New powers for the Ministry of Social Development which would allow officials to secretly approach beneficiaries' banks or workplaces if they suspected them of committing welfare fraud have been questioned by women's groups.
As part of reforms to recoup $20 million in relationship fraud each year, ministry staff would not have to inform a beneficiary if they were investigating whether they were wrongly claiming welfare.
Federation of Business and Professional Women spokeswoman Elaine White told a select committee yesterday that she agreed with the intent of the bill. But she also felt that it gave the ministry wide and unwieldy powers.
"To give MSD the ability to access information from banks, employers and ... agencies without the beneficiaries' knowledge is unacceptable ... If the investigation is unsuccessful, there is no guarantee that the employment will be continued if the employer was approached."
Ms White said that bypassing the beneficiary and directly accessing personal records amounted to a presumption of guilt and could "create a prejudice for no apparent reason".
Associate Social Development Minister Chester Borrows said that in 95 per cent of investigations the beneficiaries failed to provide the information they were asked for.
He said ministry investigators were well trained to approach their investigations in a "rigorous, sensitive and professional" manner.
Under the law change, money could be recovered from a beneficiary's partner if they "ought to have known" that their partner was committing fraud.
The New Zealand Law Society expressed concern that this rule was too broad and warned MPs that they were introducing a new standard of liability.
Professor Jeremy Finn, a member of the criminal law committee, said that beneficiaries might speak limited English or have limited intellect, and the threshold should be raised to penalise only people who knowingly or recklessly benefited from fraud.
Women's groups felt the ministry already had strong powers of investigation. The ministry introduced data-sharing with the IRD in January to check beneficiaries' earnings against tax paid. In the first six months after it was introduced, 3000 welfare fraudsters were caught.