Social Assistance (Debt Prevention and Minimisation) Amendment Bill

Hon PETE HODGSON (Minister of Health) Link to this

I move, That the Social Assistance (Debt Prevention and Minimisation) Amendment Bill be now read a first time. At the appropriate time I will move that the bill be referred to the Social Services Committee. I also advise the House at this time that I will be proposing that the bill be divided into three separate but related amendment bills at the Committee of the whole House stage.

The purpose of this bill is to enable the Ministry of Social Development to prevent and recover debts and to detect more readily the misuse of the social security student allowance and student loan systems by broadening data-matching provisions. The bill will make better use of data matches already in place between the ministry and three other Government agencies: the Accident Compensation Corporation (ACC), the New Zealand Customs Service, and the Department of Corrections. This enhanced use of information will increase the efficiency and effectiveness of existing processes. The bill will also reduce overpayments that create debt.

Data matching may not sound like a proactive social assistance policy, but the real purpose of this bill is in its title—debt minimisation and prevention. Debt is a two-edged sword. Used correctly and managed well, debt can be a useful tool, but uncontrolled debt can be a burden that inhibits people’s activities to live and work to their fullest. Of course, being over-indebted has financial implications in terms of people’s ability to make ends meet, but we also know that it can have negative impacts on people’s health and education, and that it can lead to them living in overcrowded, cheap housing in order to reduce expenditure, or taking part in crime or other socially undesirable behaviour.

Being over-indebted can also reduce the financial advantages of returning to work and may act as a barrier to employment. We know that when beneficiaries incur debt it can make it very difficult for them to enter the workforce, as the level of repayments is often reduced while a person remains on the benefit. Once the debtor is earning an income, creditors start seeking high levels of debt repayment. This can substantially reduce the financial gains from work. The sum total of all this simply is that having to meet debt and other repayments can place enormous stress on families and it can act as a barrier to entering and remaining in work.

As members know, the Government is very focused on helping all of those who are able to undertake paid work to successfully enter the workforce. Most people want to work and they see working as being the best way to ensure their own and their family’s futures. The bill that is before the House is part of a programme of welfare reform that aims to truly modernise our benefit system so that it sends the strong message that work is important, without undervaluing the caring roles that people have or the importance of caring for children.

Part of modernisation is making the most efficient use of the tools that are available. This bill makes better use of the existing data that is provided to the Ministry of Social Development, and that will increase efficiency. The bill amends legislation that specifies the purpose of information matches between the Ministry of Social Development and three other Government agencies: the Department of Corrections, New Zealand Customs Service, and the ACC. Currently, those three agencies provide data to the ministry to make sure that people get their correct benefit entitlement.

The data match does not include people who are no longer receiving a benefit but who still have an outstanding debt. To find people who have an outstanding debt, the ministry currently issues individual notices to the ACC and the Customs Service. Having a data match against benefit debtors who are no longer receiving a benefit will automate this process. It will speed up the process of clearing debts, and it will also mean that people have the opportunity to clear their debts while they are not in need of income support. The Customs Service data match identifies people who are travelling to and from New Zealand. This information is currently used to ensure that benefits are not paid to people who are overseas.

Being able to match this information against people who are not receiving a benefit but who have a benefit debt will give the ministry the opportunity to contact these people while they are likely to be in a very good position to pay that debt. The bill extends the use of information already transferred to the Ministry of Social Development to improve the efficiency and effectiveness of the data-matching processes. The bill will speed up the process of locating benefit debtors and it will make better use of data that is already supplied to the Ministry of Social Development.

Of course, having debt to repay does not help released prisoners to establish themselves in their community; for example, the bill allows the benefit to be stopped as soon as a person enters prison. In 2007 benefit overpayments to people as they went into prison totalled more than $1.4 million. The bill will reduce this amount of debt being created by payments continuing while the processes specified in the Privacy Act are undertaken, because it will allow the benefits of prisoners to be stopped immediately. Data matching between the Ministry of Social Development and the Department of Corrections occurs daily. This means that the opportunity to take prompt action to cease benefit payments already exists. The bill allows the ministry to maximise this opportunity. This is an appropriate use of modern technology to help reduce the risk of debt and the amount of debt arising when a person is imprisoned.

The mechanism in the bill to allow immediate cessation of a benefit payment overrides section 103(1) of the Privacy Act 1993. Members may be concerned about the risk that the wrong person’s debt will be stopped without the additional steps set out in the Privacy Act. My officials have considered this matter carefully, because we know how devastating it can be to individuals or families if they are left without income because of a bureaucratic mix-up. The ministry assures me that it has robust processes and procedures in place to ensure that the correct benefit stops. We do not expect the correct benefit to be stopped; it is a fact, however, that errors sometimes occur, despite best efforts. On those rare occasions where a person’s payment is mistakenly stopped, Work and Income will reinstate the benefit immediately when alerted and will pay any costs incurred as a result of the error.

This bill will also identify wrongful claims of benefits, student allowances, or student loans by people currently in prison. The current data match provides details of people when they first enter prison, but it does not give any detail of the length of sentence, so the ministry is not alerted when the person is released. Extending the data match to include current prisoners will mean that the ministry will be able to identify when a person in prison applies for a benefit, a student allowance, or the living costs component of a student loan. It will also allow the ministry to suspend action to recover debt while the person remains in prison.

The extension of the data match to current prisoners does not mean that any additional detail about the prisoners is provided to the ministry. The same information that is provided when the person enters prison will simply continue to be provided as long as the person remains there. That continuing matching process will reduce fraud and benefit debt.

Under this Government there has been a drop in the amount of debt being established relative to total benefit expenditure. The establishment of debt has fallen from 1.61 percent of total benefit expenditure in 2001 to 1.29 percent of total expenditure in 2005. I do not think anyone would argue that unnecessary debt should continue to be created when we can prevent it—and this bill will reduce unnecessary debt. To give some idea of the problem, I can tell members that the amount of debt recovered by the ministry each year now stands at $261 million. That is a lot of money to families on lower incomes, but it is also a lot of money to taxpayers.

The Ministry of Social Development has been making a concerted effort to ensure that people get their full and correct benefit entitlement. The measures set out in this bill are a further advance in making sure that benefit payments go to people who are entitled and that they do not go to people who do not qualify.

This Government is committed to reducing debt—both debt to Work and Income and debt to unscrupulous loan sharks, who all too often prey on beneficiaries. My colleague the Minister of Consumer Affairs has recently announced new rules requiring all financial service providers to be registered and to belong to a dispute resolution scheme. That work is striking at the heart of the debt problem by dealing with the behaviour of the debt industry.

This bill also makes a modest but important contribution to debt reduction for a vulnerable group. This Government will not sit back and let low-income families incur avoidable debts. Debt can be a burden on families for years. The ministry is actively working to assist low-income people and families to meet their financial commitments and to avoid debt.

Since taking office in 1999, before which there was only darkness, this Labour-led Government has reduced unemployment benefit numbers from 160,000 to just under 23,000. Let me say that again—from around 160,000 to just under 23,000. Currently unemployment stands at a record low. We have undeniably succeeded in reducing the quantum of unemployment, but it is a fact that some of the people who remain unemployed require intensive support. This bill is one way we can provide that support and help people into work.

The Social Assistance (Debt Prevention and Minimisation) Amendment Bill will help us reduce debt. This will, therefore, encourage more people to enter work by reducing the problems of debt repayment. The bill will help ensure that money goes to people who need it. By increasing the usefulness of data matches already in place, it will ensure that time-consuming manual processes in the Ministry of Social Development and elsewhere are replaced by a small increment in existing data-matching processes. I commend the bill to the House.

JUDITH COLLINS (National—Clevedon) Link to this

The Social Assistance (Debt Prevention and Minimisation) Amendment Bill has been a long time coming. It has taken a long time for this Government to start taking beneficiary debt seriously. It has been a long time coming.

I remember a meeting of the Social Services Committee just a few years ago. I can well remember the Chief Executive of the Ministry of Social Development, Peter Hughes, say, in answer to a question from me about beneficiary debt, that 49 percent of beneficiaries were in debt to Work and Income. Now, according to the answer I eventually got from the previous Minister for Social Development and Employment, David Benson-Pope, that figure is actually around 70 percent. So about 70 percent of Work and Income clients—in other words, beneficiaries—are in debt to the Work and Income system and the benefit system.

RUSSELL FAIRBROTHER (Labour) Link to this

I was going to address the Social Assistance (Debt Prevention and Minimisation) Amendment Bill without referring to the previous speaker, Judith Collins. I often find what she says to be so tempting to knock about the debating chamber, but I thought I would not lower myself to the level of utterance we have just heard.

But when she said she was surprised and shocked that it had taken this Government so many years to bring this legislation into place, having spent hundreds of millions of dollars on computer systems, she should have listened to herself and realised how even more idiotic than usual that comment was. Of course, until we have the computer systems in place, we cannot do the data matching. So until we spend the hundreds of millions of dollars—which, of course, is an exaggeration—and get the computer systems in place, we cannot do data matching. And she did not dare mention that if we get around to the pruning of Government spending, which those neo-liberals on the other side of the House are promising, then there will not be the money to develop the infrastructure to enable this very bill to come before the House. That is the key to this piece of legislation.

I would have expected the previous speaker to dwell upon the infringements of privacy of information aspects. As she has a legal background and is a neoclassical liberal, one would think she would perhaps have considered the fishhooks that might be there. They are not there, of course, and the fact that she did not even mention them underscores the point that this bill is, in terms of privacy, very tight and accurate.

One of the difficulties until now in achieving data matching has been the privacy law. It has been possible for a person to go to prison, for example, and for the Ministry of Social Development to know about that but not act upon it, because of the privacy barriers that are created. Now, with modern data-matching systems and the automated flagging systems that are contained in relational databases, we are able, as a Government, to identify movements of beneficiaries from situations of benefit to situations where they are not entitled to any benefit, and to act on that immediately. So no longer is the Privacy Act breached by endeavouring to trace individuals on such movements, and as we now have the computer systems, or are moving to have the computer systems, which will enable the tracking, this bill can come before the House.

I agree with the previous speaker in the National Party that this bill has come not before time. But the delay, if we can call it that, has been because it has taken 7 whole years to develop the much-neglected infrastructure of the previous administration. This is the unseen expense, which the National Party likes to bay about on the hustings. National members say: “We will cut taxes because the Government spends too much money on bureaucrats and committees.” Of course, they are never specific, and what they should say on the hustings is that they will cut the money and there will not be the infrastructure to develop a sound, rounded system.

This bill is the product of a sound, rounded system. This bill enables the computers to track beneficiaries so that when they move off the benefit, payments stop, and when they move on to a benefit, the entitlement can then resume. It is important to the integrity of a benefit system that those who are entitled to benefits are paid that to which they are entitled, but those who are not entitled to benefits should not receive a dollar more than they are entitled to. It is not a matter of taking a mean-spirited, public purse approach, because, ultimately, if there is an overpayment there has to be a repayment, and individuals on benefits are living so close to the level of sustainability—as they should be, on a benefit—that they do not have the leeway and the income to repay a debt not of their own making.

In the past we have seen beneficiaries who try to maximise their level of income by removing the debt provisions, and what they do is trot off to these third-level lenders, who are commonly referred to as loan sharks. For the temporary relief that comes from increasing the cash flow, beneficiaries create an even greater burden by borrowing money on the family car, television, or some other asset at exorbitant rental rates, which only worsens their position. So this bill will move beneficiaries away from the claws of unscrupulous loan sharks, because it will remove the pressure and tension that is created for beneficiaries when they unwittingly get into debt to the Ministry of Social Development.

This is a good bill. It deals with people with the best of intentions who are sometimes in desperate situations, and allows their situations not to become more desperate by official oversight or bureaucratic bungling. The system is so computerised now that individuals can be tracked with all the appropriate levels of anonymity, but at all times their interests can be safeguarded so that at the right time they receive benefits, at the right time the payments stop, and at the right time the payments commence. No longer do we have the debtor-creditor situation that is so corrosive to an individual or family who is dependent upon a benefit from the State. The situation is not only corrosive to the individual but also to the State, because people such as the previous speaker will stand in this House and lambaste the very good Ministers for Social Development and Employment that we have now and we have had in the past about the debt created by beneficiaries. That debt is usually created not through any ill will on the part of beneficiaries but through the bureaucratic inconvenience caused by beneficiaries moving off and on benefits.

This is a very good bill. It is a timely bill. It could not have been introduced any earlier, because this Government has spent careful years rebuilding a much-neglected infrastructure. That infrastructure is now tight and resilient. It can result in the bringing forward of legislation such as this bill, which speaks more loudly than any words or any TV images of the argument for a prudent fiscal policy and a prudent monetary policy. We must handle this issue of tax cuts with great caution, because for every tax cut made there is a cost, and that cost will sabotage initiatives such as the ones that lie behind this bill.

This bill is short in ambition, it is elegant in achieving that ambition, and as it comes before the Social Services Committee, which I have the privilege of chairing, I look forward to receiving the submissions that, hopefully, will address the issues in the bill. It seems to me on a quick reading of the bill that there is not much work that needs to be done in tidying up its provisions. It is a very elegant bill, it achieves a very worthwhile social purpose, and it is indeed a reflection upon a Government that cares and thinks about people and that builds up an infrastructure carefully. This is a bill for the year 2007 forward.

Dr PAUL HUTCHISON (National—Port Waikato) Link to this

I rise to take this opportunity to speak on this Social Assistance (Debt Prevention Minimisation) Amendment Bill, and it does seem a little bit premature for Mr Russell Fairbrother to be saying that it is a very elegant bill that does not need much work done on it and that the infrastructure is tight and resilient. The member is predicting that everything will go well. I am suggesting that under this Labour Government this bill, and the administration of it, is very unlikely to go as well as he suggests.

The general policy statement in the explanatory note of the bill states: “This bill is intended to enable the Ministry of Social Development to prevent and recover debts, and to detect more readily misuse of the social security, student allowance, and student loan systems, by broadening data matching provisions.” That is the reason the National Party is supporting the bill. But, as my colleague Judith Collins said, the question must be asked as to why it has taken 7 to 8 years, to the dying days of a Labour Government, before this Government is finally getting around to reducing waste and overspending. Why has it taken so long, and taken until its dying days, before it is putting in some legislation to reduce wasteful spending?

We have to look at student allowances and loans—which are substantial; they are worth about $5 billion—to recognise that over the last 7 years Labour has wasted a huge amount of money. It has not necessarily been in the area of loans and allowances but certainly in the area of the incessant reforms that the Government has carried out in the tertiary education system. We have estimated that Steve Maharey has spent something like $419 million on reforms that have got nowhere, and now we are seeing Dr Cullen about to start on another set of reforms that will probably cost a huge amount of money and will also bring us nowhere.

But that is only one aspect of it. The other aspect of it is the huge amount of money that the Government has wasted on soft courses—homeopathy for pets, twilight golf, and all the rest. It was hundreds of millions of dollars.

BARBARA STEWART (NZ First) Link to this

On behalf of New Zealand First, I rise to support the Social Assistance (Debt Prevention and Minimisation) Amendment Bill. It will be a very interesting opportunity indeed at the Social Services Committee to hear from those people involved in the submissions. One would have thought that this measure was already in place, so we are very pleased to see that at long last this is occurring, because this legislation will achieve a sound social purpose.

We in New Zealand First looked at the bill and thought that it was largely of a technical nature, and that it should enable the Ministry of Social Development to prevent and recover debts and to detect with greater ease any fraudulent use of the benefit system. I was interested to read that $29.4 million was overpaid in 2005-06 to people in the benefit system. Every party in this House would definitely support the notion that people should receive their full and correct entitlements, and they would also support attempts to assist with the recovery of any Crown debts in this area.

All members in this House want action, and they have said so at the select committee and during the business of the House. We all know that debts that are left to increase in this situation become unmanageable in a very, very short time, particularly when people are on a limited income. Of course, overpayments always mean that a repayment is necessary. That in itself can be extremely stressful for the people who are involved, and action does need to be taken. We do not want these people getting caught up with loan sharks.

In New Zealand First we believe that the social benefits of this bill are very great. We do not want beneficiaries to have debts. It is difficult enough to make a benefit stretch for the basics that people need, and for them to have to pay it back at $10 or $15 each time is an added stress in life.

I was very pleased to read that section 103(1) of the Privacy Act requires agencies to send a notice of action to individuals before any adverse action is taken, and that 10 days pass before payment ceases. This should give the affected people time to respond to the letter in the case of a mistaken identity, because we do know that that can happen. It is absolutely essential that operational practices are put in place to minimise the occurrence of incorrect matches, and to put mistakes right in an expedient and fair manner when an incorrect match occurs. When loopholes are identified in the current system they need to be fixed, and they need to be fixed rapidly.

Although these matching provisions are a major departure from the system that has been operating in the past, New Zealand First believes that this bill is a very positive step forward. It is hoped that planning is under way for the resources that are required if this change is to be successful, and we all want it to be successful. Although we are aware that the majority of the proposed changes extend the use of the information already transferred as part of the matches to enable it to be used for other purposes, the resources must be in place, and here we are looking at personal information and a very sound computer system.

New Zealand First supports this bill. We look forward to the select committee report back, and we want to eliminate the chances of this very vulnerable group having avoidable debt that has not been incurred through any fault of their own.

Dr PITA SHARPLES (Co-Leader—Māori Party) Link to this

Tēnā koe, Mr Deputy Speaker. In my electorate of Tamaki Makaurau, moneylenders have become as much a part of the environment as the old kai cart in Ruatōria or the big carrot in Ōhākune. The promises of easy finance, flexible mortgages, and ready money are on the lips of money-pushers preying on the good people of Hunters Corner, of Māngere, of Ōtara, and of Manukau. These so-called loan sharks offer extraordinarily high interest rates, commonly around 30 percent, plus all the additional fees on items such as cars and appliances.

Predominantly, the people who are preyed upon by what John Minto has termed the “parasites of poverty” are Māori and Pacific Island people. The Ministry of Social Development’s living standards survey found that 20.6 percent of Māori families were likely to have fallen behind with hire purchase, credit card, or store payments. It is a big difference from the 8.7 percent of European families in the same position. Debts on cars, furniture, and appliances now comprise the biggest amounts of debts accumulated, accounting for some 38 percent of all arrears owed by clients of the Federation of Family Budgeting Services last year. The debt levels are even higher for Pasifika. In 2000, 24 percent of Pasifika people, 16 percent of Māori people, and a mere 5 percent of Pākehā had fallen into arrears with rent and mortgage payments.

But this Social Assistance (Debt Prevention and Minimisation) Amendment Bill is not about families who have plunged into debt. This bill is not concerned with financial pain and the widening disparities between the different sectors in our society. This bill is about a Government agency, the Ministry of Social Development, which has an estimated actual forecast for 2006-07 of $1,124,430,000. The bill is to enable this agency to recover debts by targeting the vulnerable, specifically the prisoner population. It is a population of which the great majority, 60 percent, of all inmates are either Māori or Pasifika.

As well as focusing on jails, the bill also makes a target of the student allowance and student loan systems by broadening data-matching provisions. Again, this is an area where Māori are overrepresented in the debt ledger. Māori are more likely to have an outstanding student loan; the figure is some 26.6 percent against 18.8 percent of Europeans.

The final focus area is to enable officials to better detect the misuse of social security payments. In this respect, it is a case of “Play it again, Sam.” We have been down this road before, with the Housing, Restructuring and Tenancy Matters (Information Matching) Amendment Bill, which made similar proposals for Housing New Zealand Corporation tenants. That bill unashamedly targeted a particular population—the population of beneficiaries—and attacked their rights.

So rather than respond to the desperate situations that are being increasingly experienced by poor families in large households, this bill sets off another process. It is a process to undermine the stability of beneficiary households by increasing surveillance and information-matching processes. We have enough evidence in front of us to know that low-income families are becoming more and more vulnerable as their bills for essential services such as water, power, and transport rise, yet total gross family incomes are stagnant.

One of the key areas for the Māori Party is all about the priorities that our Parliament considers most worthy of attention. The Social Services Committee estimates revealed that in the year to April 2005, benefit fraud was detected in 68,000 cases, amounting to $36 million in non - data-matching activities, mainly from the benefit control programme. The estimates also reported an additional 50,000 cases amounting to $24 million from the data-matching programme. In essence, then, information matching within the Ministry of Social Development could already be seen to be very effective. A massive $29.4 million has already been established from overpayments as a result of these matches in 2005-06.

Let us be clear: the Māori Party is happy to support any proposals that aim to improve the efficiency and the efficacy of the administrative systems operating within Government agencies, but our overriding concern with this bill is to ask whether we have our priorities sorted out. What will be the long-term impact of targeting prisoners, students, and beneficiaries? Will it produce fewer or more victims, fewer or more offenders? Will it enhance general societal well-being and the health of the community? Or is this another case of the Government bringing in an unseemly and hasty patch-up of a problem while under political pressure to be seen to be doing something, which, in effect, perpetuates a perception that certain groups of the population are worthy of being snooped on?

We remind the House of the irony that the key department to be snooped on, the Department of Corrections, was painted out with a new name last year: Ara Poutama Aotearoa, which the department translated as being “Towards Wellness and Wellbeing”. How will wellness be attained by introducing new techniques to encourage the disclosure of prisoner information in order to ensure that prisoners are not receiving benefits or student allowances while in jail, or to enable debt recovery? What risk is there that escalating levels of surveillance and monitoring will compromise the basic human rights of prisoners? Although we are pleased to see the commitment that the Ministry of Justice will work with the Ministry of Social Development to resolve any associated human rights concerns, we wonder whether adequate attention has been given to privacy concerns in the first instance.

I think the prevailing concern for the Māori Party is about the type of society we are creating if we persist with the new measures to increase surveillance rather than trust, and with the new proposals to up the monitoring regime rather than to encourage behaviour or attitudinal change. We need to ask ourselves what the future is for prisoners, students, and beneficiaries. What will they become, and what might we become, as a result of the actions we are imposing on them today?

We know that the snooping culture has become a looming presence over our lives, alongside the political agenda of getting tough on crime, come what may. We believe that the ideal of a fair and just community is a far more appropriate focus to advocate for. We want to see the operations of our welfare system and the functioning of our justice system reflect the set of values and processes that lead to social harmony.

As part of that we believe that there are important ways in which institutions can help to encourage families and communities to assume responsibility for the well-being of their members without using the crackdown, punitive, hard stick approach. We believe that all inmates are entitled to receive custodial services in a safe, secure, humane, and effective manner, and that human rights for all New Zealanders are worth fighting for. It is because of these values that we stand to oppose this bill. Kia ora.

KATRINA SHANKS (National) Link to this

I rise to speak in the first reading of the Social Assistance (Debt Prevention and Minimisation) Amendment Bill. This bill addresses the prevention, detection, and recovery of debts and the misuse of social security, student allowances, and the student loan system.

It seeks to improve and broaden data-matching provisions. Earlier we heard from Mr Fairbrother, who talked all the time about tracking and the computer system we have in place to do this. This computer system has been in place for a long, long time. It has actually been matching data, not tracking data. There is quite a big difference. If we want to track people, then we will have to chip them. But we are not; we are only matching the data between two different systems—two different departments. That is actually what this bill is all about. If the Government wants to track people, that is all good and well, but that is not what this bill is about. Otherwise we would be putting little tags on everybody, or even in their little smart cards, so we could track them. This bill is not about tracking; it is about data matching.

There are two parts to this Social Assistance (Debt Prevention and Minimisation) Amendment Bill. The first part amends the Corrections Act 2004 for the facilitation of disclosure of prisoner information to ensure that a benefit is not payable during imprisonment or detention in prison. We know that benefits are paid to prisoners. The system that the Government has in place at the moment is that someone goes into prison and says to prisoners: “Would you like to volunteer the information that you are on a benefit?”. And the prisoners say no. Of course, the agencies are not told that prisoners are now in prison, so they are still paying out benefits. So what happens? This voluntary system that is in place—which has been in place for a long period of time now—just simply does not work. Hopefully, this bill will close that gap just a little bit more.

Another of the functions of the facilitation of disclosure of prisoner information is to provide for recovery of debts due to the Crown. These are debts that mount up time after time as beneficiaries obtain more money more easily for things like washing machines and dryers. These are all very good things, but they are things that a lot of us save to get to begin with. They are not just given to us, and those debts are not then eventually just written off.

The facilitation of the disclosure of prisoner information is also to allow recovery of debts in respect of the payment of allowances, student loans, or other money to which people are no longer entitled. When a prisoner walks into the prison and is asked: “Would you like to voluntarily tell student allowances that as you are in prison, you are no longer entitled to an allowance?”, the answer is, of course, no. These individuals keep on getting paid, and, of course, these debts just keep on increasing. The bill also provides that students imprisoned or detained in prison are not entitled to receive any payment under those regulations.

Part 1 will also allow benefits, allowances, and student loans to be able “to be suspended, despite section 103(1) of the Privacy Act 1993, immediately a relevant discrepancy arises or is identified …”. This is probably the most controversial and important part of this bill, as it is where we start tampering with the Privacy Act. What happens now is that when people go into prison their data is matched in the prison system, for example. Three months ago it was once a week that this data would be matched. When a person went into prison, that person would not voluntarily want to say that he or she was now a prisoner, because that person’s benefit would be cut. It would then take another week for the corrections system and the relevant department to match the data to say that all of a sudden that person was a prisoner, so he or she was no longer entitled to a benefit. What the departments were not allowed to do was to cut a person’s benefit off straight away. They had to give a person 10 days’ notice that he or she had been matched and would lose that benefit. That would mean that that person would have his or her benefit paid not only in that 1 week in which he or she had not disclosed the information but also for another 10 days, because the department would have to wait in case that person wanted to appeal the matching process. So it might not have been 2 weeks; it might have been 3 weeks. If a person appealed the result, it could be a lot longer.

This amendment also authorises the disclosure of prisoner information for social security purposes. That is basically Part 1 of the bill.

Let us go on to Part 2. Part 2 addresses the amendments to the Customs and Excise Act 1996.

SUE BRADFORD (Green) Link to this

The Green Party will be supporting the Social Assistance (Debt Prevention and Minimisation) Amendment Bill through its first reading and its referral to the select committee. But I would like to make it clear that we reserve our position on subsequent votes, as we do have some reservations about certain implications of the bill.

The overall purpose of the bill as presented here is laudable. People should not be paid assistance that they are not entitled to receive and subsequently end up heavily in debt to Work and Income. A lot of so-called benefit fraud in the past has, in fact, happened as a result of Work and Income—in its previous incarnations, as well—overpaying people when their life situation changed, thereby creating debts and overpayments through no fault of the beneficiary. It is in no one’s best interests, least of all the interests of newly released prisoners, to end up with a substantial overpayment debt. The Green Party also understands that the Ministry of Social Development should be able to locate debtors readily, in order to facilitate repayment arrangements.

However, we do have some concerns about this bill that we would like to see addressed during the consideration process at the select committee. Payment of a welfare benefit while someone is in prison is, in some circumstances, discretionary under section 76 of the Social Security Act 1964. Immediate suspension of a benefit, as laid out in this bill, will unreasonably negate or fetter the exercise of that discretion. Safeguards need to be included in the bill to ensure that this discretion is properly exercised as soon as is practicable after a benefit is suspended because the beneficiary has been imprisoned.

A secondary concern is that the bill confers powers and obligations on the chief executive of the Ministry of Social Development by way of amendments to the Corrections Act, which is not an Act that that chief executive officer is responsible for administering. Amendments in that regard to the Social Security Act and the Student Allowances Regulations 1998 would actually be more appropriate.

I would also like to note that although this Government, like its predecessor, is always quick to bring in laws that tighten up the administration of the benefit system, it is not always as easy to see related activity happen on the ground that takes into account the side effects of new legislation and regulation and the impact that that has on the lives of beneficiaries and their families. In this case I am referring to the situation of beneficiaries who are supporting a family and who find themselves in prison. If their benefit is to be cut off immediately, as this bill provides for, then I would hope that Work and Income and the corrections authorities will work closely together, as quickly as possible and in every prison in the country, to ensure that the adults and children left behind receive their full and correct entitlements in their own right, should they have entitlements—which is very likely in the circumstances—rather than leaving them destitute, even for a short period. Often the sorts of things that happen in difficult circumstances like those are too quickly seen by the State as deliberate malfeasances, when in fact all that is happening is that desperate people are struggling to survive as best they can.

I look forward to hearing some assurances from Work and Income during our work on this bill that no family of a prisoner will suffer unnecessarily or incorrectly, in terms of the social welfare regulations, as a result of this legislation, and that safeguards will be maintained to ensure that in some applicable circumstances discretion is properly exercised as per the existing law.

JUDY TURNER (Deputy Leader—United Future) Link to this

I stand on behalf of United Future to speak to the first reading of the Social Assistance (Debt Prevention and Minimisation) Amendment Bill. United Future will be supporting the first reading, but as in the case of the previous speaker there are a couple of areas where we will be keen to hear more detail and to hear what submitters say. I have just been checking through the Bills Digest that came into my office today. It describes the current situation and what happens under the current legislation. When the agencies identify that somebody is in prison, they have to give notification in writing that the benefit will stop. That gives the beneficiary the opportunity to confirm the position, or to deny it if he or she feels there has been an information mismatch, before payments cease.

We support the intention of the bill, because when people unnecessarily get into debt with a Government department that is an unhelpful outcome. But I do have a concern about the fact that many times a beneficiary is not the sole person who is dependent on that income. Beneficiaries may have partners and families who are reliant on it. If this measure becomes a blunt instrument, where gaps are created by a benefit being stopped due to incarceration but nothing is done in a timely way to remedy that for the rest of the family that has been relying on that income, then United Future would have problems with that. So we want to hear some information about how the family that is reliant on that benefit will be redirected before their income is cut off. Who makes an approach to the family to let them know that they need to reapply? Are there any time delays that could happen?

I am comforted, though, by several things that I have read in the commentary on the bill. I am comforted by the thought that the intention is to minimise any detrimental effects and to mitigate any negative impacts. However, even mitigation is weak if a person has gone through a period of time when he or she was in desperate straits, had no income, and had children around the table to feed on a particular night. The fact that 3 weeks later the department may say: “Oops”, and give that person a back payment does not solve the problem that existed right then. I think that is the kind of area where United Future will be really keen to ensure that what is proposed here is advantageous to everybody concerned.

Our concern is about people who could be unintentionally detrimentally affected by this proposal and we want to be assured that they have been identified and catered for. It is not the matching of information between Work and Income and other agencies about a person being in prison that is the problem. The issue is whether any efforts are then put in, before the benefit is cut off, to determine who else was reliant on that income, and to take appropriate steps to make sure that those people are catered for and there is not an untimely gap between one benefit stopping and another one kicking in.

The other issue I want to signal, which is one that comes up quite a lot in amendments at present, is the increasing ability of Government departments to match information. We do have to keep a watchful eye to make sure that this is not a horse that bolts on us. I am interested to hear what people like the Privacy Commissioner have to say about this kind of thing.

I think a previous speaker mentioned that quite often people with debt have got into debt because of an overpayment and the inability of departments to respond quickly to people’s changing circumstances. I just want to make sure the bill has been well-thought-through, and that families who have been reliant on the income from a benefit do not suddenly find themselves cut off at the knees and having to go to Work and Income with their hat out, asking for a temporary benefit. If members know anything about how that situation plays itself out, they will understand that when mum goes in and says the family does not have any income, during the time that it is all worked out sometimes they get irregular amounts of money. That income very rarely covers the basic needs of the family over the week. It can be a pretty traumatic time and can put a lot of pressure on people who, I imagine, if they have just had a family member go into prison, are already under severe stress.

So we support the intention of the bill, but we just want to make sure that it is very clear that those other consequences have been catered for and considered, and that there are mechanisms in place to make sure that any harm to families is minimised.