Corrections (Social Assistance) Amendment Bill, Customs and Excise (Social Assistance) Amendment Bill, Injury Prevention, Rehabilitation, and Compensation (Social Assistance) Amendment Bill

Hon RUTH DYSON (Minister for Social Development and Employment) Link to this

I move, That the Corrections (Social Assistance) Amendment Bill, the Customs and Excise (Social Assistance) Amendment Bill, and the Injury Prevention, Rehabilitation, and Compensation (Social Assistance) Amendment Bill be now read a third time. These three bills were introduced to the House as the Social Assistance (Debt Prevention and Minimisation) Amendment Bill. The measures that these bills introduce will increase the efficiency of the existing information matches between the Ministry of Social Development and three other Government agencies—the Department of Corrections, the New Zealand Customs Service, and the Accident Compensation Corporation. I will explain the relevance of those three Government agencies over the next little while.

The three bills amend the provisions relating to the use of data supplied by those three agencies. The amendments will allow the Ministry of Social Development to use that data, firstly, to prevent unnecessary debt by allowing benefit payments to be stopped in a timely way if a beneficiary enters prison; secondly, to be more effective in the recovery of Crown debts; and, thirdly, to assist in identifying claims for student allowances and the living component of student loans from people who are in prison and not entitled to this assistance.

Labour is committed to preventing the overpayment of benefits and the misuse of these benefits. We are committed to a modern welfare system and a modern social security system. These bills help to modernise that welfare system, thereby making the most effective use of the tools we have available.

We introduced this legislation to improve the efficiency of current administrative procedures, and to enhance confidence and trust in the social assistance system. I have been pleased with the support that the legislation has received from other parties in its previous stages through the House. It is good to see that so many parties can agree on straightforward measures to improve efficiency and to prevent unnecessary benefit debt.

I acknowledge the work of the Social Services Committee, where, I understand, the conversations and deliberations were extremely constructive. The select committee proposed a minor change that has improved the clarity of the legislation, and it did so as a result of a submission. Committee members expressed concern at the potential for the wrong benefit to be suspended. The committee was informed that benefits are paid a week in arrears, so in most cases people will still be entitled to receive, and will receive, some benefit payment after entering prison and will get the notification of suspension up to a week before the benefit is suspended. Work and Income will reinstate payments overnight, and, if needed, will make emergency assistance available immediately in cases where payments are suspended in error. Those two points alleviated the committee’s concerns.

Committee members were also anxious to ensure that processes were in place to assist the family members of people entering prison. The committee was informed that for the small percentage of prisoners with dependent family members, telephone contact would be made with those prisoners’ partners in order to ensure that continuing assistance was provided when needed. The committee has suggested that Work and Income consider placing representatives at major courts to adjust benefits immediately, and to assist family members. I have asked the ministry to consider the practicality of doing that, and, if it is not feasible, to consider what other action could be taken to assist people in this situation. The amendments contained in the Corrections (Social Assistance) Amendment Bill will allow benefits to be stopped immediately when a person enters prison, thereby reducing any overpayment of benefit and subsequent debt.

The bill will also allow information currently supplied when a person enters prison to continue to be supplied, as long as that person remains in prison. This will allow the Ministry of Social Development to identify when a prisoner applies for a benefit or for the living costs component of a student loan or student allowance. Prisoners will still be able to access assistance for their study costs but will be prevented from receiving assistance for their living costs, because, quite clearly, those costs are met by the corrections system while the person is in prison.

The amendments contained in all three bills will also allow data to be used to locate people who have benefit debt but who are no longer receiving a benefit. When people are off a benefit they are more likely to be in a good position to repay any benefit debt. The amendment will allow data matching to be used, replacing to a large extent the existing paper processes currently used between the ministry and the three agencies to locate benefit debtors. It will enable the ministry to contact people about their benefit debt more effectively and efficiently.

These bills make sound economic sense, as well as social sense. They represent the efficient and effective use of technology, time, and money. As I said earlier in my contribution, Labour is committed to preventing the overpayment of benefits and the misuse of any benefit. We are committed to a modern welfare system, and these bills help to modernise our welfare system as it is currently, thereby making the most effective use of the tools that are available. I commend these bills to the House.

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

I am grateful for the opportunity to contribute to the third reading of these three bills—the Corrections (Social Assistance) Amendment Bill, the Customs and Excise (Social Assistance) Amendment Bill, and the Injury Prevention, Rehabilitation, and Compensation (Social Assistance) Amendment Bill—which have resulted from the division of the Social Assistance (Debt Prevention Minimisation) Amendment Bill. This legislation is intended to enable the Ministry of Social Development to prevent and recover debts and to detect more readily the misuse of the social security system, the student allowance system, and the student loan system, by broadening the data-matching provisions.

National members are very pleased to be able to support these bills. We have enjoyed working in the Social Services Committee on a pretty much bipartisan arrangement with regard to this particularly highly constructive and worthwhile legislation.

Naturally, we have to ask why it has taken 7 to 8 years—until the dying days of the Labour administration—before this Government finally got around to doing something about debt. The facts are that when the Labour Government came into office, the debt owed by beneficiaries to the Ministry of Social Development was in the order of $320 million. It is now a whopping $760 million. As the Chief Executive of the Ministry of Social Development, Peter Hughes, said, it has gone from 49 percent of beneficiaries who were in debt to Work and Income, to 70 percent now. That is a huge—

RUSSELL FAIRBROTHER (Labour) Link to this

That was Dr Paul Hutchison, who was an erstwhile member of the Social Services Committee, which processed the legislation with all speed. I am delighted he is high in his praise of the need for the legislation. I am sad that I have missed part of his speech. I dare say it had parts that were critical of the Government, because ex gratia comments like that are made all the time. But in substance he has to admit, as do all members on the opposite side, that there is a tide in the affairs of men that when taken at the flood leads on to fortune, and in this case the Government has spent 8 years rebuilding the infrastructure so that legislation such as this can be introduced. Under the rather futile tax cut policy that National runs all the time, which questions the morality of Government spending, we would never be able to afford the infrastructure that enables, via three pieces of legislation, three Government departments to be pulled together to ease the stopping of a benefit when the need ceases because of an individual’s change of circumstances, such as being taken into custody or leaving the country. What underlies this bill, which is deceptively simple on its face, are the keen issues.

I have to say that I was going to raise a point of order at 2 o’clock today, when Parliament started, because I thought the Minister of Statistics would be called upon to give a speech on his 30th birthday. However, I was intimidated; I knew he was nervous about approaching this event, and he has tried to do so as anonymously and quietly as possible. He is not one for fanfare when it comes to minor milestones like reaching 30, and I did not want to raise publicity.

I return to the bill, and I have to say that it covers the danger of excursion into the privacy of individuals. We must value the privacy of all individuals whether or not they are serving a term of imprisonment. It is equally important for all of us. If we treat lightly the excursion into the privacy of one class of individual, then we will likely do so for other classes of individuals. So this bill had to balance the need for efficient payment of benefits with the right of individuals to privacy, some of whom have no control over their circumstances because they are serving a custodial term. This bill tightly constrains the circumstances in which there can be data matching between the Department of Corrections and the Ministry of Social Development. This data matching is set about in tightly constrained parameters, so that when a circumstance arises, the computer systems automatically identify the change of circumstance and bring to an end the payment of the benefit in circumstances when individuals can be excused for not turning their minds to such mundane matters as receipt of the weekly income because the emotional turmoil at being sentenced to a term of imprisonment is their supervening and dominant thought.

Of course, the select committee was concerned, as has been remarked on already in this House, about the need to ensure that prisoners, and particularly their families, were aware that their income status would change. The report of the Social Services Committee contained a recommendation that at times of sentencing and remands in custody, courthouses be manned with officials from the Ministry of Social Development so that they could speak with families and advise them that there would be an automatic change in the right to a benefit. That way, individuals who might be affected by a change could be aware of that at what is really a most traumatic time for any family caught up in the cycle of our criminal justice system. It is probably too much to expect that this wish of the committee will be carried out. It probably was included to salve our concerns about the incursion on liberty and privacy, but it is a recommendation and it is one that I note will have no hope of being fulfilled if the rampant tax cuts advocated by the members opposite are ever put in place. It is constructive human interventions such as this—which are supported from the public purse and which make the cogency of society so successful—that are damaged and in fact rendered impotent by thoughtless tax cuts for a few who may gain an extra few dollars a week.

I stand here proud that this legislation achieves what it sets out to achieve. I am very pleased that it will be read into law, hopefully, today. The legislation tidies up the position of those people who lose their freedom, and it means that there is an adjustment of benefit on an automatic basis, but, hopefully, and with all seriousness, it is intended not to disturb the right of entitlement of any dependants they had at the time of their change of status in respect of their freedom.

This legislation, in my view, has benefited from the work of the select committee. I dealt with that during the second reading debate. Amendments were made by agreement of all parties on the select committee, and they have survived the Committee stage. I think this legislation will rest on the statute book without much challenge in the courts, because it is purely infrastructural legislation, and it minimises the unnecessary excursions into an individual’s situation, so there appears to be no need for it to be challenged in our courts of law. But if that ever did occur, I think there is a degree of elegance in the drafting of the legislation that will survive even the closest judicial scrutiny, and it will remain on our statute book for a long time, or at least for as long as this country can afford to have a public service that is adequately funded and can fulfil its responsibilities to each and every individual in our community to make good the services of the Government.

These are the entitlements of every individual out there, which we should not take lightly, and all of us should resist stoutly the cry of a few for the immediate benefit of a tax cut. At the end of the day, a responsible tax cut is one thing, but excessive tax cuts are another, and this legislation is a great example, as Dr Paul Hutchison will recognise, of what can be done when we have a properly funded Government, and of what we could not do if we had a Government that lived on a very tight and an insufficient budget.

I am not one to delay the passing of this legislation by addressing issues that have no relevance to it, and I do not wish to have unnecessary verbiage on a matter that is as straightforward as this. But I feel that those few passing, wise remarks will be well-received by my friends opposite—Dr Hutchison and Katrina Shanks—both of whom I see take great comfort, as they sit alongside each other, from listening to the words I have uttered today. I thank them for their splendid cooperative support during the select committee stage. But to get to the point of the matter, I really want to commend this legislation to the House.

I will bring this speech to an end so that we can get the legislation passed. I ask the House to go forward and take the vote on it, and to proceed to the next major piece of business on the Order Paper, which, I daresay, will be equally as elegant and important as is this legislation.

KATRINA SHANKS (National) Link to this

It is my pleasure to stand to take a short call in support of this legislation. Unlike Mr Fairbrother, I cannot stand here for 10 minutes and look at one little spot on my desk and ramble on. At one stage I was unsure whether he actually knew which bill he was talking to, because the barbs were so good that I thought maybe he was talking to the next bill. But as he is leaving the House, he obviously was not talking on that bill. He intended talking on this legislation, which he occasionally touched on in the 10 minutes of his brief speech today.

BARBARA STEWART (NZ First) Link to this

On behalf of New Zealand First I rise to support the third readings of the bills from the Social Assistance (Debt Prevention and Minimisation) Amendment Bill. It is relatively rare for legislation to go through the House with the support of almost all parties, and, when this widespread support occurs, it is very obvious that the legislation is addressing a problem that is widely recognised. It is a real pleasure to support this legislation.

As the commentary states, this legislation amends the legislation affecting data sharing between a whole number of agencies: the Ministry of Social Development, the Department of Corrections, the New Zealand Customs Service, and the Accident Compensation Corporation. This is important and highly constructive legislation because it focuses on minimising hardship and debt when a person is on a benefit and his or her circumstances change, specifically when he or she enters the criminal justice system. Greater sharing of all the information between these organisations would prevent the hardship that occurs.

I think it is very realistic to say that people are not in a position to contact Work and Income when they are in prison or entering prison. I would say that it would not be one of the things that they would even be thinking about at that time—and neither would their families—yet this can be the very time when this debt starts to build. Overpayment on a benefit can be extremely difficult to pay back when one is on a fixed income, and we have heard various figures bandied about in this House tonight about the level of debt of beneficiaries—the number of beneficiaries who have actually fallen into debt. Any changes, such as this legislation, that help to prevent overpayments and help to reduce debt need to be implemented and to be implemented quite rapidly.

We in New Zealand First had some concerns about incorrect data matches, but, with the safeguards that the Ministry of Social Development has in place to ensure that if this happens there is minimal impact on the person concerned, we were reassured. These safeguards will actually give people the opportunity to have their benefit reinstated before a payment is missed. The transferring of money overnight into a person’s bank account when a payment has been stopped wrongly is a very positive step forward. As previous speakers have said, the data matching will be important and it will need to be carefully monitored.

We in this House all know—and we have had people come to see us who have unmanageable debts—that debt can become totally unmanageable when one is on a limited income, and unfortunately it does not take very long for that situation to occur. Unfortunately, too, it takes a very long time to pay back any debts that are owed. These are the people who often fall prey to the unscrupulous moneylenders as they attempt to find a quick way to get rid of a debt, only to find themselves with a far larger problem in the long run. It is difficult enough to manage on a fixed income and on a benefit, and, with the rises in the costs of living, to have to repay a debt at $10 or $15 a week is an added struggle and a big stress for those families—many of whom we have to recognise live from week to week. To ensure that debt is not incurred in the first place is absolutely imperative. Being in debt, of course, can also reduce the financial advantages of finding a job and returning to work, as levels of repayments are often reduced while a person remains on the benefit.

New Zealand First wholeheartedly supports this legislation. We believe that any measure that stops beneficiaries from getting into debt unnecessarily, wrongly, or fraudulently is very worthy of support.

METIRIA TUREI (Green) Link to this

I am pleased to speak on behalf of the Green Party and my colleague Sue Bradford, who is away on select committee business, in opposing this legislation. The Green Party will be voting against this legislation—the three bills that have been split from the original Social Assistance (Debt Prevention and Minimisation) Amendment Bill. We originally offered our support for that bill on the basis that one of its key goals was to prevent beneficiaries who are in prison from having their benefits overpaid. In itself that has merit as an idea, but there are some surrounding contextual issues that have caused us to change our position since the original bill had its first reading in August last year.

This legislation is geared to enable the Ministry of Social Development, the Department of Corrections, the Customs Service, and the Accident Compensation Corporation (ACC) to share more information between them in order to stop people receiving benefits, accident compensation, or student loans while they are in prison. This is to be done by data matching personal details held by the ministry against those held by other departments. A secondary purpose of the legislation is to provide the ministry with information held by the Customs Service and ACC, so that Work and Income can more easily and readily locate debtors who are no longer in the country or who are on accident compensation.

What the Green Party finds particularly offensive about this legislation is that its whole thrust is actually about the machinery of the State grinding down into the lives of some of our most vulnerable people in more and more detail, in a way that people who have never been on a benefit or, even worse, in prison would find hard to imagine. In itself improving the efficiency of the administration of the welfare system is fine. However, the Green Party would find this legislation a whole lot more palatable were it accompanied at the same time by legislation and other policy measures that improved the welfare system. For example, we would find it heaps easier to support these changes if the Government was to reintroduce a third-tier, discretionary allowance like the old special benefit, so that people on very low incomes who just cannot make ends meet have a final safety net. With the introduction of temporary additional support several years ago, that safety net for our most vulnerable people has been lost.

The Government should be doing more to ensure that people who apply for benefits receive their full entitlements from the time that they are eligible for them, and that front-line staff at all offices are trained to understand it is not their money they are giving away but is actually income support to which citizens of this country are legally entitled. People like the sole parents of young children, and invalids beneficiaries, should not be subject to constant harassment by the State to get off the benefit by any means possible. Above all, benefits should be restored to their pre-1991 levels. On Tuesday benefit rates went up just slightly, in line with CPI increases, but it was by nowhere near enough to match true rises in the real cost of living or to recover what was lost in 1991.

On top of that, as the Wellington People’s Centre pointed out, the accommodation supplement, which many beneficiaries rely on to help with their housing costs, will drop for almost everyone who receives it, as a result of the benefit rate increases. For those who are on income-related rents, their rents will increase because of their increased income—and they are not eligible for the accommodation supplement, at all. The Wellington People’s Centre considers that the real increase in benefit rates on Tuesday was around 1.5 percent to 2 percent for many beneficiaries. That is a very far cry from what is really needed at a time when the costs of transport, housing, heating, and food are going through the roof. Many beneficiaries are sinking further and further into debt just to survive. One might consider the introduction of online Lotto gambling, where one has to use a credit card—debt—in order to gamble, as an example of this Government’s ridiculous policies on managing and assisting low-income people to get out of the poverty trap. However, I digress.

Beneficiaries and prisoners and their families continue to be disproportionately Māori. All this matters, in relation to the collection of small bills we are discussing today, because the Government’s legislative efforts are symbolic of its priorities. If legislation such as that put forward today was linked to any or all of those other measures, or to some of the many other positive reforms that could and should be made to our welfare system, then the Green Party would have a very different attitude. But what we see is the Government being focused on making sure that the very last dollar is extracted from the maximum number of beneficiaries, accident compensation recipients, and students, while completely failing to extend any generosity or respect from the State in the opposite direction, to them.

All of that is at the macro level. At the micro level we still have other concerns about the impact of this legislation and what it will do to those most affected by it, who are very vulnerable people: prisoners and their families. When the Social Services Committee discussed that, the main concern of one of my colleagues, Sue Bradford, and of other committee members was the fact that it is often not just a prisoner who is affected by the immediate loss of his or her benefit, but is also the prisoner’s partner and children who are affected as well.

Although the committee received assurances from officials that families would receive plenty of notice of any benefit suspension or cut-off, the Greens are not reassured on this point, being far too aware that the benefit system in practice is very different from the benefit system in theory. Often mistakes are made by either Work and Income or beneficiaries, or by both. Sometimes benefits are cut when they should not be; sometimes there are time delays in getting benefits put back on. At the moment the fact that there is a 9-day period before a benefit is suspended, as currently permitted under section 103 of the Privacy Act, means that there is some, albeit small, protection for affected individuals and their families. But that buffer will no longer exist once this legislation goes through.

On balance the ill that this legislation seeks to correct—the issue of prisoner overpayments—is potentially less damaging than the very serious risk of the dependants of prisoners, their families, their partners, and their children, finding themselves suddenly without any income, or of innocent people having their benefit cut because of errors in data matching. For all those reasons the Green Party has withdrawn its support for these bills. We look forward to the day when we can stand in this House and vote for some progressive and forward-thinking welfare legislation, rather than for yet another bill with the primary purpose of further refining the level of State interference and harassment in beneficiaries’ lives.

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

I rise on behalf of United Future to support the third reading of this legislation, which has now been separated into three bills. They will reduce and prevent the amount of debt accrued by beneficiaries.

The point of this legislation is not to cut off at the knees people who are in receipt of a benefit. The point is that when circumstances arise such as someone serving a prison term, a person’s benefit will need to be adjusted. Another example is when someone reliant on a benefit is to be cut off and the benefit reallocated to people who remain at home.

Work and Income New Zealand has historically been slow to respond to these changing circumstances, and beneficiaries have ended up accruing unacceptable levels of debt, which is a weight around their necks. We understand that sizable numbers of New Zealand beneficiaries have enough debt as it is. The department will often help out with a loan when a large household item needs repairing or replacing and a beneficiary is unable to do that on his or her income. I know a number of beneficiaries who have $15 or $10 removed on a weekly basis to service that kind of debt. One then adds on to that the potential for debt to be accrued where, for instance, a partner has gone into prison, the benefit was not cut off in a timely way, and now that family is dealing with what debt it has plus additional debt.

We had some really interesting submissions. I was just checking through one from the Law Society that pointed out to us that in the previous year there had been 23 discrepancies it knew of where the wrong person had had his or her benefit cancelled due to a name mix-up. I guess in any system one will always have to guard against that kind of inevitability. The point of this legislation is not about doing harm to families, but making sure that they are protected from accruing unnecessary debt.

As part of the work that the Social Services Committee did on this—and I want to reaffirm my thanks to the House for the collegial way in which the cross-party work proceeded on this bill—we made sure that when a benefit is going to be cut, any family affected by that would be given proper notification before the cut-off date. A family would be notified and its members would be able to go into Work and Income, explain their situation, and reapply for the level of benefit that they were entitled to. A seamless transition would then be able to happen without debt accruing. It seems wrong to us that historically a large numbers of families, often with a dad in prison, have additional trauma added to their already loaded plate when they suddenly discover that they owe the department hundreds and hundreds of dollars in overpaid benefit. Often in the traumatic circumstances that family members find themselves in with a member sentenced to a prison term, the last thing they are thinking about during the process of a court case, sentencing, and everything else, is their income. They can be blindly dealing with the emotional baggage that goes with having a parent or family member sentenced to a prison term and forget that they have some income issues to consider. This legislation makes both the Department of Corrections and Work and Income responsible for sharing sufficient information with each other to proactively guide family members through this process for their own benefit.

United Future is therefore happy to support these third readings. The legislation highlights something that I suspect may underpin some of the concerns that the Greens still have about this legislation. It is interesting. I have spent this morning at a conference at Te Papa for a group of people who represent the concerns about biometric information-sharing. Although this does not necessarily have direct relevance to this legislation, we are seeing an increasing amount of legislation where Government departments are empowered to share information with each other in a way that can be helpful. I believe that the intention is to be helpful, but we always need to be mindful of the fact that information gathered for one purpose that is used for another purpose starts to have what we call “function creep” occurring. I caution the House that I think we are currently making a lot of these provisions in a whole range of legislation, and we do not have a broad ethical framework in place. I know that the Law Commission, in cooperation with the Privacy Commissioner, currently has as part of its work programmes some really good reviews around privacy issues to do with the law. I look forward to that being brought forth, because it may have some implications for those kinds of provisions.

However, I think that the intention of this legislation is for the good of the people it affects. It is not about people owing money to society when they are overpaid. That is the least of my concerns; my concern is about the burden that debt is to extremely low-income people on a benefit, and about the need for a timely intervention to remind them that they need to go down to Work and Income and renegotiate the benefit that they are entitled to, and all that goes with that, when there has been a major change in their family circumstances.

United Future feels that this legislation has been well considered. I thank the people who made submissions on the legislation. The information they provided us with was thought-provoking, and I think we certainly responded very well as a committee to those suggestions. United Future is therefore very happy to support the third readings of this legislation.

SUE MORONEY (Labour) Link to this

Thank you, Mr Deputy Speaker, for the opportunity to rise and speak to the last stage, the third readings, of these three bills. This legislation deals with an issue that many members have already outlined, so I will take just a short call. A few issues were raised in the course of the debate that I feel need some response. Although the National Party and the Greens are taking quite different perspectives on this legislation—National is supporting these three bills and the Greens have informed the House that they are voting against them—they both raised the issue of the priorities of this Government. The National Party raised that issue by asking why it took so long for these three bills to be brought forward. I remind listeners and members opposite that the technical changes made in these bills to overcome this issue were never attempted during the course of the 9 years that National was the administration. So it is a little bit rich for the Opposition side of the House to ask why this has taken so long.

The legislation has taken so long because the Government has had other priorities. Members should not forget that when this Government took office it had to undo an unholy mess that had been left behind by the previous regime. The National administration had left so many things for this Government to try to unravel, and to turn around—