A government crackdown on welfare fraud shows that $45 million has been saved by stopping thousands of illegitimate benefit payments in the past year, while a further $3 million has been recovered from a total of $88 million in overpayments.

Meanwhile, a new prevention measure that puts those with a history of dishonesty under close watch has resulted in no new offending.

"While we know it is only a tiny minority of beneficiaries who take money they're not entitled to, those who do cost tens of millions of dollars each year," said Associate Social Development Minister Chester Borrows, who released the figures this morning.

Since last March, information-sharing between the Inland Revenue Department and the Ministry of Social Development have caught thousands of benefits paid to people in work.


"This enhanced information sharing has prevented an estimated $44.8 million in illegitimate benefits from going out the door, and resulted in almost 6900 benefits being cancelled," Mr Borrows said.

"These are not people being kicked to the curb ? they are people who are working, and earning enough money that they are no longer eligible for the benefit, who have failed in their obligation to tell us."

There have been 351 successful prosecutions, with a further 435 underway. Of the $56.3 million that has been overpaid, $3.1 million has been recovered.

Under the new 'low trust client' system, there are 1884 beneficiaries who have been previously been dishonest and are now subject to strict monitoring. No subsequent offending has been detected by those under watch.

In 2013/14, there were also 329 successful prosecutions for relationship fraud, totalling overpayments of $15.4 million. This fraud is most commonly committed when a person pretends they are not in a relationship so they can still receive a sole parent benefit.

A law change in April means that both parties to the fraud are now liable, which is expected to apply to 700 to 1000 cases a year.

The ministry is testing follow-up interventions with sole parent beneficiaries to ensure they are getting correct entitlements. Results are due later this year.

"While it's still early days I'm very encouraged by what we're hearing from our staff as to the success of these preventative measures," Mr Borrows said.


He said the welfare initiatives in total had seen 4614 completed investigations, established 2270 overpayments, and prosecuted 893 people during the 2013/14 year.

In total, $88.4 million of fraud and illegitimate overpayments were established.

"When someone commits benefit fraud everyone loses ? the taxpayer and the beneficiary. The best result is if we can help people understand their options and their obligations before they end up receiving money they're not entitled to."