Panel decision-making

The SOC stated in paragraph 32 that prior to the Panel being convened, MSD made no decisions about enforcement action in relation to any case. They responded by saying some cases were sent to debt collection but did not say how many.

Documents show that they wanted to complete wage subsidy work in December 2020. They told the Auditor-General that they wanted to get back to their core business as soon as possible but they were forced by the Auditor-General to continue on and they then set up the Panel on 22 February 2021. There was no mention of debt collection in November and December 2020 OIA replies regarding prosecutions. One reply stated that there were a number of investigations, but the actual number was not provided.

A Recovery and Response Panel was established 11 months after the start of the wage subsidy. After a further 8 months it had considered a few cases and decided to prosecute two where there was blatant dishonesty due to multiple applications for the same or non-existent employees. Other cases required further investigation or civil action if repayment arrangements could not be made.

      1. The Panel was established to ensure enforcement decisions are made in a consistent way and in accordance with the Solicitor-General’s Guidelines for Prosecution. Its policies and procedures are set out in its Terms of Reference.82 A redacted copy of the Terms of Reference was provided to Mr Nelson, a trustee of Gama Foundation, on 23 April 2021, in response to his Official Information Act 1982 request.83 MSD’s response also explained that the Panel followed the Terms of Reference and not MSD’s Prosecution Policy for benefit fraud.84 
      2. As at 9 February 2022 the Panel has reached the following decisions:85

        1. 1 In 11 cases the Panel agreed to seek civil recovery through issuing a demand letter, continuing engagement with the applicant on the issue of repayment or, if necessary, referring the matter for civil recovery:(Further details in this paragraph and footnotes.) The Panel considers four principles and objectives when making determinations about wage subsidy recovery responses: 90

      Recovery in the public interest: Recovery promotes MSD’s responsibilities for efficient and economical delivery of the wage subsidy scheme and to responsibly manage assets of the Crown, it helps ensure that taxpayer money is going where it is intended to go, to support the economy. It maintains public confidence in the wage subsidy scheme.

      Deterrence: The necessity of a high trust model and the cost of the delivery of the scheme mean that abuse should be met with action. Denunciation of offenders will also promote wider recovery.

      Fairness and balance: While there may be actions available to MSD, for instance, civil recovery or criminal prosecution, those actions will not always be appropriate or in the public interest. Lesser actions, such as ongoing communication about repayment obligations and options, may at times be more appropriate. MSD’s approach will always consider and balance the interests of the community at large.

      Consistency: The Panel will have regard to the importance of consistency when making decisions across a high volume of varying cases.

      COMMENT: This paragraph states that taxpayer money was intended to support the economy but that was not what the MSD was told to do.  The Reserve Bank created $50 billion to support the economy and part of this was used for the wage subsidy to help employees retain an attachment to their employer when they were unable to do their normal work.

      The Panel does not appear to have taken any notice of its own requirements for responsible management of taxpayer assets, deterrents and denunciations. The stated need for consistency meant that the MSD had to ignore huge volumes of overpayments and fraud and only pick on unusual and rare cases for token prosecutions. The voluntary repayment of $750 million indicates that vastly more repayments should have been requested for the sake of consistency and fairness.

          1. Factors that would support a decision to prosecute include: 91   
          2. Factors that would support a decision to seek civil recovery include: 92 (These seem rather subjective)  
          3. The public interest test recognises that even though there may be sufficient evidence to support a prosecution, a prosecution should occur only where it is also in the public interest.

        COMMENT:   the Auditor-General said that prosecutions were critically important.

            1. The Solicitor-General’s Guidelines contain an extensive but non-exhaustive list of factors relevant to the public interest test. The factors most relevant to MSD prosecutions are:

          COMMENT:  The importance of prosecutions encouraging a huge number of recipients to repay thousands of millions of dollars was not considered by the MSD because they did not want this to happen.

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