Partners of welfare cheats will be liable for prosecution under a law change announced this afternoon, and could face a year in jail or a $5000 fine.

Associate social development minister Chester Borrows announced three new initiatives to clamp down on relationship fraud in the welfare system, which was believed to cost Government more than $20 million a year.

A new offence will be created to target partners or spouses of beneficiaries who are convicted of fraud.

"Currently there are few options available to prosecute partners who know or benefit from such offending, leaving the entire debt with one partner," Mr Borrows said.


He said prosecuting partners who benefitted from welfare fraud would ensure both parties who profited from the crime were punished, and the debt could be split between the two partners and recovered more quickly.

The Ministry of Social Development would be given extended powers to seize partners' assets in order to recover costs.

There were expected to be 700 cases of debt splitting a year once the legislation had been passed.

The amendment to the law would relate to partners of people who claimed a Domestic Services Benefits or Sole Parent Support despite being in a "marriage-type" relationship.

The penalty for partners involved in relationship fraud would be a fine of up to $5000 or up to a year in prison.

In addition to the law change, the ministry would introduce tougher rules for beneficiaries who had been dishonest in the past.

Three-quarters of the people who were charged with welfare fraud in the last financial year had previously ripped off the ministry.

These "low-trust" beneficiaries would have more restricted access to self-service transactions and would face more rigorous verification of their personal information.


The new policy would affect around 1000 beneficiaries.

The ministry would also formalise information sharing with related agencies such as ACC, Inland Revenue, Housing New Zealand and the police.