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Social Security Amendment Bill (No 3)

First Reading

Wednesday 6 April 2011 Hansard source (external site)

BennettHon PAULA BENNETT (Minister for Social Development and Employment) Link to this

I move, That the Social Security Amendment Bill (No 3) be now read a first time. At the appropriate time I will move that the bill be referred to the Social Services Committee, that the committee report back to the House on or before 31 May 2011, and that the committee have the authority to meet at any time that the House is sitting except during oral questions, and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 187 and 190(1)(b) and (c).

This bill is about fairness. I am proposing these changes to ensure that people in similar circumstances are treated the same. Two areas of the Social Security Act need changing. They are the treatment of weekly compensation and accommodation assistance for students. This bill makes the legislation clearer so that we treat people consistently.

It is important that people receiving weekly compensation are treated the same, regardless of who pays the compensation. Weekly compensation is paid when people cannot work because of an injury covered by the accident compensation scheme. The Social Security Act sets out how the payments are treated when injured persons or their partners claim a benefit. A recent Social Security Appeal Authority decision made it clear that the current wording in the Act does not cover weekly compensation paid under the accredited employer scheme. ACC introduced the scheme to encourage employers to better manage the risks of work-related accidents. The employer gets a reduced levy rate and is responsible for claims where a worker is injured in the workplace. It provides employers with good incentives to minimise the risk of accidents for their workers.

For workers, things are just the same as if they were working for any other employer. They continue to pay the same levy through PAYE and they have the same cover guaranteed under the Accident Compensation Act. If the accredited employer fails to make the compensation payments, ACC steps in to pay the injured worker. That could happen where the employer became insolvent, for example. It would be very unfair if the benefit system treated the injured worker differently just because the weekly compensation payments were made by an accredited employer rather than by ACC. The amendments set out in this bill will ensure that payments of weekly compensation continue to be treated the same, whether paid by ACC or by an accredited employer—or, for that matter, by someone else acting on behalf of ACC or an employer.

Work and Income already treats all of these payments the same. The changes set out in the bill confirm the current and past practice. They will be backdated to take effect from July 1999. That is the time when the wording was first changed to mention the Accident Compensation Corporation as the payer. The decision of the appeal authority, though, will not be overturned. The bill preserves the position of the person who successfully appealed the treatment of weekly compensation payments by an accredited employer.

What does the change mean in practice? It affects two current practices: the backdating of benefit applications and the deduction of weekly compensation payments from benefit payments. The usual rule is that Work and Income cannot grant a benefit from a date earlier than the day on which the person applied for it. Backdating a grant is allowed when a person applies for a benefit after they have been getting weekly compensation for some weeks but their ACC claim has just been declined. If the person had known the claim would be denied, then they would have applied for a benefit in the first place. The Act allows Work and Income to treat the person as if they were receiving a benefit during those weeks. The backdated benefit is used to offset the payments made by ACC. The bill makes sure that the backdating can apply whether the payments have been made by ACC or by an accredited employer.

The second impact of the bill is for people who get less in their weekly compensation payments than the benefit rate that they could claim for their family. Those people can, in effect, have their weekly compensation rate topped up to the right benefit rate. Work and Income pays the benefit after deducting the compensation dollar for dollar so the payments cannot double up; the Crown is not providing twice for loss of income, and families are provided with the level of income they need. The bill makes sure that all weekly compensation payments, not just those made by the corporation, are deducted dollar for dollar from benefit payments. That was, and still is, the Government’s aim. It would be unfair that a person who receives compensation from an accredited employer would be better off than a person who received the same amount of weekly compensation from ACC. That simply would not be fair, and they should be treated the same.

I now turn to how the bill affects students who need help with their accommodation costs. The Government provides assistance for full-time students through allowances and loans. That assistance is designed taking into account the fact that both the individual and the nation benefit from tertiary education. There is a shared approach to assistance, with the Government, students, and their parents contributing resources. This has helped support our high levels of participation in tertiary education, and it is a sensible approach. The accommodation supplement assists low to middle income people with accommodation costs when they are not getting other Government assistance such as income-related rent or a student allowance.

A few students have worked out that they might get more by giving up their student allowance and the accommodation benefit that goes with it, and claiming the accommodation supplement instead. It is not an easy thing to work out, because so many different factors are involved. It depends on their family situation, income, where they live, and their housing costs. The loophole in the Act has meant that students in very similar circumstances can end up getting quite different levels of accommodation assistance. That simply is not right. Students should get the assistance designed for them. The bill closes a loophole so that students cannot use it to claim an accommodation supplement. These are fair and reasonable changes and I commend this bill to the House.

ArdernJACINDA ARDERN (Labour) Link to this

It is my pleasure to rise and, on behalf of the Labour Opposition, be the first to speak on the first reading of the Social Security Amendment Bill (No 3). For the record I state up front that Labour will support this bill. As the Minister, the Hon Paula Bennett, has set out, predominantly the bill makes what appear on the surface to be some minor technical amendments. But, as the Social Services Committee has found in the past with amendments to our social security system, from time to time these minor amendments have unintended consequences, and it is incumbent on the select committee to scrutinise these bills closely to identify where those unintended consequences might be.

At this point I may not be in a position to raise some of those matters, as I have not been able to look closely at the bill and question officials in particular, but I assure the House that that process will happen in due course, as it has with the arrangements in relation to the superannuation living alone payment rate, which the select committee is currently looking at.

As the Minister has pointed out, this bill primarily amends three aspects of the Social Security Act. Firstly, it requires that weekly compensation and payments paid under the Accident Compensation Act 2001 be deducted dollar for dollar from benefit payments. It applies equally to weekly compensation paid by ACC, an accredited employer, or a person acting on behalf of ACC or an accredited employer. That sounds reasonable, on the face of it.

The second aspect is to allow backdating of an application for a benefit when payments have been made by ACC and the applicant’s claim for weekly compensation subsequently fails. Backdating provisions can sometimes tend to be controversial, particularly, obviously, for applicants, and in my mind it is always appropriate for us to err on the side of caution from the perspective of the applicant to ensure that the applicant is not left short if backdating provisions are unfair.

Thirdly, the bill clarifies the provisions that exclude students who are eligible for assistance under the Student Allowances Regulations 1998 from receiving the accommodation supplement. My question to the Minister would obviously be more appropriate for the committee, but I guess I feel it fair to forewarn her that at the select committee I will be very interested to try to ascertain what it means in monetary value for students to go to the extent of cancelling particular student allowance arrangements in order to receive the accommodation supplement. To me, that points to two things. Firstly, there obviously must be a significant financial difference between those two rates of eligibility, but, secondly, in relation to the accommodation supplement, these supplements are never designed to be overly generous but to ensure that an individual is able to survive. For the accommodation supplement to be disproportionately larger than what a student is subsisting on says to me that there might be an issue with the student allowance rate that the student is receiving. It is something that I would be happy to debate at the select committee, and I am sure we will do so with vigour.

ShanksKatrina Shanks Link to this

I can’t wait.

ArdernJACINDA ARDERN Link to this

I am glad that the chair of the Social Services Committee is here to hear me give big props to all of the work that the select committee will do on this bill. I might be overstating my enthusiasm at this point, but perhaps not—we will wait and see.

The Minister pointed out in her address that she saw this bill as primarily being about fairness. I am glad she raised that word. It is one of Labour’s favourite words at present, particularly when it comes to the cost of living, which in many ways this bill goes to the heart of with the issue I have just addressed in relation to students in particular.

I would be happy for any member of the Government to tell me what is currently fair about what students in this country are facing. Not only do we have a situation where the Government is ensuring that in real terms it is allowing a shrinking of the caps that have been funded in tertiary institutions but also students who reach eligibility for our tertiary institutions are being either turned away or subsidised by the institutions that do not wish, in a recession, in good conscience, to turn away young people who have met the threshold test to enter their institutions. To me, that is an absolute shame.

When we look at what Australia is doing to try to match what is happening in a recession, we see that it is opening its doors. It is ensuring that its tertiary institutions are well funded and well placed in a time of recession to place young people who cannot find work into credible training institutions to make sure they are upskilled and ready for when the recession turns round. We are doing the absolute opposite. I have heard of institutions that are turning away up to 300 students at a time—to what? The unemployment rate is almost one in four for 15 to 19-year-olds. What is fair about that?

Also, what is fair about a situation where students are cancelling their student allowance, which is relevant to this bill, in order to try to get the accommodation supplement? Is that triggered by the fact that they are facing such a dramatic increase in the cost of living—about 4.8 percent—and that many of them of struggling to survive? If we match that with the fact that part-time job availability is decreasing, we have a recipe for disaster.

The student allowance scheme is not built to allow people to survive solely on what we provide them from the State. They need part-time work. They need to be able to supplement what allowances they may be eligible for, and I really want to highlight the words “may be eligible for”, given that they are all being means-tested against their parents’ income until the age of 24. It is absolutely ridiculous that we determine that students are dependent until that age when, of course, very few of them live at home or have parents who are able to support them at that point. Also, they could quite possibly be married with children, but they are still means-tested against their parents’ income, which is absolutely ridiculous.

What is fair about a GST increase that hits hardest those with the least discretionary income, which includes students and people who, through no fault of their own, are trying to survive on ACC payments? What is fair about that? Just to throw it all into the mix, what is fair about the Government’s voluntary student membership bill? I say “the Government’s bill” because the Government is supporting the ACT Party bill, even though students associations are one of the small ways that young people in universities and tertiary institutions are able to access health centres at a reasonable cost or free of charge. They did, of course, at one point have the opportunity of accessing youth health centres, but the Government has let a couple of those collapse as well, just for good measure. There is absolutely nothing fair about any of those things that those people are facing, all of which are touched on in some form or another by the Social Security Amendment Bill (No 3).

I am also interested in the quite hefty regulatory impact statement—which is unusual for a Government bill these days—which almost seems to be potentially longer than the bill might be. I was interested in point five of that statement, which states: “Assistance for students is designed in the context that benefits from tertiary study accrue to both the student and the nation so it is reasonable to expect students to contribute to their own study costs.”

I have not at any point argued with that, but I think it is interesting that we have a regulatory impact statement arguing that there is a public good to tertiary study. That is something that we would be hard-pressed to get the Government to acknowledge. In fact, all of its policy towards students has pointed squarely to a firm view that there is a private good only involved in education past the point where a student leaves school as a secondary student.

Not even night classes are viewed now as a public good by the Government, unless, of course, one is learning literacy and numeracy, and I mean that in the narrowest sense of the term, because literacy and numeracy cannot be learnt in any form other than reading, writing, and arithmetic—if one is a member of the Government. Labour members, of course, take a much different view towards the notion of education, its contribution to society, and the public good that it is. We believe that it should be invested in at every step of the way.

There are many elements of this bill that I would like to have a wider debate on. I am sure that my colleagues will pick up on the fairness theme in respect of ACC, because there is a lot to be discussed under that heading. I am sure my colleagues will carry that theme through.

ShanksKATRINA SHANKS (National) Link to this

I did not realise we were in a general debate. The Social Security Amendment Bill (No 3) is actually a very, very narrow bill, and I do not quite know how adult and community education fits into it, how GST fits into it, and how voluntary membership of students associations fits into it. It is actually a very, very narrow bill, so I think that member, Jacinda Ardern, got a lot of latitude in the speech she has just given. It will be interesting, when we get to the Social Services Committee, to discuss the issues that are relevant to this bill. I know there may be a wider debate that goes on within the Labour team amongst themselves, but I am sure we will be able to keep to the bill itself when we get to the select committee.

This is an interesting bill. It addresses just two things. It addresses loopholes in the Social Security Act, and it addresses two areas only. One area is in relation to some students who receive accommodation support. Basically, the bill makes it clear that students are not eligible for the accommodation supplement if they could receive assistance under the Student Allowances Regulations but choose not to apply for it. The bill closes a loophole. It is interesting that the member said she was unsure about what the differences were between the accommodation supplement and assistance provided under the Student Allowances Regulations. Actually, it did not take me very long to get on the phone, ring up, and find that out before I got up here to speak tonight. There is very little difference in the maximum value of those two forms of assistance towards accommodation costs, but it is actually extremely hard to get the maximum amount. Someone has to meet a whole lot of conditions in order to claim the maximum amount.

You know, I would say not a huge number of students are claiming the accommodation supplement, because it would not really be to their benefit to do so. But I think it is really important that we get legislation right. This bill just shows us that when we make legislation we have to be really wary that we do not create loopholes, and that when we find loopholes we have to ensure that we close them pretty quickly.

The bill’s second main provision clarifies that weekly accident compensation includes weekly compensation regardless of whether it is paid by ACC or an accredited employer. Once again, this is just a little loophole in the current Act, which means that it does not include weekly payments when they are made by accredited employers. A recent Social Security Appeal Authority decision confirmed this. The past and the current Ministry of Social Development practice is that compensation payments are deducted, whether they are made by accredited employers or by ACC. This bill will validate the past and current practice of deducting payments dollar for dollar from benefit payments.

I have taken just a short call tonight, and I look forward to debating this bill vigorously in the select committee later on. Thank you.

SioSU’A WILLIAM SIO (Labour—Māngere) Link to this

The last speaker, Katrina Shanks, said she looked forward to debating this issue vigorously at a later stage. I wonder why the member did not take the opportunity to debate the issue now, at this particular time. Let me provide some context before I come to the Social Security Amendment Bill (No 3). We are in a crisis at the moment in this country. I see that the country is in crisis. There has been a cloud over this country for quite some time. We had the tragedy in Christchurch, prior to that we had the Pike River mine tragedy, and prior to that there was another earthquake. Since then, there has been a sense of urgency through the length and breadth of this country about the need as a country to pick ourselves up and move forward. Despite the desire I pick up from the people of New Zealand, all we are getting from this Government is this kind of legislation, this flimsy piece of legislation.

Yes, my colleague Jacinda Ardern said we would support this bill, but we are supporting it on the basis that this is the first reading. We are supporting this bill because we want to debate it and we want to go out and ask for the views of the general public. I have to say that if we send this bill out to Grey Power, whose members will be affected by what is in this bill, or to the students associations of the various universities for their comment, they will throw it in the rubbish—they will describe this as rubbish. Is this the best this Government can do—flimsy legislation? Is this the best this Government can do at this time, when the country is in a crisis, when people are looking for leadership, and when people are looking to move forward? Is this the best this Government can do?

The explanatory note of this bill states that the bill “is intended to ensure equitable treatment—for people receiving payments of weekly compensation:”. I get people on a daily basis coming into my office and saying this Government is not providing the support they need in a time of crisis. I would say that people who have left Christchurch who are now living in Māngere and Manukau are still looking to find support for housing. People who have lost jobs are still looking for support to find jobs.

The other thing this bill is intended to do is to ensure the equitable treatment “of students seeking assistance for their accommodation costs.” Is it not important that in times of crisis we ensure we are investing in the future of this nation? Is it not important that in times of crisis we give every support to the younger generation coming through, so that they are supported to receive the education that not only they need but this country will need in the years ahead? Sooner or later we will need this younger generation to be able to come through the ranks, to be able to get an education, and to be prepared to take up the reins of this country. But if this is the best we are going to do by this Government, it means we are left languishing in terms of trying to find where we go. Let me read out what this bill intends to do. It provides that “the requirement for weekly compensation payments paid under the Accident Compensation Act 2001 to be deducted dollar-for-dollar from benefit payments applies equally to weekly compensation paid by the Accident Compensation Corporation”.

When Grey Power organisations and students associations hear what this bill is about, they will ask: “What about us? What is this Government doing for elderly folk? What is this Government doing for students who want to upskill themselves and get further education to prepare themselves for the future?”.

I have to say it is very disappointing that under this Government we do not seem to be going forward but seem to be going backwards as a country. Instead of wanting to move the nation forward, the Government seems to be taking the nation backwards all the time. In fact, at the beginning of this month, the legislation that came into force was generally an attack on workers. On 1 April, this Government attacked the working population of New Zealand. Workers are already in a crisis; they are already under attack with high unemployment, but this Government, instead of creating and finding jobs for them, is content to say to those workers that employers can now sack them within 90 days for any reason. That is the gift of this Government this month. So I ask whether it can be helped that the population listening to this debate and to the presentation from this Government on this flimsy piece of paper will say that under this Government instead of moving forward we are going backwards. They will say this Government has no plan.

Unemployment increases. Every day, I have to say, we get complaints about the housing stock in our neck of the woods. During 2½ years of being in Government, National made promises to maintain housing stock and ensure that houses were going to be available, but those houses continue to be unlivable and unmaintained. We have winter coming up. What will happen to those people who are still looking for homes? What will happen to the people of Christchurch who are still unable to return to their homes? This Government, instead of focusing on tinkering around the edges of legislation, should be presenting to this House major work to move this Government forward. It should be presenting to this House a plan to move the economy forward.

Frankly, the public has every right to say this Government is out of touch, and does not realise the struggles that families the length and breadth of this nation are experiencing. The rising price of food is making it very difficult for many families, particularly families with schoolchildren, to provide quality food, quality lunches, for their children. The rising cost of petrol is making it so difficult for many of our families to look after themselves. Once upon a time in 2008, my 1990 Toyota Corona cost $60 to fill up. Today, it costs over $100 to fill up the same car. It happened under this Government’s watch, and all we get is the Social Security Amendment Bill (No 3). When will the Government do the right thing for this country? When will it move the economy forward? When will it take this nation forward?

ShanksKatrina Shanks Link to this

I raise a point of order, Mr Speaker. Is this a general debate? He is not speaking to any of the bill at all.

TischMr DEPUTY SPEAKER Link to this

I will judge the relevancy there and otherwise. This is a first reading speech, which is a wider-ranging speech than we find in the second and third readings. I will determine the relevancy.

SioSU’A WILLIAM SIO Link to this

Your determination is excellent.

TischMr DEPUTY SPEAKER Link to this

You do not need to comment on the ruling I have just made; otherwise, I will terminate the speech.

SioSU’A WILLIAM SIO Link to this

Let me just say that when this bill goes out for consultation, I expect that questions will be asked by members of Federated Farmers, Grey Power, and students associations. They will ask what plans this Government has for raising the productivity and economy of this nation, what plans this Government has to increase our employment needs, and what plans this Government has to ensure we invest in our young people.

LockeKEITH LOCKE (Green) Link to this

The Green Party has some criticisms of the Social Security Amendment Bill (No 3). I am speaking tonight on behalf of our spokesperson in this area, Catherine Delahunty, who is the expert. Although we acknowledge that the bill seeks to address two perceived anomalies in the current social security legislation, the Government fails to acknowledge that the two provisions that it is attempting to patch up through this bill are themselves anomalous, discriminatory, and unfair.

First, I wish to address the provisions of clause 4, which will ensure that students eligible for student allowances, whether or not they access them, are not eligible for the accommodation supplement. At present, a perceived loophole exists so that students who may be eligible for a student allowance but choose not to apply for it can access the accommodation supplement instead. In most cases, that provides a higher level of accommodation support than the accommodation benefit payable under the Student Allowances Regulations. The level of accommodation supplement a person can receive under the Social Security Act is subject to a regional cap, responsive to his or her actual accommodation costs. However, the accommodation benefit that a person entitled to a student allowance can receive is not; it is capped at a fixed rate, regardless of the student’s actual accommodation costs. The fixed-rate cap for the student accommodation benefit is a significant cause of debt incurred by students. Often they simply cannot find accommodation they can afford on their student allowance and the flat-rate accommodation benefit. There is an inherent discrimination and unfairness in the way that students are treated in this regard, by comparison with everyone else.

I note that the recently released report from the Welfare Working Group of the Minister for Social Development and Employment proposes abolishing the accommodation supplement for everyone and introducing a fixed-rate accommodation allowance, similar to the student accommodation benefit, albeit with different regional rates for all people requiring accommodation assistance. That would be a retrograde measure, indeed. Just as students currently encounter considerable difficulties finding accommodation they can afford and frequently end up living in overcrowded and substandard conditions as a result, the recommendations of the Welfare Working Group would exacerbate that problem many times over. They ghettoise beneficiary and low-income New Zealanders into the sorts of disgraceful housing estates that we see in the northern parts of England and Scotland, with all the associated social dysfunction and crime that goes with that.

Rather than extend the student accommodation benefit regime to beneficiary and low-income New Zealanders, the scheme should offer students accommodation costs that are linked to, and genuinely meet, their actual accommodation costs. Rather than putting a sticking plaster over the pustular sore that is the student accommodation benefit—which this bill does—the Government should be seeking to heal it.

Clause 5 addresses the way ACC weekly compensation payments interface with benefit payments payable by Work and Income. At present, benefit payments are deducted from weekly ACC compensation payments on a dollar for dollar basis. However, a loophole discovered through a case at the Social Security Appeal Authority revealed that in law weekly compensation payments paid directly by employers accredited with ACC should be treated as income and deducted from benefits at a different, more favourable ratio. The current practice, which this bill seeks to retrospectively validate—and that in itself is repugnant to good legislative practice—can result in someone who has been on a benefit while working part-time suddenly having their benefit reduced to zero after an injury.

The Green Party does not support people being able to double dip. The dollar for dollar deduction is fair enough if someone’s eligibility for weekly compensation is caused by the same event as his or her eligibility for a welfare benefit. But when someone is receiving, say, a sickness benefit in respect of a chronic illness, and is working part-time, it is completely unfair, if he or she becomes fully incapacitated as a result of an injury, to have the sickness benefit reduced by $1 for every dollar of weekly compensation received. Such a person effectively receives no compensation for his or her loss of earning due to injury, and that is repugnant in respect of the principle of real compensation upon which our accident compensation scheme was founded.

Were the Government to propose reverting to the pre-1999 provision under the weekly compensation - abated welfare benefits, in the same manner as any other income does in the absence of a common causal event for both entitlements, we would consider supporting clause 5. But under the current, unfair, dollar for dollar deduction system that applies for weekly compensation, we cannot. I sincerely hope that the select committee will address these profound points, provided to me by my colleague Catherine Delahunty. Thank you.

McClayTODD McCLAY (National—Rotorua) Link to this

It gives me pleasure to rise and speak on the Social Security Amendment Bill (No 3). I will start by thanking the extremely hard-working Minister, Paula Bennett, for bringing this bill to the House. I particularly enjoyed her speech introducing it, and very much look forward to the bill coming to our Social Services Committee, where we can seek the wider views of the public on this issue.

I will touch on just a couple of points. I have had a chance to read the bill. I understand it, and I think that it is doing a number of things that are important. I am glad to hear that others in this House are going to support it. Mr Su’a William Sio, who spoke earlier, spoke of many things, and at one stage he was waving a piece of paper and saying that when this bill went out for consultation others would be concerned and would throw it in the bin. The problem with that was that it was not the bill he was holding; it was his speech. So I agree with him. I am sure that many others out there would throw that speech in the rubbish bin, although we have some important work to do.

The point I really want to make is that this bill is about anomalies and closing loopholes. That is why I am sure that Labour members will support this bill all the way through. It was not so long ago that we heard the Leader of the Opposition say in public that he would give a $5,000 tax break to all New Zealanders—their first $5,000 of income would be tax-free—and that he would pay for that by closing loopholes. So I guess that this was one of the loopholes he was talking about; it would not go anywhere close to paying for that promise that he will not be able to deliver on.

It is important that as a Government, and as a Parliament, we come together to make sure that those outside this place are treated fairly, and I believe that this bill does that. As I said, I look forward to dealing with it when it comes to our committee, and I look forward to seeking the views of the public, who Mr Sio said would have thrown his speech in the bin. Thank you.

PrasadDr RAJEN PRASAD (Labour) Link to this

I am pleased to take a call on the Social Security Amendment Bill (No 3), and I say to the previous speaker that, yes, we will support this bill, probably through all of its stages. But let me also say to that member that we remind him and we will remind Government members of all of their follies in the many other areas that also relate to many of the issues raised in this bill, and the principles that speakers from the other side of the House have already talked about. So, yes, we will take every opportunity, I tell Mr Todd McClay, to do those things, as well.

The first point is that this is correcting legislation, which is designed to fix two problems that have arisen—and, yes, we can understand that. The first arises from a decision of the Social Security Appeal Authority. That appeal authority has found a hole somewhere, and it wants that hole fixed and to have a decision. This relates to section 71A of the Social Security Act 1964, which does not cover weekly compensation payments made by employers accredited under the ACC accredited employer scheme. So the practice of reducing, dollar for dollar, income-tested benefits by the amount of compensation for injuries at work, paid through ACC by accredited employers, is illegal and therefore has to be fixed. So I can see the need for correcting legislation, which is what this bill is.

It is also interesting to note that the scheme covers a lot of employees—about a quarter of all employees are caught by this particular scheme, so it is quite important. There is a financial incentive for employers to be part of the scheme, because they pay lower levies if they are in this particular scheme. If only some income benefits came under the scheme, and not others, we are told that that would create extra costs for employers and inequality amongst different types of beneficiaries. The word “inequality” comes up quite often in this bill, and the Minister mentioned “inequality” in her own speech, as well. I just wish that the Government was as quick also to address the many other kinds of inequalities we have seen, because some of what the Government has introduced, under equality measures so to speak, are really “inequality” measures. That has found many New Zealanders going backwards. Much of the tax switch for many of our citizens has had the same effect, as well.

I can see how the regulatory impact statement says that the return to full-time or part-time work could be seen as a disincentive if the compensation were treated as income and the full benefit was paid out. So if somebody received the full benefit as well as some income, then if that were cut off, there really would be a disincentive for people to go back to work. The benefit, plus the income, would be higher than one would ordinarily receive, so would thus act as a disincentive. Again, this is a recurring theme. The assumption always is that those who are poor, and those who are on low wages, are somehow out there to get the system, so we must screw everything down to the lowest common denominator in order to make it as difficult as possible. This bill, in a sense, does that. It tries to take everything down to the lowest common denominator. The point, though, is that this is not being done in a consistent manner.

There are many other areas where disincentives are a recurring theme but they are not addressed. However, we have to accept that there are good reasons for correcting the problem that has arisen with section 71A of the Social Security Act 1964. The approach taken is to make it legal for these deductions to be made for those people on weekly compensation payments. The Government has rushed this legislation, quite urgently, and it is important to discuss it now. But again when we look at the total amount of money that this provision will save, we find that the regulatory impact statement says that the problem, if not corrected, would cost an additional $700,000 in benefit expenditure per annum. So there we are—$700,000 in benefit expenditure per annum is what this bill is trying to hold, and what this bill is trying to fix.

I agree with Katrina Shanks, that if there is a problem with legislation we should fix it. But for something with such a small annual dollar value, one wonders whether this is the priority. Given all that is happening at the moment, we ask whether this is the priority at this time. Is this part of the Government’s plan for getting our economy going? Somehow, it is always people at that end of the socio-economic spectrum who are the ones being watched most of the time, when an amount as little as $700,000, which we might pay off extra in a year, is something that this particular bill is being brought forward to try to resolve. Again, that masks the fact that the Government does not have a plan. This is part of its economic plan, and if this is what it is—and measures like this—then I think we are in pretty serious difficulty. The bill also makes the correction retrospective.

Retrospective legislation always leaves a bad taste in one’s mouth, wondering if it could be avoided, etc. Perhaps when we look at the bill in the select committee we will see if it is reasonable.

There is one good provision in the bill, as well, and it is that the appeals currently going through are saved. If those appeals are successful, then they will be accepted. So those appeals are not frustrated, and I congratulate the Minister and the officials on thinking that through and making sure that at least retrospective legislation takes account of something that might have happened perversely. The regulatory impact statement also makes it clear that if the provision was not retrospective, there could be an additional $3.2 million of one-off payments coming out of those kinds of appeals. I guess that provision takes care of the risk.

There is a second issue that the bill addresses, which relates to the inconsistency between policy and legislation, as set out in section 61EA of the Social Security Act 1964. This inconsistency has the unintended consequence of giving access to accommodation supplements to some full-time students, when it is the intention that their conditions are to be regulated by the Student Allowances Regulations 1998 and the student loan scheme. There is another bill currently before the select committee that is using the same kinds of principles to make sure that students and student loans are taken care of by that particular scheme. So it is really about unintended consequences.

I am pleased the Government is looking at unintended consequences. As this relates to ACC as well, I wonder what thoughts were given to the unintended consequences of coming down so hard on ACC payments for the treatment of sexual abuse victims. Where was the unintended consequence of that type of policy that the Government has brought forward? The effect of that policy on many women for many, many months was very, very serious. I know my colleague Lynne Pillay received many letters that said that that policy had taken people’s lives backwards. There is a little inconsistency in what the Government is doing. There were clear, unintended consequences of a particular policy the Government brought forward under ACC, affecting sexually abused women. Yet in this bill the Government is very careful to make sure that the unintended consequence is addressed. This provision will exclude students who are eligible for assistance under the student loan scheme.

Labour will support the bill going to the Social Services Committee. I am sure there are many other aspects of the bill that I have not fully understood, so I look forward to robust discussion and debates in that committee, of which I am a member. I look forward to seeing exactly what some of the other unintended consequences are of this particular policy. It will give us a broader opportunity to look at the Government’s plans in this particular area, and we will come back to the House to debate other areas as well. Thank you.

MacindoeTIM MACINDOE (National—Hamilton West) Link to this

It is always a pleasure to follow the loquacious Dr Prasad in debates in this House. We need to remember that the Social Security Amendment Bill (No 3) is a fairly straightforward and necessary measure. It is designed to restore fairness and equity within our system for paying student accommodation allowances and accident compensation. I say to the member that it is good to hear, yet again, that Opposition members will support the bill, but I am puzzled—as I have been so often in my time as a member of this House—that the Opposition members say they will support a bill, but then everything they say in debate appears to oppose it.

I say to members opposite that it is no wonder New Zealanders have absolutely no idea what Labour currently stands for. It is also very apparent why Labour is becoming less and less relevant to the New Zealand public with each passing day. To give members one example—and it is worth pointing it out—the member for Māngere, Su’a William Sio, professed to be deeply concerned about the cost of petrol at the moment for New Zealand consumers. I am sure we all are concerned; it is at a high level. But of course he failed to point out that the cost of petrol at the moment has still not reached the level it did in 2008 under the previous Labour Government. It is very curious to hear a member saying how outraged he is at the cost of something and that it is unaffordable, when, in fact, it is cheaper than it was when his party was in Government.

This measure responds to inequities and it overcomes unfairness. As Dr Prasad has just said, there are very good reasons for promoting it, so I simply say to that member and to all members opposite: let us stop talking about it, and let us get on and do it.

FaafoiKRIS FAAFOI (Labour—Mana) Link to this

Thank you very much for the opportunity to speak to the Social Security Amendment Bill (No 3). Earlier in this debate as my colleague Su’a William Sio was addressing Parliament, members across the House—I think including the Minister—were asking whether he thought he could pad out his speech for 10 minutes, and were saying that he would need to speak slowly. I am not surprised, because there is not enough in this bill. It does not take a good look at what the real problems are in this area. In fact, it is tinkering. It is tinkering around the edges. It is a lost opportunity.

The bill is correcting legislation. Although I believe that Labour will support the bill through all stages in the House, there is some concern that the Government is not taking a really good look at what the issues are for the people the bill will affect. The Minister of Social Development and Employment, in her opening address, made a comment that this bill is about fairness. If it is, then that is very interesting in terms of fairness for most New Zealanders at the moment, and in terms of the cost of living.

I would actually challenge Tim Macindoe at the moment, in relation to his assertion that petrol prices are not as high as they were in 2008. I cannot remember petrol being $2.19 when I paid in 2008. I cannot remember paying that much for it. I cannot recall in 2008 paying $2 and 18.9c for a litre of 91 petrol. Maybe Mr Macindoe might want to go and check his facts on that claim, and then come back to the House to clarify whether that is true.

As I said, the Minister said the bill was about fairness. That comment is interesting, given what is going on in most Kiwi households at the moment, where in terms of the cost of living people think that New Zealand is going backwards. Todd McClay mentioned to the House Labour’s policy of making the first $5,000 of earnings tax-free. That is exactly about fairness, because whether a person is a cleaner or a chief executive, that person would get the first $5,000 tax-free. That is unlike the tax-cut package that came in on 1 October, where the top 10 percent of earners got 40 percent of the tax cuts under this National Government. In terms of fairness, most New Zealanders think that that does not quite meet that standard. I thank Tim Macindoe for bringing up the issue of petrol, because most Kiwis think petrol is yet another one of the things they have to fork out for, in the cost of living rises each week that are making things unfair for them.

MacindoeTim Macindoe Link to this

Have you seen what’s happening in the Middle East, Kris?

FaafoiKRIS FAAFOI Link to this

I read the papers, too. But I say to Mr Macindoe that people are also concerned about what is happening at the petrol station when they are filling up their cars, and when they see the petrol pump figures going well beyond the hundred-dollar mark to fill up their cars. Where is fairness when people are looking at what the National Government is doing at the moment? Most Kiwis believe that in terms of fairness and the cost of living they are not getting a fair deal under this Government. Although this bill, as the Minister said, tries to address fairness, most Kiwis feel as though they are going backwards. Most Kiwis feel as if this Government does not have a plan to get the economy going. In terms of fairness for ordinary Kiwis, I believe that this Government might be out of touch.

Going back to the bill, I tell members that we are talking about tinkering. We are talking about correcting legislation that is really inconsequential. Going to the bill itself and looking at the third aspect of it that I have on my piece of paper, which is to clarify provisions, I note that the bill will exclude students who are eligible for assistance under the Student Allowance Regulations 1998 from receiving the accommodation supplement. I guess the intention of that—and as I said before, Labour will support this legislation—is to try to help students. But if this Government really wanted to help students, they would not support the legislation that the ACT Party put forward in terms of voluntary membership of students associations. Student unions—and if I am correct, the Minister may have been the president of a student union in her student days—are absolutely vital in terms of making sure that students have the required assistance they need at tertiary institutions. If this legislation goes through, all the services that students have relied on over time will no longer be available to them. In the fairness game for students, that does not match up.

I am also looking at the disincentive Rajen Prasad spoke about: the disincentive for getting both the allowance and accommodation supplement for part-time workers. Although that attends to the question of fairness, we on this side of the House will definitely address fairness in the upcoming election. We have a plan to make sure that we give most Kiwis a fair go, and to make sure that everyone pays their fair share. I guess that is what having the first $5,000 of salary tax-free is about. We will make sure the economy will work for most ordinary Kiwis. We will be introducing legislation that will make sure we focus on jobs and creating jobs, not the kind of tinkering legislation we have before the House at the moment.

We will not be tinkering, either, with our State-owned assets. We will not be tinkering with those. They will stay in the ownership of the ordinary Kiwis who already own them. We will make sure that State-owned assets are protected from being sold offshore. The profits that come from our State-owned assets—I believe they are somewhere in the region of $750 million a year—will stay right here so that they will go towards paying for the essential services that Kiwis rely on.

While I am talking about services, let us talk about public services and the fairness of what the Government is planning to do there. Unfortunately this House—

TischMr DEPUTY SPEAKER Link to this

I ask members that the noise level be reduced. It is becoming increasingly difficult to hear the member, so please calm it down.

FaafoiKRIS FAAFOI Link to this

Thank you very much for that, Mr Deputy Speaker. I think I was talking about the fairness of public services, and the Government’s intentions around cuts that, unfortunately, it has been telegraphed will come on Budget day next month. Where is the fairness for ordinary Kiwis who rely on very essential public services in health and education? How is it fair that we are getting this tinkering legislation, and a massive whack, when the Budget comes through next month? What we really need is to stop this tinkering around the edges. What we really need is a plan to make sure that we are making it fair for all Kiwis who are struggling to make ends meet.

What we have here is just a small piece of inconsequential legislation. It does not really address the wider issues facing Kiwis at the moment. What we need is a real plan to make sure things are fair for Kiwis, and to make sure that Kiwis can do the simple things like putting food on the table and making sure their kids can go to school and early childhood education without having to pay exorbitant prices for that—because this Government is pulling $400 million out of early childhood education. I expect a barrage about that but it is absolutely the truth. The members opposite are not listening. They do not care about the fact that in one case in my electorate parents will have to pay $25 more, per kid, per week to make sure their kids can have the right to go to early childhood education.

BorrowsCHESTER BORROWS (National—Whanganui) Link to this

I support the Social Security Amendment Bill (No 3).

Link to this

A party vote was called for on the question,

That the Social Security Amendment Bill (No 3) be now read a first time.

Ayes 110

Noes 10

Bill read a first time.

BennettHon PAULA BENNETT (Minister for Social Development and Employment) Link to this

I move, That the Social Services Committeeconsider the Social Security Amendment Bill (No 3) , that the committee report finally to the House on or before 31 May 2011, and that the committee have authority to meet at any time while the House is sitting (except during oral questions), and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 187 and 190(1)(b) and (c).

Motion agreed to.

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