Benefit fraud vs tax evasion: NZ’s hypocrisy

16 August 2017
Steve lecturing.

Sociologist Steve Matthewman contrasts the meteoric rise and fall from grace of two of New Zealand's most prominent politicians.

It has been the best of times and the worst of times for two prominent women in New Zealand politics: Jacinda Ardern and Metiria Turei. The former assumed the leadership of the Labour Party and the Opposition on August 1. The latter resigned as co-leader of the Greens just over a week later, her 15-year parliamentary career likely having ended. The media is abuzz with talk of the “Jacinda effect”. One journalist wrote of the coming of the “Jacciah”, Labour’s very own messiah. She certainly seems to have delivered them from dismal polling. Party support is up, and Bill English is getting a run for his money in the preferred PM stakes. Turei, meanwhile, has taken a public pounding for welfare and electoral fraud. What is a sociologist to make of all this? 

Turei’s fall from grace tells us something about social values. We, the general public, get more upset about what’s ripped off from the state than what’s withheld from it. Benefit fraud exists, so does tax evasion. But as Kerre McIvor recently noted, when the Government ran a ‘dob in a beneficiary’ campaign in the late 1990s the anonymous tip-off line received over 11,000 calls, while an IRD campaign to identify tradespersons working under the table received but a few hundred calls.

Lisa Marriott’s work shows that welfare fraud amounts to $30.6 million per annum, which is not insignificant. However it is nothing compared to government losses from tax avoidance. The Inland Revenue Department costs this at a bare minimum of $1.2 billion annually, although it admits that it may potentially be many times that.

So when it comes to beneficiaries it would seem that the state has an unduly punitive streak. Tax avoidance is clearly the greater evil – it takes more from the public purse – but it is far less likely to be punished. Up to 1000 welfare beneficiaries are prosecuted each year. Only something like 60 to 80 tax evasion cases are filed annually. Tax evaders do not come under anything like the same level of scrutiny. They are less likely to be investigated, fined or incarcerated. They are more likely to be white and middle class – in criminality, as with many other things, it matters if your collar is blue or white, or if your skin is brown or white. (The state keeps ample statistics to this effect which you can fact check at your leisure.) Here, then, is another indisputable sociological insight: we treat people of different races and classes differently.

We also treat people of different genders differently. While New Zealand always comes out favourably in global measures of gender equality, it remains the case that women await pay parity. Back in 2015 Jan Logie examined data from the New Zealand Incomes Survey. On current trends she estimated it would take another 120 years for women to earn as much as men.

Jacinda Ardern’s elevation to the top position in Labour has clearly found favour with women voters, doubtless exasperated by differential treatment. Such differences were on display on the day of her ascendancy. She was questioned on her future child plans, which is something no male political leader has been asked. And as a sociologist I would be remiss not to mention another element of Jacinda’s popularity, although not necessarily related to gender, which is her charisma. This is an all-important x-factor in the realms of leadership and politics. By comparison Andrew Little, whatever his workplace talents, had, well, little.    

It is also sociologically interesting to consider what and whom we believe. I had some interesting experiences accompanying my partner when she co-chaired the Children’s Commissioner’s Expert Advisory Group on Solutions to Child Poverty. People readily believed in the reality of bad parents, but they typically found it harder, if not impossible, to believe in the reality of child poverty. One of our foundational myths is that ours is a society of equals. Yet since the 1980s we have witnessed some of the widest income inequalities anywhere in the world. Peter Skilling’s 2014 survey of 1000 people certainly showed that New Zealanders vastly underestimate our wealth disparities. The gaps between haves and have-nots are bigger than most of us realise.

While we have focused on personalities, in the run-up to the election it makes good sense to scrutinise policies and practices. We are good at praising and blaming people, but not so good at finding fault in social structures, or our economic and political arrangements. Indeed, by personalising pressing issues like poverty we let the system off the hook. The debate surrounding Turei’s benefit claims (or Ardern’s family plans for that matter) should be set within the context of what we as a society are prepared to excuse and tolerate, what we are not, and what we are willing to change and why.

Dr Steve Matthewman is an Associate Professor in Sociology, in the University of Auckland's Faculty of Arts. His current research interests are social theory, technology studies, the underbelly of modernity, the sociology of accidents and disasters.

Used with permission from Newsroom,  Benefit fraud vs tax evasion: NZ’s hypocrisy published on Wednesday 16 August 2017.