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Lisa Marriott argues we need consistency in how financial crimes are treated, suggesting sentencing guidelines are a good place to start

Public Policy / opinion
Lisa Marriott argues we need consistency in how financial crimes are treated, suggesting sentencing guidelines are a good place to start
Getty Images.

By Lisa Marriott*

As it stands in Aotearoa New Zealand, beneficiary fraud (fraud by people on benefits) is largely dealt with under the Crimes Act, while tax evasion is prosecuted under the Tax Administration Act. This, among other factors, means beneficiaries engaging in financial fraud face significantly stiffer penalties than professionals doing the same.

This inconsistency in how fraud is handled in New Zealand underscores the strong case for ensuring financial crimes are treated the same. Sentencing guidelines are a good place to start.

To be fair, sentencing is more of an art than a science. The art is balancing consistency with fairness, alongside all the aims of sentencing: deterrence, denouncing the behaviour, holding offenders accountable, providing for the interests of the victim and, in some cases, protecting the community, assisting in rehabilitation, and providing reparation.

It probably goes without saying that the combination of these objectives creates a system that is multi-faceted and complex. What may be less clear is that the complexity generates the potential for inconsistencies in sentencing decisions. Sentencing guidelines could help.

Creating clarity in a complex system

Sentencing guidelines provide guidance to judges on the length and type of sentence that is appropriate for a particular offence. Typically they provide a sentencing range with some, usually limited, opportunity to depart from this range. Guidelines prescribe sentences based on the seriousness of the current offence, while considering any prior offending.

This approach to sentencing is not unheard of in New Zealand. Guideline judgements exist for a range of serious offences, including aggravated robbery, sexual violation, grievous bodily harm and various categories of manslaughter. These guidelines primarily deal with offending that is likely to result in a sentence of imprisonment.

But this limited approach is problematic because inconsistency is more likely to occur at lower levels of offending. This is also where there is less transparency of sentencing outcomes as there is generally less media, and therefore public, attention on these cases.

There have been efforts to establish sentencing guidelines across the spectrum of offences. Nearly 17 years ago, the Law Commission raised the idea of an independent sentencing council to develop sentencing guidelines in New Zealand.

The council came close to a reality. A bill establishing the council passed in 2007 and subsequently received royal assent the same year. But the legislation was never introduced after the change of government in 2008. It was repealed in 2017.

Minimising inconsistency across all sentencing

Research has identified inconsistencies in sentencing practice in New Zealand for many years. Findings include that the type of offender, the location of the court and/or the individual judge may influence the sentence handed down.

Sentencing guidelines can minimise these inconsistencies in sentences. Guidelines also offer a range of other benefits including:

  • increased transparency

  • efficiency gains, as sentencing guidelines generate a single source reference for a judge

  • improving public trust and engagement in the sentencing process

  • removing the politicisation of sentencing, whereby judges may feel pressure – or may wish to – move in response to the prevailing political or public mood.

We have seen this in action. In 2008, Justice Graham Panckhurst wrote:

sentence levels, and therefore the prison population, have increased in response to popular demand.

The increased visibility that sentencing guidelines can bring is important for addressing either the presence of, or the potential for, institutional bias.

Independence of the judiciary is essential. And at least some level of discretion is necessary, to ensure that the judiciary can consider all relevant factors when making sentencing decisions. However, where there is complete discretion, there will be disparities.

Some of the clearest illustrations of these disparities can be seen in how we respond to financial fraud.

The disparity in financial fraud

Historically, there have been clear differences in the numbers of investigations and prosecutions, and severity of sentences, for tax evaders and benefit fraudsters. That said, this is changing. A similar number of tax evaders and benefit fraudsters are now prosecuted in New Zealand.

But there are still stark differences in how different types of financial fraud are dealt with.

My research, to be published later this year, found that between 2018 and 2020, most benefit fraud cases were prosecuted under the Crimes Act (83%) with 17% charged under the Social Security Act 1964. This situation reversed for tax cases, where 84% were prosecuted under the Tax Administration Act and 16% were prosecuted under the Crimes Act 1961.

The Crimes Act provides for harsher sentences than the Tax Administration Act. This is despite the tax offences typically comprising higher average values of offending.

Sentencing guidelines cannot address inconsistencies of treatment prior to sentencing, such as the use of different charging legislation, or even choices about who is, or is not, investigated or prosecuted.

However, guidelines can limit discrepancies in the sentence. Moreover, they can provide an opportunity for greater public engagement, as justification is typically required when sentences are outside the specified range.

With this in mind, there is a strong case to revisit introducing sentencing guidelines in New Zealand for financial fraud – and potentially many other offences.

Perhaps the strongest argument for sentencing guidelines is that of fairness. To the extent that sentencing guidelines can minimise the potential for different outcomes for offenders who commit similar offences, they can positively contribute to the justice system.The Conversation

*Lisa Marriott, Professor of Taxation, Te Herenga Waka — Victoria University of Wellington. This article is republished from The Conversation under a Creative Commons license. Read the original article.

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"Breakin' rocks in the hot sun
I fought the law and the law won
I fought the law and the law won
I needed money 'cause I had none
I fought the law and the law won"   , (The Clash) (origin* The Crickets)

A few decades ago during the throw it on the streets Auckland inorganics , I came across an old magistrates sentencing guide hardcover book for the UK ... It listed types of offences and fixed recommendations for first ,second and subsequent offending. Im not sure we can afford that type of sentencing in NZ as the ' slap on the wrist with a wet bus ticket' seems to be the direction NZ has trended . Further to this sentences have so much parole built into them these days it is perhaps misleading how long some terms are (eg Parole.. more then 2 years eligible after serving 1/3rd ,less than 2 years eligible after serving 1/2). NZ seems to be guided by precedence rather than any sentencing guide . I think we would likely have a more effective justice system if all sentences followed a guide however I dont think we could build enough prison capacity to follow such a guide and I think such is why sentencing is such as it is currently. Should all fraud be treated the same? maybe....certainly beneficiary fraud is taken very seriously whereas other types of fraud less so... Are those at the very lower income levels held more accountable?... I think they are...but white and blue collar crime have historically always had somewhat distorted outcomes so much so that at one time NZ may have had a white collar leaning prison (Ohura). I am all for a sentencing guide for all crimes not just a handful , I am also for sentences that have no parole built into them and sitting at home watching TV is not my idea of any sentence at all (Home Detention). Reality is we cannot afford a serious justice system.... There seems to be a push for a dual system of some sorts but I opinion a system that educates or trains in life skills and or sociological aspects might have a better reach slash impact . Sentence reductions for achieving qualifications /skills or showing knowledge of the impact ones offending has on victims/ larger society would be a better fit in my mind rather than just eligibility after time served. Bottom line is Judges have the say and regardless of my own opinions they have a heck of a job and I respect them, for it is no easy task dealing with those that stand before them. 


Thanks, this is a good article.