Social Security Amendment Bill (No 3)

on behalf of the Minister for Social Development: I move, That the Social Security Amendment Bill (No 3) be now read a third time. I do not intend to take a long call on the bill in the name of the honourable Minister Anne Tolley, but I do just want to reflect that this is a bill that is before the House to ensure that the benefit system works appropriately to treat people fairly in similar circumstances. We cannot, of course, have a social security system that does not apply consistently, and the changes in this bill certainly act to work in that direction.

The bill has been through a full select committee process, and I note that the Minister was very grateful for the assistance of the Social Services Committee when it reported back to the House. She certainly made reference, in her second reading speech, to two core submissions made to the committee, both of which urged the Government to increase the amount of accommodation assistance available to students. The committee, of course, quite rightly ruled those outside the scope of the bill. With those few words, I wish to commend the bill to the House.

That was indeed a brief call from the Minister in charge of the third reading of a bill, but I think that probably shows a little bit of the disregard with which this bill has actually been put forward by the Government. It is not surprising, really, because it is a bill that makes busy work. We have got all the way to the third reading of this bill, and we have yet to hear some examples of why it is important that these loopholes be closed. The Labour Party does support the closing of these loopholes, but we are still unconvinced that anyone has ever used these loopholes. We are still yet to see the evidence as to whether that has happened. None the less, it has been an important occasion on which to be able to talk about some of the issues that might drive people to look for loopholes because of their personal circumstances.

But before I get on to the substance of that, can I just take the opportunity to welcome Chris Bishop back to Parliament, and to congratulate him on his special skills. It is something quite special to turn a 9,000 majority into a 4,000-odd loss, but—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! Reluctant as I am, I am going to ask the member to come back to the bill.

And now I will come back to the bill, of course, Mr Assistant Speaker, and thank you for that guidance.

This bill, when it went through the Social Services Committee—and I regret that I was not on the select committee at the time—did give people an opportunity to talk about some of the circumstances that might lead people to look for such loopholes. One of the loopholes that is being closed off by this bill is the ability for students to claim the Work and Income accommodation supplement instead of the student allowance in instances where that might be more generous. I think that in itself begs the question that if the Work and Income accommodation supplement may, in some cases, be more generous for students than the student allowance, then I think that describes the very tough circumstances that some students actually find themselves in.

In fact, when the two submitters came in front of the select committee—and the Minister, when proposing this bill, did make mention of those two submissions. But what she omitted to say was that the reason why the issues they had brought before the select committee were ruled out of the scope of this bill was that in fact because they were there to tell the select committee that the student allowance has flat-lined under this Government. That meant that many students were living in situations of hardship. So closing off this loophole that we are not sure anyone has ever used—it might have been, actually, of some advantage to students because of the very difficult situation they find themselves in of not being supported to undertake their studies, as this current Government has put those students in that position. Those submissions were ruled out of scope by the select committee, quite rightly; but, none the less, they were raising important issues.

The other loophole that this bill is designed to close off is, again, something that we are not sure—we have yet to be convinced—has ever actually happened. But it is a loophole that, apparently, would mean that for people who are being paid ACC compensation by way of a third party provider—or, as we sometimes call them, partnership employers or approved employers—rather than directly by ACC itself, they could also claim a benefit from Work and Income as well as getting an ACC payment from a third party insurer or a partnership employer. Clearly, that was not the intention of the law, and so therefore Labour does support that particular loophole also being closed.

But I do want to take the opportunity to ask the Government, as we are talking about different rules applying to people getting their ACC payments directly from ACC as opposed to people who are in the ACC Partnership Programme—it has come to my attention in the select committee recently that there is not as much monitoring going on of the partnership programme as there is of ACC and its dealings with its clients individually. It is one thing that I would like to take the opportunity to ask the Government to do, because this bill is showing an inequity in the way partnership employers’ payments have been treated in the past as opposed to payments directly from ACC. So I take the opportunity to ask the Government to put in some good monitoring processes for the partnership programme, so that we can know more about how those claims are being dealt with. Are they being dealt with as equitably as when dealing with ACC itself? Are there more claims being turned down? Are there more being approved? Are there more reviews being held? These are things that I think we need to know about when it comes to the partnership programme, because it is the part of the ACC programme that seems to have less scrutiny on it. Our ACC programme is a very, very good one. It is, of course, not perfect, but internationally it is admired for the sort of support that it does give to people.

I am not going to take up too much more time on this bill. I am pleased that I have made a more substantial contribution than what the Minister was able to make, but I just want to lend Labour’s support for this bill, which is not very substantial and probably will not make a difference to the way anyone is living in New Zealand. But, none the less, on technical grounds, it does close off some loopholes that were unintended. Thank you.

Thank you for the opportunity to contribute to the Social Security Amendment Bill (No 3) in its third reading. The bill clarifies that students who choose not to apply for assistance under the Student Allowances Regulations are excluded from receiving an accommodation supplement. It also clarifies that the income test includes the income of a person’s spouse or partner, as well as parental income. Assistance for students is designed so that there is a shared approach from both the Government and the student to contributing resources. This is because the benefits from tertiary education accrue to both the student and the country. The bill is not about the level of assistance provided. The reason for this bill is not to save costs but to ensure that the legislation is clear in relation to the policy intent.

Currently, assistance with accommodation costs for students is available through the accommodation benefit provided under the Student Allowances Regulations 1998. A student is not eligible for an accommodation supplement if they are receiving a basic grant or an independent circumstances allowance, but the wording of the legislation does not make it clear that a student is not able to receive an accommodation supplement if they are eligible for a basic grant or independent circumstances allowance but do not apply for such assistance.

A student is also not able to receive an accommodation supplement if their income or the income of their spouse or partner, if any, or the income of their parents is too high for them to be paid a basic grant or independent circumstances allowance but they are otherwise eligible. The wording of the legislation does not make it clear that income includes the income of a spouse or a partner, so this bill closes loopholes that allow for some students and beneficiaries to receive varying levels of income support. The accommodation supplement is intended to assist low to middle income people with accommodation costs—those who do not receive any student allowance or a loan.

The National Government encourages equality and fairness. This loophole in the Act is leading to an inequality in the benefits received by two people in exactly the same kinds of circumstances. The proposed commencement date will have no immediate impact on those students currently receiving an accommodation supplement. Work and Income plans to use the annual review cycle to review and adjust ongoing entitlements. Students should receive the assistance designed for them. Students who are eligible for student allowances should not be able to take advantage of the system and request an accommodation supplement. The current wording in the Social Security Act is not clear enough and it leaves a loophole that allows people to claim the accommodation supplement if they give up their student allowance and accommodation benefit and simply do not apply for a student allowance. This bill closes that loophole, it provides clear wording to exclude students who have access to the student allowance scheme from being granted the accommodation supplement.

This bill also intends to ensure that the direct deduction of weekly compensation payments from income-tested benefits applies whether these payments are made by, or on behalf of, ACC or by an accredited employer. The changes set out in the bill will provide for the current practice in relation to treatment of weekly compensation payments to continue. It will amend the definition of weekly compensation to make it clear that it includes compensation paid by, or on behalf of, ACC or an accredited employer. It will make it clear that weekly compensation paid by, or on behalf of, ACC should be deducted dollar for dollar from income-tested benefits, and will also validate best practice in this respect.

The weekly compensation received should result in a corresponding reduction of the benefit to ensure that the person is not advantaged over other people receiving benefits in similar circumstances. The largest difference is reached at the point when the weekly compensation rate is the same as the benefit rate. Direct deduction of the weekly compensation results in no benefit payment at this point, while treating the weekly compensation as income results in an unemployment benefit payment of $116.70 per week or a DPB sole parent benefit payment of $196.87 per week.

The bill also addresses the fiscal risk of $0.7 million per annum in benefit payments and the more than $3 million in one-off backdated benefit payments. These payments would be made to beneficiaries who have received their weekly compensation payments from their accredited employers rather than ACC. In addition, Work and Income resources will need to be diverted to identify the beneficiaries affected and the amounts and time periods covered by an accredited employer and to make the adjustments to the benefit payments.

This bill has been examined by the Social Services Committee and the Committee of the whole House. The select committee received two submissions on this bill at the select committee stage. I was not part of the select committee when these submissions were received. The first of these submissions was from the Dunedin Community Law Centre and the second was from the New Zealand Union of Students’ Associations. These submissions discussed wider issues of the adequacy of accommodation assistance provided to students through the student support system. There was a view expressed that student accommodation rates are inequitable and do not meet the needs of students. There was a suggestion that we should consider why students seek to access the accommodation supplement, just as the members on the other side of the House are saying, but this bill would not be an appropriate vehicle to make changes of the type suggested to the assistance levels provided to students.

As to the other view from members on the other side that students are having a tough time, that simply does not stack up with the evidence, and also the bill is not about changing the assistance levels provided to students. If you look at the evidence, it says that the National-led Government is focused on improving tertiary education, lifting achievement, increasing skills, and focusing on better outcomes for students and taxpayers. Since 2008 there has been a rise in the number of full-time students and we are seeing more graduates than ever before and at higher levels. Data from the Ministry of Education shows that New Zealand students completed a record number of undergraduate degree qualifications in 2013. It shows—

💬 Chris Bishop: More Māori, more Pasifika.

Yes—more Māori, more Pasifika. It shows that our reforms across the tertiary sector are steadily delivering much better results for students. Having more people achieving tertiary qualifications means a more highly skilled labour market. Higher skills mean higher-paying jobs for all New Zealand families. This is because of the New Zealand Government focusing on the things that matter to New Zealand families.

I am actually astonished at the stance from members on the other side that they do not mind having a loophole in the legislation and they do not mind the loophole being used by some to gain financial advantage. The National-led Government is focusing on improving tertiary education and increasing skills. The National Government is committed to efficient and effective legislation that treats people fairly, and this bill closes fiscal loopholes, supporting the National-led Government’s undertaking to responsibly manage finances on behalf of taxpayers.

So, in summary, the Social Security Amendment Bill (No 3) amends the Social Security Act 1964 to ensure that people in similar circumstances are treated equally in relation to the treatment of weekly compensation payments and assistance for students’ accommodation costs. I support the bill and commend the bill to the House. Thank you.

Just before we go on, I did not interrupt the member as she read her speech because I did work on the assumption that she might have been using some notes that were prepared for an earlier speaker. But I do want to make it clear to the speakers who are following now that the leniency that was shown to that member will not be shown to further members.

Thank you, Mr Assistant Speaker. We would expect nothing less of your good self. The truth of it is that it took longer to endure that speech than it took to draft the bill in the first place. This is the ultimate nothing bill. This must be an embarrassment to the Government. For goodness’ sake! Here we are in the dead of late evening working to pass a bill that—how many people actually made submissions on? Mr Assistant Speaker, I hesitate to draw to your attention the fact that only two—two—members of the New Zealand public were excited enough about this bill to actually make a submission. What does that tell you about this Government?

💬 Chris Bishop: A good Government.

It tells you that Mr Bishop needs to go back to Northland, because he is part of a trend, and that trend is called “third-term-itis”. This is a Government in decay. It is a Government that I need to come back to the substance of the bill to describe.

The ASSISTANT SPEAKER (Hon Trevor Mallard): That is exactly right.

It is with an amazing bout of perspicacity that I am learning to intuit your body language from the Chair, and I think that is fantastic.

I come back to the substance of the bill. It really has been an amazing experience to hear the member who has just resumed her seat, Dr Parmjeet Parmar, read out the Minister for Social Development’s notes. That is what one comes here for, is it not, as a Government backbencher—to get the Minister to pass the notes back, and read them out again just in case any poor, long-suffering radio listener failed to hear them the first time. What a miserable experience those Government backbenchers are having. They are seeing their prospects of ever entering the executive in their mortal lifetimes slip, slip, slipping away with the current Government’s poll rating.

I will get back to the substance of the bill. I would like to turn my attention to a very important part of the bill—namely, the student allowances. I am the Labour spokesperson on tertiary education, so I thought it was appropriate to remind New Zealanders that this Government is royally dismantling the tertiary education system. It did so by ruining university councils recently. It has done so by gutting student associations, and—

💬 Hon Amy Adams: I raise a point of order, Mr Speaker. Despite several of your warnings to the member, he still has not in any way addressed the bill, and I would ask you to bring him back to it.

The ASSISTANT SPEAKER (Hon Trevor Mallard): I think the question of relevance is a question for the Speaker’s judgment, and I will work on it but without your assistance.

Thank you, Mr Assistant Speaker. You can lead a horse to water and occasionally they sip, but—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! The member will now speak about the bill and not about the ruling or the ruled-out point of order.

Thank you. It is good to see that that Minister has not lost her sense of humour. The bill does touch on closing a loophole, and nobody bothered to tell the speaker who has just resumed her seat that in fact the Opposition, or at least the Labour Opposition, is supporting the bill—supporting the bill—because we believe in good fiscal management and closing down loopholes. There is no reason that students who are eligible for the accommodation allowance should be able to get a different social security benefit just because of a legal error. So of course that should be tidied up. There is no debate about that. But, frankly, who can blame the students? Student allowance rates have barely increased while the price of rental accommodation, particularly in Auckland, Wellington, and Christchurch, has absolutely skyrocketed. Students have seen course fees increase by up to 4 to 5 percent every year, and they have absorbed a hike in GST as well. Student loans have been cut for part-time students and have been limited for postgraduate students.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! The member was up until the last sentence or so marginally close to discussing the bill. When he was talking about allowances and rents that was probably OK, but when he gets on to loans I think he gets beyond it.

I will follow your guidance, Mr Assistant Speaker. I was endeavouring to rebut the point made by the previous speaker that the Government somehow had evidence of its generosity to tertiary students.

I would draw your attention to the regulatory impact statement drafted by Treasury in relation to this bill, which is where the Social Services Committee noted that only two submissions had been received. Treasury notes that despite small numbers of students being likely to know of the loophole, it is inequitable for the loophole to be left and different payment levels available. Who could argue with that? I think Treasury itself has unwittingly drawn the attention of Parliament and the New Zealand public to the metanarrative that underlies this bill. Here is a Government that has nothing to do but push through Parliament legislation that only two New Zealanders could be bothered commenting on and that Treasury says students themselves are barely aware of. So here we are, frankly, taking up Parliament’s valuable time and your own close attention, Mr Assistant Speaker, with a bill that is worthy of the Opposition’s support but hardly likely to inspire New Zealanders to give a fourth term to members opposite, who have clearly run out of puff, run out of imagination, run out of goodwill, and who are rapidly running out of support.

It is a pleasure to speak to the Social Security Amendment Bill (No 3). But before I start, I cannot resist, given the comments about how terrible it must to be on the backbenches of the Government, reminding the member David Cunliffe that the worst day in Government is better than the best day in Opposition.

💬 Hon David Cunliffe: Touché. Stung.

I am sure you have heard it before.

💬 Tim Macindoe: The worst day in Opposition will be familiar to the member.

Yes. This bill, I think, follows a longstanding principle known as the “one-benefit” principle—that is, one form of income replacement for one particular set of circumstances. I think that is key to this bill, and I think that we have to get that right. I do share the member’s enthusiasm, and I congratulate him on supporting the bill to deal with the loopholes that have been identified.

💬 Hon David Cunliffe: Fiscal prudence is our middle name.

Absolutely. Fiscal prudence is absolutely a great thing, and this Government has spent a lot of time getting its house in order in that particular area, and Better Public Services is absolutely a major target for the Government.

ACC and the Accredited Employers Programme amendments are really about the dollar for dollar deduction from benefits. The Accredited Employers Programme is a really important part of the ACC system—and if I could just take a moment to explain that situation. Employers have the ability to take over, for an agreed period of time, the payment of the ACC benefit and medical costs of injured employees. In return, they get lower ACC levies. I have seen, through employers in my own electorate, the culture change this brings to a business, not only from the point of view of the employer but also from that of the employees who take ownership of managing their health and safety. I think this is a fantastic initiative. But what we see with this particular loophole is that the bill is written in such a way that it could be read that an accredited employer’s ACC benefits are not subject to the same dollar for dollar deduction as an ACC payment.

I have got an example here. If a domestic purposes benefit recipient is paid $100 in weekly compensation, with no other income, their benefit will be reduced by $100 if it is paid—

💬 Hon David Cunliffe: I raise a point of order, Mr Speaker. Drawing the attention of your good self to your new-found robust interpretation of the rules against reading from the member’s notes—

The ASSISTANT SPEAKER (Hon Trevor Mallard): The member will resume his seat. I recommend to him a good reading of the report of the Standing Orders Committee at the end of the previous Parliament, and then he will not be disorderly and interrupt in that way.

It is quite good reading, actually. I can recommend it. [Interruption] I might start again because I have lost my thread—if that is OK? If the recipient of a domestic purposes benefit is paid $100 in weekly compensation, with no other income, their benefit will be reduced by the $100 from ACC, on a dollar for dollar basis. But if that person is paid the benefit by an accredited employer, then there will be no dollars taken off their benefit. That is unjust and has to be fixed.

You could say that the unfairness of that is quite obvious, but in previous speeches at earlier stages of the bill, it was pointed out by some that the benefit is not enough anyway and, therefore, we need to deal with that. It did not come from the Labour Opposition but it did come from others. The whole point of our benefits system is fairness. People pay taxes in the belief that that they will be distributed in a way that is fair. If we do not meet that fairness test, then the whole system falls apart.

If we move to the student accommodation supplement, we have a similar situation. For some students whose own personal income, their parental income, or their spousal income does not allow them to get a student allowance and a supplement, they can apply for an accommodation supplement. That is also grossly unfair. I do have an example for this, if I may be permitted to read on that one. For a sole parent in Auckland with two children, the maximum amount that can be paid in the accommodation supplement is $225 a week. In contrast, the accommodation benefit for a student is only $60 a week.

💬 Tim Macindoe: That is deeply inequitable.

It is terribly inequitable. The point is, I guess, that on one level you could say that if a student can identify that loophole and exploit it, then perhaps for certain courses that they are taking at university they deserve a merit pass, I would have thought. But it is inequitable, and students—

💬 Darroch Ball: Have you thought that maybe they need it?

Ah! The member brings up a good point—maybe they need the money. The supplement is designed for a student. If somebody can identify a loophole and exploit it, that is inequitable for everybody else. Encouraging people simply to exploit little loopholes like that is not good legislation. It is not good law. It leads to everybody trying to exploit those loopholes, because, after all, we are a competitive lot. That is what brought us out of the caves, after all—the fact that we were all able to try to exploit the little differences that were available. I think that this bill aims to fix this particular loophole. That is something I really support. The Government is all about equity. It is about getting good public services. And the only way we can do that is to ensure that the benefits that we do have—that we pay out—are paid on a needs basis, not to whoever can exploit the law as it stands.

I do not think there is a lot more that I can say, unless we perhaps talk about clause 4, which clarifies eligibility for the criteria—[Interruption] Yes, clause 4—absolutely. That is an absolutely essential part of dealing with that accommodation supplement.

Debate interrupted.