Social Assistance (Debt Prevention and Minimisation) Amendment Bill

The National Party has supported this bill all the way through because it does not want to see beneficiaries—who are the poorest people, economically, in the country—in a situation where they are unnecessarily put into debt because nobody has turned off the taps for their benefits in the situation where they have been put into prison or are not able to qualify any more for a particular social assistance.

We think this bill has been quite a long time coming. We say that not just because there has been almost 9 long years of a Labour Government but because, in this time, the debt owed by beneficiaries to Work and Income has more than doubled. That shows why there is a massive need for this legislation. We now have about $760 million worth of debt owed by beneficiaries and former beneficiaries to Work and Income. Although some portion of that debt is the result of fraud, a lot of it is because there has been an overpayment for a week, 2 weeks, or a few months. There have also been situations where a beneficiary has not contacted Work and Income to let it know of his or her change in circumstances. There have been instances where a person been paid his or her benefit after going into prison, for instance. The fact is, if a person is in prison, I am sure it is not the first thing on his or her mind to contact Work and Income and tell it to cut the benefit. There are probably other things on a person’s mind. I think the best thing we could do is to actually have a mechanism to stop people from getting into debt.

💬 Hone Harawira: If you’re in prison, you can’t go and contact them.

Well, I think Mr Harawira is quite right—that person is not in a position to contact Work and Income. Of course, we could ask: “What about their families?”. Well, in many cases people’s families in those situations are going through a very difficult time—an extremely difficult time—and the first thing on their minds is not to contact Work and Income and say that if there is a benefit still to be paid, it is a different sort, and it is to different people within the family.

It is very important to have this legislation to allow better data-matching not only between, say, the Department of Corrections and Work and Income but also between Work and Income and other agencies. But this legislation is not being passed for just that purpose; it is also being passed because we need to have some integrity in our benefit system. It is absolutely not acceptable to the taxpayers of New Zealand that people continue to be wrongly paid benefits at various times. Just today in the Social Services Committee we heard about a massive benefit fraud—the Patterson fraud of $3.2 million. Although this legislation might or might not have helped in that situation—

💬 Hone Harawira: What about the Inland Revenue fraud of $600 million?

No, I do not think that was a fraud. Although the Patterson fraud might or might not have been detected by this legislation, the fact is that technology is being changed and updated constantly. Those who would defraud the benefit system are getting themselves into a position of using technology to do so. We are finding that the Government technology cannot keep up with the technology of fraudsters. That is because people who really want to defraud the system are sitting all day and thinking of ways to do it, while the rest of us are getting on and doing our work. It is incredibly important that we do not allow this to happen without trying to do something.

I do not know, though, how this legislation is going to help deal with the current benefit debt. I do not know how it will deal with the three-quarters of a billion dollars owed by beneficiaries and former beneficiaries. I do not know how this will keep beneficiaries as a whole from getting into further debt other than to try to stop new people getting into debt.

I think it is a real shame that, after all the Government’s opportunities to deal with the problem, it really has not pushed budgeting services like it should have. It took away the compulsory budgeting service that National brought into place for beneficiaries when they were getting into debt. It took that away and made it voluntary. The problem with making it voluntary is that many people in these situations just want the money now. It is very difficult to talk to them about budgetary services, because the very names of those services imply that people will have to put some limits on things. By the time people end up in a budgetary service it is often just too late. In my Papakura budgetary service, which does a great job, we have had instances where the debt has been $30,000.

It is my pleasure tonight to speak to the Social Assistance (Debt Prevention and Minimisation) Amendment Bill. This is a very sensible bill that addresses an anomaly in the system. In the past, people who were sentenced and entered prison could volunteer whether they were receiving a State benefit, a student allowance, or accident compensation. More times than not, they did not volunteer this information, and there was a delay in the matching process between the Department of Corrections and other organisations. As soon as people are sentenced and enter prison they cannot receive any form of benefit, whatsoever. This bill will start matching data from the Department of Corrections with all these other organisations, so if someone is receiving a benefit, that information will be matched off daily, so no debt will occur.

In the past there has been a delay, although systems have been in place. In the Social Services Committee a big concern was whether a person could be mistakenly matched and the benefit stopped. There may be two people of the same name and both receiving a benefit. One goes into prison and a benefit is stopped, but the wrong benefit has been stopped. There would be hardship associated with that. There were provisions in the legislation that allowed for people to be given written notice that their benefit would be cut because they were in prison, and they could contest it. There was about a 21-day process, before the benefit could be stopped.

Those processes were in place, but the current bill changes that. Instead of having to wait for 2 weeks, the identification is done daily. It is much quicker to identify the people whose benefit must be stopped because they have gone into prison. That is actually unfair, because people in prison have families. In the select committee we were very concerned about the hardship they would face because they had lost income into the home. We made very helpful suggestions in terms of putting Work and Income people in the courts, and then once these sentences were passed, they could liaise with the families in the courthouse, work out where they could go forward, the impact on their income, and whether they needed any additional assistance. The last thing we want for our vulnerable families is to have their income reduced instantly, when they have debts and commitments. We need things in place for those families, and especially for the children in those families. That was really important to our select committee, so we always had that issue at the front of our minds.

The select committee worked as a great team, I thought, and that is why National supports this bill. National thinks it is a very, very good bill. The unfortunate thing is that it took so long to get the bill introduced into the House. This issue is not new; beneficiaries who go to prison have been incurring debts for a long time, due to the slowness in the matching system. In that time a lot of debt has come about, because it has taken so long to get this legislation before the House and have it passed so it can be implemented. When we look at the statistics about debt, current beneficiaries owe $337 million, and former beneficiaries owe $426 million. That is a lot of debt, but the select committee was really concerned about how much of that debt was owed by people who were in prison and who also had families.

The statistics are actually very low for those who are in prison. We were told that 12 percent of them admit they are on a benefit; a very small proportion volunteered: “Yes, I’m getting a benefit, and it needs to be stopped instantly, otherwise I’ll have debt outstanding.” The bill provides for daily matching and that will be much better, and make the net much tighter. Of all those in prison who had their benefit cut, only 3 percent were matched to a benefit. Of that number, 115 had spouses and 5,185 were without spouses. That was a really interesting statistic.

I think the officials have just come into the Chamber to listen to this debate. I would like to recognise the work they did with the select committee; they gave us some fantastic advice.

I take the opportunity to take a brief call in the Committee stage of the Social Assistance (Debt Prevention and Minimisation) Amendment Bill, and to speak to Part 1, which deals with clauses 3 to 7. I first of all acknowledge the work of the Social Services Committee, and, in fact, all parties in the Chamber who have indicated support for the principle of this measure, which is to prevent unnecessary debt from being incurred by beneficiaries.

The part that we are dealing with is primarily in relation to the Department of Corrections, but the other two organisations that the legislation deals with are the New Zealand Customs Service and the Accident Compensation Corporation. The aim is to ensure that the information matches between those three organisations—the Department of Corrections, the New Zealand Customs Service, the Accident Compensation Corporation, and, of course, the Ministry of Social Development—have increased efficiency. The point of the part that we are debating at the present time is primarily to prevent debt being incurred by people in receipt of a benefit who go into prison. As the two previous speakers have indicated, the timeliness of the information exchange is critical in ensuring that that person does not get into debt unnecessarily.

The second point I want to make is that legislation like this has a principled purpose. It is good to see that all parties are supporting that purpose of ensuring that beneficiaries are not incurring debt that could be avoided. But I have to say that behind the principle, the legislation, and the procedure that has gone through the select committee and is now before the Chamber are a lot of very hard-working public servants, officials, and people who have been on the receiving end of a lot of very unfortunate attacks, over recent times. So I take the opportunity to thank not just the select committee for its work, and the other parties in the Chamber for being so conscientious in ensuring that, where they do agree on the principle of legislation, they put their petty party politicking to one side and support it constructively, as they certainly have with this legislation. I also hope those parties might take the opportunity to thank the public servants, who have no opportunity ever to respond to the attacks that they come under—in particular, from the National Party and the first speaker in this debate, Judith Collins.

I want to refer to Supplementary Order Paper 184 in my name, which is a technical Supplementary Order Paper. In case members have not had the opportunity to read it, I point out that it simplifies references to sentences of imprisonment; it omits references to corrective training, which was removed by the Sentencing Act of 2002; and it corrects a cross-reference that was made in error. With those brief comments, I commend the progress of this bill to the Committee.

I must say that the Social Services Committee worked very well over the Social Assistance (Debt Prevention and Minimisation) Amendment Bill, and I would like to mention particularly my colleague Judith Collins, who made a strong representation on the issue of minimising hardship. I would also point out that my excellent colleague Katrina Shanks mentioned the great work done by the Department of Corrections. I think that the general spirit that the select committee worked with on this bill was excellent, and it shows how well Parliament can work when it sees that there is common sense to be followed.

But, of course, the big worry about this bill is what the Labour Government has been doing over the 8 years prior to bringing in this bill. I think that the statistics are fairly clear, and they show that Labour has dawdled over a very, very serious problem. It is a problem for which National is happy to be able to support a solution, but the facts of the matter are that when the Labour Government took office in 1999, this debt was $320 million, and by last year it was $760 million. That is a huge debt. In the words of, I think, Peter Hughes, a few years ago 49 percent of beneficiaries were in debt to Work and Income and now the figure is around 70 percent. That is a horrendously high number of Work and Income clients—beneficiaries who are in debt and who are particularly vulnerable to all sorts of challenges that may cause them to compromise their position and their families. To have a bill like this is over timely, and we are very happy to support it.

As the Minister pointed out, this bill will enable data sharing between the Ministry of Social Development, which administers the social security system and the student allowance system, and the Accident Compensation Corporation. These agencies are critical parts of the factor. The purpose in Part 1, which we are addressing, is to amend the Corrections Act, which is the principal Act in this part. It will make the appropriate amendments through the Social Security Act, the Education Act, the Student Allowances Regulations, etc.

We certainly know, as well, that during these last 4 or 5 years particularly, student debt has mounted enormously. Once again, that is a major problem. Under this Labour Government we have seen not only beneficiary debt mount to an extraordinary level but also student debt mount. I would have thought that the Labour Government would be much more interested in being assiduous to ensure that this sort of corrective legislation was put into place much earlier.

Clause 5 substitutes section 180 of the Corrections Act with a new section 180, “Purpose of section 180A”. The new section provides: “(1) The purpose of section 180A is to facilitate the disclosure of information, by the chief executive to the requesting department, for the purposes of the operation of all or any of” a variety of provisions. I think those provisions are pretty well covered. Previous speakers have made the point about minimising hardship, because there is no doubt that if prisoner suddenly find themselves in that position, and their families are not catered for and are penalised, then it can reflect pretty badly on them. We would want to be sure that the Labour Government is able to respond through this legislative mechanism to ensure that it does come about for families that are very dependent on a rapid response to this sort of legislation.

I remember that in the second reading of this bill we had Russell Fairbrother, the excellent chairman of the select committee, saying how efficient this Government is. Well, everything about this bill and this Government is, in actual fact, inefficient.

Picking up on the point of my friend across the Chamber, I must say that I am an excellent select committee chair only because I am so lazy and let the committee members do what they want. We get through the work quite quickly as a result, but I do not take credit for anything else.

The argument that Dr Hutchison is reduced to running in this Committee amuses me somewhat. It is a shame when a man with great professional practice is reduced to running oxymoronic arguments. He said it has taken 8 years for the Labour Government to get around to bringing in this legislation, the Social Assistance (Debt Prevention and Minimisation) Amendment Bill. Well, let us think back. In 1999, when Labour came into power, the National Government had been in power for 9 years, and not once did it bring forward a bill such as this. So we could say of the last 17 years that the National Government did absolutely nothing for most of it.

The real truth—and it is hard to find; the officials do not know the real answer either—is probably a mixture of two things. First, when this inspired Government came into office in 1999 it met a run-down Public Service—the Public Service had been under attack through cost cutting, as had the beneficiaries—and the money was not there for the infrastructure development. It has taken this Government a long time to get the Public Service back on track, and it is not being helped by the current rhetoric and vague promises from the Leader of the Opposition, who says that he will bash the public servants and reduce their number, and all of those sorts of things that are endearing him highly to the public servants in Wellington. The public servants in Napier whom I speak to are just throwing up their hands in horror, because they work very, very hard. Not one of them believes that they put in less than a 10-hour day. They are worried about that rhetoric, which has no substance.

I will get back to the bill. The real truth in that complaint by Dr Hutchison is simply that it takes time for good things to evolve. It is accepted that this is a good bill. I do not really buy too much into grandiloquent arguments that there is some great moral cause in saving beneficiaries from accumulating debt, because I must say that in the 25 or 28 years I acted for many beneficiaries going to jail, I do not recall one of them worrying about the debt they had accumulated from doubling up on the system.

The really important part of this bill is that it is morally neutral but takes away the privacy rights of people who, for example, are going to prison or leaving the country. They forgo that privacy because the new section 180 enables the department that controls these individuals to disclose what is otherwise privileged and private information. But the price of doing that is greater efficiency so that debts are not being accumulated that must be recovered later on, which is always a more painful process. It makes for more efficient administering of our benefits system.

I do not see this legislation as necessarily having closed in on any great moral compass or on any great moral imperatives; it is really a sensible piece of infrastructural legislation that pulls together what has been 8 years of this Government building a sound and competent infrastructure of civil servants, public servants, and techniques such as computerised systems, which can work together.

The bill really says to the public of New Zealand that this Government is able to bring everything together to move us forward so that those people on benefits get their full and due entitlement—I do not see it as charity; I see it as a citizen’s right to receive a benefit in a time of need—and so that when their benefit time ceases there is less for them to worry about because, in return for forgoing their right to privacy, the system will pick up the time they cease the right to entitlement, and the benefit will stop there and then.

This is a reflection of a very good Government that has built infrastructure that will support a bill that on the face of it is as simple as this is. The complex issues are the release of privacy, and each beneficiary is effectively caught by the new section 180. But the price of that is that there is no further embarrassment down the road of collecting moneys wrongfully paid.

This is a good bill; it reflects a very good Government and a very, very good Minister who has brought this bill forward.

💬 Nathan Guy: Who’s that?

The member obviously could not recognise quality if he fell over it, but we on this side of the Chamber appreciate the very good Minister—and her predecessor, who also did an excellent job in this field. This is a very good bill; we recommend it. It says to the public of New Zealand that this is the sort of thing they can expect from a very efficient, organised administration that cares for the populace of New Zealand but is also careful to make sure that the taxpayer dollar is spent wisely and prudently. It is coherent and cogent legislation. I recommend Part 1 to the Committee accordingly.

I rise to take a brief call on the Social Assistance (Debt Prevention and Minimisation) Amendment Bill, particularly in regard to the purpose of the bill, which is the sharing of information between departments. I see here that the proposal is to share information between the Ministry of Social Development, the Department of Corrections, the New Zealand Customs Service, and the Accident Compensation Corporation. This is a fine purpose, and is the reason why National is supporting this particular bill and getting right behind it.

The point I particularly take up is the Minister Ruth Dyson’s call about National petty politicking around civil servants and the job they do. On the one hand, I agree with the Minister—the civil servants out there, in the large, do an amazing job. But these civil servants often have to cope with a very difficult system. The system has particularly let them down in the Hawke’s Bay over recent years. There are two cases I would like to highlight. The first one was a very difficult case of a young child sex offender who had committed a number of very serious crimes as a young man and had ended up back in Napier, being cared for by two minders and a supervisor. A constituent of mine came to me about it. This gentleman ended up climbing the fence some 14 times and putting at risk my constituent and her young daughter.

The fact of the matter was that no information had been shared—no information had been shared with the local police or within Child, Youth and Family between the Auckland division and the local department. So when this young lady found this gentleman over her fence, wondered what he was doing there, and subsequently found out he was a child sex offender, she became extremely concerned. When the lack of information sharing was subsequently found out, one had to ask whether there had been a breakdown in the system. On the other side of the coin, the civil servants were most concerned about this, and wanted to make sure that things were put right.

Another case is before us right now concerning a young man—an 11-year-old child—in my constituency, who has been difficult. He is in the guardianship of Child, Youth and Family as we speak. He went into its guardianship at the age of 8. He is a very difficult young man, and I am not going to stand up here and pretend he is an easy case to deal with, by any stretch. He was given a 3-month supervisory term up in the Auckland childcare facility, and after 3 months was released back to foster care in Wairoa. Within 4 hours this young child had moved on—had escaped. I guess that is what it was; he was put into foster care but escaped. That young man has largely been on the run—can members believe this—for some 3 months now. He actually hitchhiked to Hamilton. I put this in my own perspective. I look at my own 11-year-old boy and wonder how my 11-year-old boy could manage to hitchhike up to Hamilton. This young man did so and he ended up with the mob. He ended up back down in Wairoa, again with the mob, and ultimately ended up back with his parents. He committed a significant number of crimes and was taken back in by police. But he is now on the run again and has been committing a significant number of crimes again.

But I want to make the point here that in this case information sharing between the departments was not happening.

The CHAIRPERSON (Hon Marian Hobbs): It is a stretch of this legislation—not quite in this bill—but carry on.

The point I make is that National supports information sharing between departments. It is critical that information is shared so that children like that young 11-year-old—who is still on the run—can be helped. He needs to be under Child, Youth and Family guardianship. Information should be shared with the police so that they can help to capture him, and to allow some of these hard-working civil servants to do their jobs properly. Thank you, Madam Chair.

The question was put that the amendments set out on Supplementary Order Paper 184 in the name of the Hon Ruth Dyson to Part 1 be agreed to.

Amendments agreed to.

Part 1 as amended agreed to.

Part 2 Amendments to other Acts