenant’s circumstances will be reviewed once every three years to ensure their housing needs are being properly catered for. When their circumstances improve significantly and they are able to afford a home outside state housing they will be assisted to move – freeing up a state house for someone in greater need,” Mr Heatley said.

“Elderly tenants and those with significant disabilities will be subject to a desk top review only as their circumstances are unlikely to have changed, and we don’t want to worry them unnecessarily,” he said.

This means that people occupying a larger house will have to move if, for example, children leave home meaning they no longer need so many bedrooms.

This is much fairer than the current situation which allows a single person or small family to continue occupying “their” state house when larger families are in need is unfair.

A tennnt renting a privately owned home wouldn’t expect to live their for life, nor should someone in a state house.

 Other changes that HNZ are making include:-

• A suspension period to prevent tenants who are issued a ninety day notice, for abusing their state home or for ongoing anti-social behaviour that affects communities, from reapplying for a state house for up to a year; and
• Stronger measures to detect and prevent fraud.

“The Government wants the state housing system to be fairer, more focussed and more efficient,” Mr Heatley said.

“These changes are fairer to people in greatest need, more transparent to C and D applicants and give a clear signal to the other social housing providers that we need them,” says Mr Heatley.

“A state home and the Income Related Rent that goes with it amounts to a considerable taxpayer subsidy for a household. We want to make sure this benefit goes to those in the greatest need, for the duration of that need,” he said.

 This policy will result in a much better match between people and housing.

It also sends an important signal that state house are for those in greatest need while in need. That might be forever for some people but it won’t be for all.


166 state house rip-offs

October 20, 2010

Housing Minister Phil Heatly said that since last July 166 state-house tenancies were terminated because tenants had dishonestly obtained the house or subsidised rent.

The 166 tenancies terminated included situations where tenants failed to advise Housing New Zealand about income from employment, business interests, assets, or that they lived with a partner. 

“Over the past two years Housing New Zealand has built a highly effective team of expert investigators. This team has identified $6.3m in debt where tenants have received subsidised rent that they were not entitled to,” says Mr Heatley.

More than 130 cases of tenant related fraud have been placed before the courts – a ten-fold increase from two years ago.

Among the cases investigators found were:

  • An Auckland man used his state house as a storage facility for commercial goods for his online business, while living in another property which he rented privately under an alias. The Corporation property he rented had five bedrooms – four of which he sublet for $165 a week each. He did not declare rental income or the profits from his business. His tenancy was terminated, criminal charges have been laid, and $18,270 in debt was identified for recovery.

 

  • An Auckland man failed to declare that he was running a motor vehicle repair business, was buying and selling cars and leased large commercial premises. He also owned three rental properties which were under a company name, and was living with a partner. His tenancy was terminated and he was prosecuted for fraud. He was sentenced to five months home detention and 100 hours community work. A debt of $68,410 was identified for recovery.

 

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    • An Auckland woman, who lived in a state house for six years, deliberately disguised her position as director of a limousine company by using numerous false identities. She owned six taxis when she applied for a state house, and bought another six during her tenancy. She bought and sold a number of vehicles during the six years. She did not declare she had a partner – but married three times prior to and during her tenancy. She also purchased two houses during her tenancy, both of which she rented out. Her tenancy was terminated, and a debt of $63,319 was identified for recovery. She was prosecuted for fraud, and paid $50,000 at the time of sentencing in reparation to avoid prison.
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How do these people sleep at night ripping off the public who pays for these  and taking accommodation which other people desperately need?


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