Social Security (Commencement of Benefits) Amendment Bill

I move, That the Social Security (Commencement of Benefits) Amendment Bill be now read a first time. The Government has a long-established policy position on benefit stand downs as a way to encourage people to make provision for a short period without income before relying on State assistance. The policy intent has always been that stand-down periods are full calendar weeks without State income. To be very clear, this means that a 1-week stand down is 7 days and a benefit would commence on day 8. Operational practice has always reflected the policy intent.

Work and Income commences benefits on the day after the stand-down period ends. However, there is a technical error in the Social Security Act that allows a benefit to commence on the day that a stand-down period ends, instead of the day after. The error occurred as a result of an incorrect amendment on 3 June 1998, but, unfortunately, it was not discovered until May 2014. This bill corrects that error so that a benefit will commence on the day after a stand-down period ends. The change has retrospective effect to 3 June 1998.

The error needs to be corrected quickly to, firstly, uphold the Government’s policy intent; secondly, to ensure that previous ministry practice is validated; and, thirdly, to avoid any unintended financial cost to the Crown. The bill does, however, protect people from the effect of the retrospective validation if they have had a benefit commence on the day that a stand-down period ended before the amendment is enacted, whether through a new grant or a review or an appeal process that commenced before the bill comes into force.

The bill also provides an opportunity for people to seek a review of a decision about their commencement date if their benefit was commenced incorrectly since the error was detected on 20 May 2014 onwards. They can do this before or, in the case of a benefit that commenced on or after 20 May 2014, after the bill comes into force, up until what I am proposing, 8 January 2016, if the Supplementary Order Paper I have tabled in this House is accepted by the House.

This is a fair and balanced approach that allows beneficiaries to claim what they were entitled to under the law while mitigating the financial risk to the taxpayer. Initial data suggests that since June 1998, when the error occurred, 2.7 million benefits have commenced after a stand down. We also know that if this is not corrected the ongoing additional cost is likely to be around $6 million a year for a technical error in law, not a change in policy. The fiscal risk to the taxpayer cannot remain unchecked, which is why we have separated out this change from the Social Security (Extension of Young Persons Services and Remedial Matters) Amendment Bill.

I believe this bill takes a fair and balanced approach to correcting an error in the legislation. Beneficiaries will have until 8 January to lodge an appeal for any benefits granted from when the Ministry of Social Development became aware of the issue in May 2014.

I also want to take this time to acknowledge Labour’s Carmel Sepuloni, who came to me when the issue was raised at the select committee with a constructive proposal for such a review process. We always want to be able to work across party lines on issues such as this. This error went undetected for 17 years, across a number of Governments, so it is fitting that we are able to work together on a balanced and fair solution. I commend this bill to the House.

I would like to first point out that we have made an attempt to work with the Government on some changes here. We were disappointed in September when we realised that the Government was planning to retrospectively change the law in relation to the issue of historical underpayment of welfare entitlements via the Social Security (Extension of Young Persons Services and Remedial Matters) Amendment Bill. That issue was not fit to be in that bill. Concerns were raised with us by beneficiary advocates about the fact that they felt it had been hidden in there as a way to disguise what the Government was attempting to do.

Since we did write to the Minister for Social Development in September after realising that that clause was in that piece of legislation, there have been conversations and letters backwards and forwards between us and the Government about what changes it has been planning. There are some elements of what it is attempting to do that we would say are better than what it had originally planned, but there is one major element to this piece of legislation that we cannot support, and I will go into that in detail shortly.

The exchange between us and the Government has been going on since September. On 15 October I met with Minister Anne Tolley and she showed me a draft of the bill. Not long after that I wrote to the Minister and highlighted our concern that if the bill was put through under urgency, there was no application period for those who had been underpaid from 3 June 1998 to 20 May 2014. This bill does take into consideration those who have been underpaid since May 2014 to September 2015, because the Government recognises that it was aware of the technical error and so feels that those people should have the right to be able to make an application or a claim, so a window of opportunity has been provided for them. But there is no window of opportunity for all of those people from 1998 to May 2014 to be able to have that same window of opportunity to make a claim. I just saw a National MP shaking their head, like: “That is unnecessary.” Actually, it is necessary to provide people with that natural justice. The Government says it is a technical error, but we in this House know, and everyone out there across New Zealand knows, that when money is owed to the Government, it is chased relentlessly. The point here is that actually when the shoe is on the other foot, the same thing—natural justice—should prevail.

I want to give a recent example where the shoe was on the other foot and the Government was seen to chase New Zealanders relentlessly for cash, and that is in respect of the Novopay disaster. Only a week ago we saw in the media that the Government has now moved to get debt collectors involved in chasing up the $1.8 million from almost 2,000 school staff who were overpaid by Novopay. The education sector was put through hell with the Government’s botched-up Novopay debacle. Some were overpaid, some were underpaid—some were underpaid for months.

💬 Peeni Henare: Some weren’t paid.

Yes. Of those who were overpaid, more than 80 percent of them have repaid that debt, but in this instance, because it was money owed to the Government, the Government has demanded that that money be paid back. The shoe, in respect of this issue that we are talking about today, is on the other foot.

There are a number of people out there who justifiably should have the right to make a claim. It has been brought up that there would be thousands of people who would be entitled to make a claim. The chances are—from the conversations I have had with people—many people would not actually put in a claim. It might be 1 day over the last 17 years that they are entitled to, but there are certain pockets, certain workforces, where actually there could be something significant that was lost here. We have been talking to our teacher-aides, teacher assistants, some of whom go in and out of employment four times a year, some of whom have stand-down periods for benefits four times a year, and some of whom have been providing that teacher-aide service and working in our schools for several years, not just 1 year. We respect the job that those people do and believe that they should have a window of opportunity to make a claim. Other workers that we have had discussions with include seasonal workers, who are in and out of work and on to benefits with stand-down periods. They should have the right to make a claim. People who are in and out of temporary work should have the right to make a claim.

We know that many people would not take up the opportunity to make a claim, but natural justice should prevail, and they should be given that opportunity. We have put up Supplementary Order Paper 142, which we think is a fair compromise here. That would provide a small window of opportunity for people to be able to make that claim, as we have suggested should be done. The Supplementary Order Paper that I have put up delays the commencement of this bill for 6 weeks so that there is that window of opportunity for those who are underpaid by a day or more, depending on how many times they were stood down between 1998 and May 2014, to put in that claim.

We do not think it is asking too much. We think fair is fair. We know that when money is owed to the Government, it is chased up relentlessly. When the Government owes people money, it should not have the right just to retrospectively change the legislation so that it takes away the right of New Zealand citizens to make a claim. We are pushing hard for that amendment and asking that the Minister and the National Government consider supporting that Supplementary Order Paper that would delay the commencement date of the bill to enable people to have a window of opportunity to make a claim. Jono Naylor is laughing. I do not actually think it is a funny matter, Jono Naylor.

We have had a few other issues highlighted in the media recently that really do show up the hypocrisy of the National Government in respect of this issue.

The ASSISTANT SPEAKER (Hon Trevor Mallard): No, that is not a word that can be used. The member will withdraw.

Apologies.

The ASSISTANT SPEAKER (Hon Trevor Mallard): I am sorry. The member will withdraw. I did not require her to apologise.

OK, thank you. I do not mind apologising. This really does highlight—what is another word for it? [Interruption] It does highlight the inconsistencies of the National Government. So here we have some of the, potentially, poorest members of New Zealand society who are now going to be denied the right to claim for $27, or whatever it might be, for the day that they were underpaid by the Government after a stand-down period. The inconsistencies are highlighted when we see that we have a Minister for Social Development who does not want to pay that amount of money to those people who are entitled to make a claim, but does want to pay $3,000 to Paula Rebstock per day for her role as chair of the Child, Youth and Family review panel. We have a Government that does not want to pay out people who are underpaid in their benefit for a day, and yet we have got a Government that will engage in extravagant spending like the $500 sheep repairs for the Ministry of Business, Innovation and Employment, the $26,000 Christmas party for that ministry, a $140,000 TV screen, hair straighteners in the bathrooms, an $11 million New York apartment, a $26 million flag referendum that no one in New Zealand wants, and, potentially, pandas for Wellington.

It does show up inconsistencies with the Government’s approach to New Zealand citizens, and all we are asking is that the Government provides a window of opportunity for these people to make their claim and that the Government delays the bill by 6 weeks so that these people have that window of opportunity to do that. Thank you.

I rise to take a first call on this, the Social Security (Commencement of Benefits) Amendment Bill, going through all stages under urgency. The point I want to raise—as the previous speaker, Carmel Sepuloni, has talked about—is that the issue is this has been a legislative error since 1998. It goes some time back, so I think there needs to be some cognisance that the issue of responsibility and liability probably goes a long way back. However, we are at this point where we do need to address a critical and a technical issue where the legislation does not follow policy. I just want to put that on the record. Although we can talk about the responsibility and the liability of this Government, which it is taking under urgency, we also remind the House and those who may be listening that this is an issue that has been a legislative error since 1998. I want to make that point really clear. We are taking responsibility, and this is what needs to be done.

I do want to acknowledge the previous member too. She did also make petitions and inquiries into this issue under a previous bill. I know that it was also due to her persistence in trying to get us to a point where we could address this issue. But I also want to acknowledge the Minister for Social Development who herself has also taken on the role of responsibility to ensure that we progress this bill under urgency because of the concerns that there are. I want to talk about some of those concerns, as well. We must act quickly to mitigate the increasing financial and legal risks that this technical error poses to the affordability of our welfare system. I think that is quite critical and it is important as well.

One of the issues, too, that comes up is that the tax reduction and social policy legislation from 1996—and I know that people out there will be riveted to hear about this—contained an error that technically provides for benefit and stand-down periods to end a day earlier than intended. So there is the technical aspect that this bill is trying to address. Again, I want to go on record as commenting on that. That is what this bill is trying to address.

The other aspects, I suppose, and the concerns that have been raised by the member in her speech are around the impact on beneficiaries. The bill protects people from the effect of a retrospective validation. If they have had a benefit commence on the day that a stand-down period ended before the amendment is enacted, whether through a new grant or a review or an appeal process commenced before the bill comes into force, then any reviews relating to that period, back to 3 June 1998, that are lodged prior to the legislative amendment coming into effect are allowed. This is to provide some sort of protection for those in that situation as well. There are a couple of other points. Those people affected can do this before or, in the case of a benefit that commenced on or after 20 May 2014, within a 6-week period after the bill comes into force. The other thing is that these protection provisions are a measure of the Government’s good faith and do not negate the original policy intent that a benefit should commence on the day after a stand-down period begins.

There are some other points I want to raise. The legal and financial risks of this error have been increasing, so we are fixing the problem. We do acknowledge that it is a problem, it has been a problem for some time, and we do need to address this. In fact, in May 2014 the Social Security Appeal Authority alerted the Ministry of Social Development to this error, and through that alert and through that judgment, it was important that it acted in the appropriate way. In May 2015 Cabinet agreed that a correction was needed, with full retrospective effect to 3 June 1998, when the Tax Reduction and Social Policy Bill 1996 took effect. At this time the risk to the Crown was considered relatively low. A plan was put in place to correct the error that was established and amendments were included in the Social Security (Extension of Young Persons Services and Remedial Matters) Amendment Bill, and that amendment bill is currently before the Social Services Committee. In the meantime the ministry practice is to continue to reflect the policy intent until the legislative correction is passed, as it was considered that people should be able to get only the assistance that they were intended to have.

I look forward to other opportunities to speak in the House on this bill as it goes right through all its stages under urgency. Again, we first of all take responsibility for what was an error that goes some time prior, to the time of 1998. It is a legislative error, a technical error, that needs to be corrected. The intent of the Minister and of the select committee, and also, hopefully, of the House, is that we will correct this error through having this bill go through the House under urgency. I commend this bill to the House at its first reading.

Tēnā koe, Mr Assistant Speaker. Tēnā koe e Te Whare. Thank you for the opportunity to rise and take a call on the Social Security (Commencement of Benefits) Amendment Bill. Firstly, I just want to raise the matter that the previous speaker, Alfred Ngaro, touched on: when does owing something to somebody become a “technical matter”? As my colleague Carmel Sepuloni pointed out, in the case of an individual owing the Government, it is not technical, but the other way round; when the Government owes the individual, it becomes a “technical matter”.

We are pleased that the Government saw sense to take this portion of the Social Security (Extension of Young Persons Services and Remedial Matters) Amendment Bill out of that particular bill and craft it as a piece of legislation on its own, because it is an important aspect and it is a stand-alone, one-off situation that needs to be dealt with separately. There were concerns when this was discovered within the aforementioned bill that it would become a matter that would not receive the full attention that it requires.

What we are concerned about are the rights of those who are seeking to make a claim and that their right to seeking those arrears has been curtailed for those people who may have been able to make a claim for arrears that have occurred between 1998 and the period halfway through 2014, when this original technical matter was found by the ministry. That is an important issue because it has not really been fully explained or justified why the ministry has decided on this period. I know that the technical matter was discovered at one point and the ability to fix it happened at another point, but that does not excuse the ministry or the Government from looking at what was actually owed to those people from 1998 and having a conversation with them.

We have had no information provided about what the cost of that might be. How many days are we actually talking about? There is no information to give us a real sense of what is going on here and how many people might be impacted on by this. In that case I find this really unfair. There will have been people who may be entitled to claim only 1 day, but there are people who have, for example, seasonal work who may be on and off benefits, on and off stand-down periods, over the course of many years and who would be owed quite significant amounts of money. So in terms of that aspect of natural justice those people will not get an opportunity to make a claim whatsoever, and that is technically unfair.

So here we are in urgency again, with a truncated process without the ability to get really, really sound information, particularly from submitters—people who may have a slightly different perspective and who should be given full consideration of those views. Yet again, we are not able to take full opportunity to hear what those views might be. So there will be no full select committee examination, but we do want to look at what people are already saying out there in the public about what is going on, and I just want to quote from something that was in the Waikato Times—that illustrious publication. It says that “The Ministry of Social Development takes a dim view of benefit fraud.”—we all know this—“It has … about 100 specialists who investigate abuses of the benefit system or accusations that some welfare recipients have pocketed money” that they are not entitled to.

So the overpayment of benefits is one reason why money might be owed, and this can arise where changed personal circumstances affect a beneficiary’s entitlement. Underpayments are another matter. The Government can simply write a new law to validate the short-changing of beneficiaries, as it is now doing, to deal with the costly implications of serious maladministration. Yes, this is a matter that has been discovered in recent years, but it is not an issue that relates to just that time period within which that matter came to light. It is an opportunity to review more fully the implications for those people who may have been affected earlier on.

Just in relation to the departmental disclosure statement—because there is no regulatory impact statement—I want to look at a couple of aspects: points 4.3 and 4.9, about retrospective effect. Point 4.3 states: “Provisions in the Bill have retrospective effect, which could be seen as contentious, as generally legislation should operate prospectively not retrospectively … The amendment to section 80BA [of the Social Security Act] to correct the commencement date of a benefit so that a benefit commences on the day after a stand-down period ends will be retrospective to 3 June 1998, in order to validate the Ministry of Social Development’s previous practice …”. However, in point 4.9 we now note that: “To acknowledge that the Ministry of Social Development’s operational practice should have been amended when the error was discovered on 20 May 2014, clients whose benefits were commenced on or after 20 May 2014 may apply for a review of decision …”. That is the statement that I find of most contention. The date at which the error was discovered is the date from which claims can be made, and that is blatantly unfair.

Members of the beneficiary advocacy community, such as Kay Brereton, were very hopeful, when the error was first discovered, that the Government would look at the legislation being retrospective to 1998. Sadly, she, along with other beneficiary advocates, is saddened to hear that the period has been brought forward to 20 May 2014.

We are not likely to support this bill unless my colleague Carmel Sepuloni’s amendment is supported by the Government. Her amendment would allow a period of time, 6 weeks, in order for those affected beneficiaries to make the appropriate claim, as they should do. This is right, and we should allow that period for that to happen. I do not see any reason why the Government would delay that. It is certainly not giving us any indication that there is an issue with not wanting to pay what is owed to beneficiaries for that period of time, yet we are not getting the indication that the Government would support that amendment. It is a fair amendment and it should go ahead. Thank you. I will have the chance to speak more fully on this during the bill’s passage through the House, and I thank you for the House’s time.

I rise to take a short call to stand in support of the Social Security (Commencement of Benefits) Amendment Bill. I guess we are already at the start of what no doubt will be a somewhat arduous afternoon and evening, based on what we have just had to listen to. We have heard that the core difference of opinion in respect of this bill is about what the policy intent of the stand-down period was. When that regime was put in place, successive Governments, going back a number of years—as you can see here, back to 1998—always held the view that if you were put on a stand down when that regime was put in place, it was for a calendar week. Everybody—those who were administering the law and those who were claiming under the law—held the view that it was for 7 days that you were stood down and on the eighth day you stood back up in terms of accessibility for a benefit. Everybody assumed that that was, indeed, the law that we were working to.

So to have the conversation here around broad natural justice now for those before May 2014 where everybody could be available for further review and potential addition for money that they were potentially excluded from—to me, that misses the point. If you have a policy intent that is clear and you have successive Governments that have acted accordingly, then that, ultimately, has to be at the core of this debate. Of course, when you have had—as we have had—a ruling in May last year that identified comprehensively that this was actually a technical error and that technically, under the law as it was written, it should have been paid on the seventh day as opposed to the eighth day, as everyone had assumed that it should be, then, clearly, this legislation is required. It is required under urgency, as we have all collectively agreed today, and you need to apply some natural justice.

Therefore, what the Government is proposing in this bill, where you provide opportunities for those from that day forward to when this legislation comes into effect—actually, 7 weeks beyond that, even—I think is a particularly generous approach. I think it is fair-minded and it gets the balance right between ensuring the original intent of this legislation is upheld—and that we make it absolutely clear through retrospective legislation that we are going to have in law what everyone assumed to be the case all along—and having a process for those who were in a review prior to May last year and for those who have subsequently identified that there is a particular issue. I think that is fair legislation. I look forward to having a sensible debate around that policy intent being confirmed by legislation here over the next few hours. I very much support this bill through the stages and commend it to the House today.

The Green Party opposes this bill, which seeks to retrospectively remove the legally established rights of New Zealanders for the primary purpose of saving this Government some money. I think this bill speaks to some very important points in relation to New Zealanders’ relationship with the Government around trust, balance, the rule of law, and transparency.

Over 1 million New Zealanders did not vote in the last election. Many of those New Zealanders were low-income New Zealanders. Today we heard from the Salvation Army that children in Auckland are living in cars, garages, camping grounds, and emergency housing. We heard that this is due to a lack of housing, in part, but also because some people’s experience of Work and Income has been so bad that they will do anything to avoid going to Work and Income, even if that means giving up their legal entitlements to support. These two things are calling us, as a canary in the mine, warning us of a very fundamental breakdown in trust between the Government and this House and a large number of citizens in this country.

This bill does not work to rebuild that trust. This bill fundamentally erodes that trust further. The urgency that this bill is being brought to this House under is a fabrication and an abuse of power. There is no plane arriving tomorrow and there is no threat to the country; there are only people without much money lodging claims for an average of $80—$80 to which they are still legally entitled. There is only a Government that has, since May last year, knowingly denied people their legal entitlements and that now seeks to give those people only 7 weeks to be able to get their legal entitlements and that is knowingly denying anyone else before that point access to justice. This bill—

I apologise for interrupting the member, but the time has come for the lunch break.

Sitting suspended from 1 p.m. to 2 p.m.

Debate interrupted.