Paul Little: Stealing from Peter to pay Paul

Naturally the Government isn't interested in making good the money delinquent employers don't pay - that would reward delinquency. Photo / iStock

If you are one of those people whose employer hasn't been ponying up their contribution to your KiwiSaver fund, you might be wondering about your retirement plan - such as, will you have one.

It was reported last week that $29.3 million in contributions and penalties is owed to KiwiSaver by employers who have not been passing on workers' contributions, deducted at source, or not paying their compulsory 3 per cent contribution, a figure, it's worth noting, that is a meagre third of what Australian employers must contribute to their workers' retirement.

In the first case, they are effectively stealing from staff who would presumably be shown the door were the situation reversed. Employee contributions, however, are Government guaranteed; employers' contributions are not.

Naturally the Government isn't interested in making good the money delinquent employers don't pay - that would reward delinquency. The alternative would be to pursue them through the justice system, but the amounts in many cases will be so small this would not be cost-effective.

But when it comes to cracking down on people not paying what they should, beneficiaries are much easier to go after.

As Lisa Marriott's landmark 2012 study showed, 22 per cent of people convicted of tax offences are given a custodial sentence; for those convicted of benefit fraud, the figure is 60 per cent. This is possibly because the former can afford better lawyers, in which case you no longer need to wonder about whether the justice system favours the better off.

And so do the authorities. A draft SFO report on economic crime obtained by Radio New Zealand estimated the total cost at up to $9.4 billion. Of this, tax fraud accounted for $2b benefit fraud for $80m. And although only a humdrum 5 per cent of tax fraud was being detected, a belting 30 per cent of benefit fraud was being brought to light.

When it comes to cracking down on people not paying what they should, beneficiaries are much easier to go after.

At least, the SFO was in the process of estimating all this. That report was suspended because of "concerns about methodology".

In this respect fraud must be different from other areas of research, such as medicine and archaeology and anything else you care to name, where concerns with methodology are dealt with by fixing the methodology and then going back to work.

But soon we won't have to worry so much about benefit fraud because there won't be so much paid out in benefits, thanks to a policy over recent years of making them more difficult to get regardless of how difficult people's circumstances are.

Bill English has been delighted to announce recently "we" will be saving $12b in the lifetime cost of benefits. We will be doing this by, when you get down to it, not paying benefits to people who need them, while tax avoiders, stingy employers and the many people earning millions but only paying tax on a fraction of it carry on unimpeded.

This is a reverse Robin Hood approach: taking from the poor to give to the rich.

The $12b looks like a great saving, but not spending isn't really the same as saving, is it?

If the Government decides not to spend money on benefits, the ex-beneficiaries still need to find money for food, education and accommodation. Some will not find it.

And we do not know how many are driven to the most desperate acts in order to find money or because they can no longer face being unable to pay for things. That sort of data is hard to find.

Don't have the methodology.

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