Social Security (Commencement of Benefits) Amendment Bill

As the bells rang, I was speaking to the point of the importance of trust between the people of this country and the Government and, indeed, this Parliament. This bill in front of us, going through this House under urgency, I think, creates the risk, at the very least, of giving New Zealanders the impression that the first rule is that the Government is never wrong, and when the Government is wrong, see rule No. 1: the Government is never wrong. And I want to say very clearly that I do not want to live in that society. I want to live in a society where as a Parliament we seek to strengthen—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! I am sorry to the member. Those who are leaving the Chamber, please do so quietly and as quickly as possible so that, in fairness to the speaker, we can all hear.

As I was saying, I want to live in a society where as a Parliament our focus is on strengthening the people’s trust in the Government and public institutions and where we do our best to protect the rule of law and the human rights of everyone in this country. There are some very significant principles at stake with this piece of legislation. I have already spoken to the principle of trust, and quite significantly connected with that is the principle of balance.

Last year this Government, in this Parliament, passed a piece of legislation to strengthen Work and Income’s requirement to recover debt from beneficiaries. It did this in response to court rulings that suggested the human rights of beneficiaries to shelter and food may actually have primacy over Work and Income’s right to reclaim debt. I want this House to think about that—that when the court said the human rights of New Zealanders may take primacy over the Government’s fiscal agenda, this Government came to this House with legislation that said: “No, our fiscal priorities need to take priority.” This House passed legislation that undermined people’s human rights to shelter and food. And now here we are about a year later in this House, when the Government has been told by the courts very clearly over year ago that it is misapplying the law and denying people money that they are entitled by law to access, and the Government is saying: “Oh, we made a mistake. I know the courts think we owe these people this money, but, actually we’re retrospectively going to rule out that right and deny people that money.” I think that raises some pretty major questions of trust and balance.

I want to talk this House through the process as it has happened, as I can work out—the time line. The law was introduced on 3 June 1998, and section 80BA(4) of the Social Security Act states that if a stand-down period applies under this section, benefits commence on the day on which the stand-down period ends. The day on which the stand-down period ends is the day on which the benefit commences, and yet, somehow, for 18 years, the Ministry of Social Development has been commencing the benefits on the day after the stand-down period ends. That is a pretty clear piece of legislation—benefits commence on the day the stand-down period ends—yet for 18 years, despite reviews of legislation, that piece of legislation has been misinterpreted.

We have been hearing from the Government that, well, that was a technical error and that there was always the intention that the stand-down period be a week and that benefits commence the day after, despite the fact that the legislation says “the day on which”. I have asked the Parliamentary Library to go through the debates at that time in 1998 to consider where the debate was and whether there were some points raised in the debate that would back up what the Government is telling us. The library could not find one reference that backed up the Government’s perception that this was not the intent of the law. We have nothing on record that backs it up.

Then in May 2014 we had the courts establish that Work and Income was incorrectly interpreting the law. That is well, well over a year ago. That practice of misapplying the law has continued until 29 September, denying people what they were by law legally entitled to. It seems to me very worrying that despite there having been two court cases reinforcing that law and—as we heard from a previous speaker, Alfred Ngaro—Cabinet having considered the fact of those court rulings, Work and Income still refused to implement the law. It chose to act illegally until about 2 weeks after this came to the media’s attention.

So we have court rulings—two court rulings—we have a Cabinet consideration, and nothing. There was a decision and there were choices not to apply the law to beneficiaries as it was written. I can assume it was only because Work and Income did not think that beneficiaries would have any public support to back them up on accessing their legal rights, until the matter managed to come to the attention of the media—through advocates raising this in a select committee. The Minister for Social Development said to me that she was not aware, and then we get to a very significant problem of a major breakdown between Minister and department.

It is a pleasure to rise on behalf of New Zealand First to speak on the Social Security (Commencement of Benefits) Amendment Bill. In its essence it is a rather simple bill in so far as it wants to change one section of the principal Act. I would just like to read out part of the general policy statement, which is in the explanatory note of the bill: “This Bill amends the Social Security Act 1964 to correct, with retrospective effect to 3 June 1998, an error in the legislation that does not give effect to the policy intent that a benefit commences on the day after a stand-down period ends as opposed to the day on which the stand-down period ends.” In other words, as the Minister has said, and as other members have said, this bill corrects a technical error in law. It is not a change in policy. That is the basis on which, and the reason why, New Zealand First will be supporting this bill.

There are a couple of issues, however, and firstly I want to talk about the process that we are going through at the moment under urgency. There are a couple of issues about that process, and one of them is the actual lack of communication from the Minister for Social Development and from the Government as a whole with regard to the change in legislation, what it is going to look like, the intent, and even with regard to when we were going to go through the legislation and go through urgency itself. With legislation like this, which is an actual correction in law that spans successive Governments, you would think that communication was key.

Why are we going through urgency in the first place? That is the second issue. We see, if we put together the time line, as Jan Logie did, that in fact this change in legislation was actually placed in another piece of legislation, and months later—in fact, 18 months later—we now find ourselves under urgency. What are the reasons for that? I think it boils down to the fact that the Government was found out and wants to rush it through to ensure that it is not fiscally disadvantaged in the end.

There is one key point that has been brought up by Labour, and that is that the Government knew of this issue back in May 2014. In the departmental disclosure statement, in the last paragraph, under the heading “Any other unusual provisions or features”, it says: “the Ministry of Social Development’s operational practice should have been amended when the error was discovered on 20 May 2014,”. So the question that obviously comes out of that is: why was the operational practice not amended in May? As we can see, and as I stated right at the start, it is actually a simple enough bill and it is a simple enough change, so why was it not changed, and why was the issue not communicated to the beneficiaries and to the public back in May?

As far as communication to the beneficiaries is concerned, it is all well and good to give them 6 or 7 weeks—I think it has been pushed out now to 8 January—but, again, the lack of communication from the Minister is disappointing. However, that time period is only as a result of the process we are now in—urgency. If we were not under urgency to get this pushed through, there would be no need for a time limit on when people who got a benefit from May 2014 can apply.

The other question actually is: if, out of a matter of principle and fairness, there is a 6 or 7 or 8-week period when beneficiaries who received a benefit from May onwards can apply, why is everyone not able to get the back-pay for that? Why do they have to make an application to do so? In this day and age, with digital computer records and everything like that going back to May 2014, there will obviously be records of all those beneficiaries who will be eligible for this back-pay. So why are we going through the rigmarole of making beneficiaries apply when it can be automatically done? That is a question that, hopefully, the Minister can answer during the Committee stage.

The two main reasons why New Zealand First is supporting this bill are the intent of the original legislation, and the intent of the stand-down period itself. It is easy, actually, to get dragged down an emotive pathway where we are seeing the effects of beneficiaries’ poverty. There is bill called the Support for Children in Hardship Bill going through the House, and we have heard stories about children who are homeless in Auckland. We have got issues with child poverty throughout New Zealand, and obviously those are big problems for this country. But this is not the problem here, and this is not the legislation that we need to change to fix that problem. Labour and the Greens are opposing this bill based on that emotive pathway. So, in reference to that, I would actually like to look at the departmental disclosure statement again. It highlights right at the start that this bill amends the Social Security Act to correct “an error in the legislation that does not give effect to the policy intent …”. So New Zealand First’s stance is that if you take those beneficiaries from day one, from 1998, and if the legislation itself was written to the intent of the bill—we know that it was not—those beneficiaries would have received exactly the same amount that they have already received.

So if the legislative error was not there the beneficiaries would be no better off today than when the mistake was made. So we are correcting that, and we have heard from Labour and from the Greens that the beneficiaries are owed money and that they missed out on a day, but the intent of that original legislation states that they did not. And, of course, if the situation was reversed and the intent was for them to have the extra day and they did not, of course we would be holding the Government to account on that.

Also, some have said that there is an issue with the retrospective effect. The departmental disclosure statement says that in this case the retrospective provisions can be justified to ensure that the Government policy intent is upheld, that the practice and understanding that has been previously applied by the Ministry of Social Development is validated, and that financial costs to the Crown that were not anticipated are avoided. New Zealand First agrees with that.

I would just like to finish off with a 3 News article about this urgent Government bill that is going through to fix a benefit error. TV3 states that beneficiaries are being underpaid by 1 day. It is disingenuous to report that, because that is not the case. Beneficiaries have not been underpaid by 1 day. The intent of the bill was fulfilled, and that is why New Zealand First is supporting this bill.

It has always been Government policy—in fact, the Minister has said it too—that the benefit will commence the day after a stand down, and that the stand-down period is a 7-day period. So it is not just the case under the National Government; it has been so under successive Governments. And it is a little bit contradictory for the Labour Party to oppose this when the policy intent was being fulfilled under the Labour Government too.

I have got a few more things to say, and I will say them in the second reading and in the Committee of the whole House, but at this stage we will be supporting the bill.

I would just like to acknowledge the contribution made by Darroch Ball because he did highlight the fact that this is actually a very technical bill and not one that we need to get too carried away on in terms of the wider impacts on families who are dependent on benefits or otherwise. This is a technical bill. There is a technical error in some of the drafting that needs to be fixed, and that is exactly what we are looking at.

Some people have talked about the fact that there was nothing compelling in Hansard or in the debates when the initial legislation was put in in 1998. I think the issue here is that you have got to look at the intent. When you have a stand down, people would normally acknowledge that, actually, after a period of a stand down, then that kicks in, and not necessarily on the day on which it ends or otherwise.

But there have been some conflicting ideas about this, and so today, through this legislation, we are going to put it right. When you are putting things right, you have got to make sure that things are, in essence, fair and practical, and I believe the balance we have arrived at with this legislation is both fair and practical. It is not practical for us to for ever and a day keep taking people’s challenge of things going back as far as 1998, and so what we are saying is, actually, from the point at which this legislation comes into practice, you will not be able to go back to 1998.

However, I think it is fair and reasonable for us to acknowledge that, actually, since May of 2014, perhaps things should have been done differently. So there is an option through until January this year for people to apply for a refund for where they have been unreasonably treated, perhaps, and that is exactly what will happen. Thank you.

The next call is a split call. I call Marama Davidson—5 minutes.

Kia ora. This bill seeks to fix a mistake that recently came to light that found that the law was not being followed. The law was not being followed and people receiving a benefit were missing out on a day’s pay, and that has been happening since 1998.

What I would like to raise in this short call is that the law says that they are entitled to this—this is a legal entitlement. Retrospective legislation to deny people what is owed to them is, I think, an affront to the rule of law, and when that affront to the rule of law harshly impacts on those already doing it tough, then to me that is a stain on our moral society, on a transparent society, and on a society that has to be based on trust, which my colleague Jan Logie has already referred to. The operational blunders have been raised often, and rightly, I believe.

We go to intent again, which I feel is a good point to raise. Firstly, where does it say what the intent was? I think the onus should be on the Government to prove that. But, secondly, even though that was the intent, the law was quite clear, and so this is a legal entitlement that we should be upholding as per good lawmaking in this country. Some 10,000 people have already applied to get what they are entitled to, so this, we know, directly affects a huge number of New Zealanders and would help in numerous and meaningful ways.

I know that the previous speaker, Jono Naylor, would prefer that we do not talk about them and that we try to ignore the stories of absolute hardship, and also the stories where this would help and the stories where this would be an investment in our children—for example, those who are homeless, according to the report released today. Denying this payment is absolutely going to add to the hardship that too many are already feeling. For example, the economy and the state of employment at the moment are up and down. They are tumultuous, so people have needed to move in and out of employment for so many valid reasons.

I know that in my own past, as a mother of young children in full-time, paid employment, it was validly difficult trying to uphold that in light of huge costs. I had to keep trying to find a job that would enable me to work but would also properly cover my basic living costs. So that is a very real situation that many people face. You know, that is the nature of our current employment market. It is precarious.

Again, I would like to support what Poto Williams has said. I also wanted to talk about our seasonal workers. Often the nature of their work is unstable. They are often in and out of these employment situations, and this has undoubtedly hit them hard. Those stand-down periods have undoubtedly hit them hard.

My last point is that I also stand—again, despite what some members would like to ignore—to acknowledge the disproportional effect that this will have on Māori, Pacific, and migrant communities. I am asking for written responses to see whether we can also get a handle on how many children this payment would benefit. We are opposed to this bill. Thank you.

The Hon Ruth Dyson—5 minutes.

I just want to commend Marama Davidson, the member who has just resumed her seat, for her contribution to this debate. I say to the member Darroch Ball from New Zealand First, who spoke before her, that I think he should have listened to her contribution and figured out that, actually, the law as written in 1998 did not make it clear that the way it was operationalised after that was, in fact, the intent of the law. Nothing in the Hansard records would lead one to assume that that was the case. But I do not think that there was a deliberate attempt, either by the Minister at the time—who was the Minister in 1998?

💬 Carmel Sepuloni: I’m trying to find out.

OK. I cannot recall who the social welfare Minister was in 1998, but I do not think the Minister at the time or the current Minister for Social Development or the department have made a deliberate decision to underpay beneficiaries—to start people getting their benefit a day later than they were intended to.

This is an error. This is legislation interpreted 18 years later in a different way than it has been implemented. So that is not the challenge for this House to debate. In my view, the challenge for us is to say: how should we fix what has been determined through the appeal process to be a misinterpretation of the law? So, of course, you have to say that either we are going to change our operation, or we are going to change the law. The Minister has decided to have a bob each way, and that is where I disagree with her.

I think that it is fair enough for her to take a call as the Minister and say “Well, we’ll start the payment the day after the stand down ends, as we will do as we have been doing.”, or “We will start it as the original law intended. We will leave the law as it is and start it on the last day of the stand down.”—that is the difference. That is where the 1 day comes from. But to then say “We’re going to change the law to the way it has been interpreted”—that is, leaving all those beneficiaries with a day less of their payment than they would have had if it had been interpreted in the way that it was intended—“to retrospectively take that off them.” is unfair. It is saying “We interpreted the law wrongly for 18 years. We found out 15 months ago that we were doing it wrong, but we are going to retrospectively take that entitlement off”—how many people? We do not know. It could be thousands. It could be hundreds.

The Minister, Anne Tolley, sort of dismissed it in a radio interview that I heard. She said: “Oh, it’s only a day, so it won’t be very many.” Well, actually, over 18 years it could be quite a lot. If teacher-aides, for example, are employed term by term, they may be on a stand down four times in 1 year, and over 18 years that is quite a few days’ payment they would be entitled to. But the Minister has said: “Oh, we’ve got to balance changing the law with financial responsibility.” Well, I say, actually, our job is to comply with the law or to change it, but not to change it retrospectively to suit—what? The Budget? Convenience?

People were left out of their legal entitlement because of a misinterpretation, and I do not think they should have that 1 day’s pay from their benefit taken off them by a retrospective law change. So that is where I strongly disagree with the determination that the Minister has come down on. Retrospectively taking away an entitlement is bad law. It is unfair, it is wrong, and I would not want my name to be marking alongside it. I do not understand, if it is as few people as the Minister has said, why she is happy to go along with it.

So I think we should stick to the facts of this case. The idea that some have raised that there might be worthy beneficiaries and not-so-worthy beneficiaries—I do not agree with that at all. I think that is a disgraceful slide into value judgments, which is not appropriate for this Parliament.

The idea that Parliament should fix a misunderstanding only from the day that it discovered it is just plain nonsense. The courts would never do that. The courts would never say: “This is our determination and from now on you will interpret it.” The courts operate in a way of interpreting our law from the time that a law has passed. That is the standard that is set by our judicial system, and I think it is a standard that this Parliament should follow.

Thank you for the opportunity to speak on the first reading of the Social Security (Commencement of Benefits) Amendment Bill. The matter being dealt with in this bill under urgency is a very urgent matter because there are a number of people who go on benefit each day, and it is dealing with that number of people. This bill is to clarify the Social Security Act about the commencement of benefits, and to ensure that the Government’s policy intent is upheld.

This Government is committed to our welfare reforms. We know hundreds of people are getting off benefit every day because they are getting into jobs. When people go on benefit there is a stand-down period. The current practice—when I say “current practice”, the practice I am referring to is the one that started in June 1998 and ran until 29 September 2015, because from 29 September 2015 we have changed the practice to reflect what is in the legislation. The current practice has been what the intention of the legislation was, which is to start the benefit after the stand-down period finishes—that is, the next day after the stand-down period finishes.

So the current practice is in line with the intention of the legislation, but if I look at the legislation it says that Work and Income people should start benefits from the last day of the stand-down period. So there is a big discrepancy in the legislation and the intention of the policy, and it is important that the legislation reflects the intention of the policy. It is a great bill. I support this bill and commend it to the House.

I enjoyed that speech from the member Parmjeet Parmar. The senior Government whip, Tim Macindoe, was staring at her throughout, I think encouraging her to take her seat. I guess now that the member does not have taxpayers’ money available to her to promote herself as a possible candidate in an upcoming by-election she is having to do it the old-fashioned way, by using her time in the House to try to raise her profile in the event that she should find herself the National Party candidate in any upcoming by-election.

The member also said that this is an urgent matter for the Government, I guess as some way of trying to convince the House that this bill actually belongs in the urgency motion. Well, if it was such an urgent matter for the Government it would have dealt with it somewhere between May 2014 and today. More than a year and a half since the Government realised that it had been breaking the law, it is finally getting around, under urgency, to dealing with it—a year and a half after it realised it was breaking the law.

I have heard members opposite say: “Oh, this is just technical. It’s not such a big deal.” The last time I checked, being ignorant of the law was not a defence for breaking the law. But even when the Government became aware of the fact that it was breaking the law, it continued to break the law until it became public. So the test for this Government was not “Are we doing the right thing? Are we adhering to the rule of law?”; the test was: “Will this look bad for us on the front page of the Dominion Post?” When it started to look bad for it on the front page of the newspaper and on the 6 o’clock news, only then did this Government decide that it was probably about time to start doing something about it. I think that goes to the motivation of this Government. If it can get away with it, it will break the law. Only when it becomes politically dodgy for it, is it actually prepared to do something about it.

I actually do not think this is just a trivial matter, because it actually helps us to understand the standards to which the Government holds itself. We have heard about the housing Minister’s office encouraging Housing New Zealand officials to involve Parmjeet Parmar—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! This is not in the bill.

—in a roadshow, because she wanted to raise her profile—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! Come back to the bill.

—and we have heard about a range of other matters that actually question the standards of this Government. I think the fact that it has brought this legislation under urgency more than a year and a half after it discovered it was breaking the law is just another example of the shoddy standards of this John Key - led Government.

The other thing I have heard, about why this is just a trivial matter, is that for the people involved it is not a lot of money—it is just 1 day on the benefit. There are probably not many people involved, although the Government cannot tell us how many people are involved. It cannot tell us what the cost of compensating everybody who has been affected by this breach of the law by the Government would be. I do not even think the Government has told us what the cost of the opportunity to seek compensation that it is offering will be. There is very little information for the House from this Government.

But I want to challenge the notion—and other members have done this as well—that this is a small matter for everybody affected by this, because there are a number of people, and it is a growing number of people, who move in and out of work on a regular basis. They are people who are in temporary work like seasonal work, like fixed-term contracts, and like casual work and people who get their work through temping agencies or labour-hire companies. For a lot of people these days, they are moving in and out of work. Every time the work that they have comes to an end—whether it be because it is a fixed-term contract, whether it be because it is seasonal work, whether it is casual work that has come to an end—they then have to go through this stand-down period.

The example that has been used a number of times, particularly, is of classroom support people. They have a number of fixed terms every year because they are actually employed only during the school term. For those people, they are having to go through this stand-down period four or maybe five times a year. That is 4 or 5 days every year for many of them. We are talking about an 18-year period here, over which maybe four or five times a year an individual may have been denied a day of benefit that they were entitled to under the law. So for some people—and I appreciate that it is probably not an enormous number of people—this is more than just trivial. Just because it is a small number of people—possibly; we do not actually know, because the Government cannot tell us any figures. Just because they are not people who are a priority to the National Government does not mean that it is not very real for those people, and it does not mean that we as a Parliament should not address that for them and compensate them for it. I think it is more than just trivial.

Actually, I think it raises the issue of just how relevant and appropriate this stand-down period, as it is applied today, actually is in the 21st century, because the number of people who are engaged in this type of temporary work is growing, and growing at a dramatic pace. Overall, in the New Zealand employment market, around 10.5 percent of workers fall into one of those categories of temporary workers—around 10.5 percent. OK, so that is a significant number of people, but only one-tenth of the overall employment market. However, for the jobs that were created between 2008 and 2012, a full 28 percent of those jobs—28,600 people—are actually in that form of temporary work. In recent years the overall proportion of people in these temporary work situations has grown significantly, and that is a trend that shows absolutely no sign of abating at all.

This issue of the stand-down period is actually one of those issues that falls into that suite of issues that we on this side of the House are talking about as part of our Future of Work Commission, because the nature of work is changing. This is maybe a 19th century, but probably not—very much a 20th century policy, when overall the vast majority of people were in stable work with a set number of hours a week, had long-term prospects of staying in the same job, and were not moving in and out of employment on a regular basis. That is, sadly, becoming a thing of the past. The fact that it is becoming a thing of the past is not something that we should resign ourselves to, and we as parliamentarians should be looking at how we provide employment security and income security for people. But we have to acknowledge that the nature of work is changing, and this policy of putting people through a stand-down period, especially those people who are on fixed-term contracts and especially those people who, by the very nature of their work, are required to go through a stand-down period a number of times a year—I think it is a well-overdue time for us to reflect on that policy and actually ask ourselves as a Parliament whether that is an appropriate policy in the 21st century.

In a lot of ways, I think, this change is perhaps not the change we should be debating. We should actually be debating the question of how the stand-down period actually operates and whether it is appropriate. On this side of the House we do not see this as a trivial matter and we will not trivialise it in the way that members opposite have. This is significant, and for the people who have been affected by it, it is significant. We actually need to acknowledge that and treat this as a serious issue and try to actually get it right, because some people have been severely affected—

The ASSISTANT SPEAKER (Lindsay Tisch): Sorry, the member’s time has expired.

We do not take this as a trivial matter at all on this side of the House. I think the reason we are debating this bill today is that the policy intent back in 1998 was very, very clear, and due to drafting errors or poor wording we have ended up with the legislation not matching that policy intent. That needs to be addressed for many reasons, but not the least being a fiscal one. Although there has been a little bit of politics from the Labour Party in this particular debate, I think the contributions from the Green members underline for those who were in any doubt that they certainly are not ready for the Treasury benches. It would be, certainly, a cruel and unusual punishment should they ever get the opportunity to be unleashed on us in that area.

This is a very timely bill. It is very good to get it done at this point. It absolutely nails the problem that we have of getting the legislation lined up with the policy intent. I commend it to the House. Thank you.