A Government crackdown on the partners of welfare cheats could increase malicious complaints taken against people believed to be defrauding the system, the Opposition has warned.
The Labour Party supported the principle of eliminating welfare fraud but was concerned that it could penalise people who were unaware of their partner's fraudulent activity.
Social development spokeswoman Jacinda Ardern also highlighted that the removal of the need to inform beneficiaries that they were under investigation could lead to a more inefficient system which victimised people on Government support.
But she did not go as far as promising a repeal of the bill if Labour was elected.
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Associate social development minister Chester Borrows yesterday announced a new offence for partners or spouses of beneficiaries convicted of welfare fraud, as part of a drive to recoup $20 million lost to relationship fraud.
The law change meant that if a person claimed the Domestic Purposes Benefit or Sole Parent Support while married or in a de facto or civil union relationship, their partner could face a $5000 fine or a year in jail.
Mr Borrows said this would ensure that both parties who profited from the crime were punished, and the losses split between them and recovered more quickly.
He said: "I'm expecting people from the other side of the political spectrum to say this is beneficiary-bashing, but these people are taking money by criminal means so this is about catching crooks."
Mr Borrows said that many investigations were the result of neighbours or friends reporting fraudulent activity to the Ministry of Social Development or Work and Income New Zealand.
Green Party co-leader Metiria Turei responded: "It harks back to the old National Party's dob-in-a-bludger days, when they were asking people to sneak around and check in people's windows and then report them."
The policy was criticised by National's coalition partner, the Maori Party, who said it was punitive and not restorative.