Social Assistance Legislation (Budget 2019 Welfare Package) Amendment Bill

We come to the Part 2 debate; the debate on clauses 15 to 21 and the Schedule.

I raise a point of order, Madam Chairperson. I took a previous point of order because my Supplementary Order Paper (SOP) 243 that was submitted to the Table—I did not have a chance. I did seek the call previously, prior to you sitting in the Chair. Also, it was not referred to by the Minister in regards to this Supplementary Order Paper, hence the reason why I wanted to take the call so that I could refer to my Supplementary Order Paper and at least have a response from the Minister.

Just in relation to that—I thank the member for your point of order—the Minister had answered several questions. She may not have come to yours specifically, but she did spend a lot of time answering questions put to her. It’s unfortunate that you didn’t get a chance to speak to your SOP. You did actually have a call, I think, during the debate. You could have spoken to your SOP at that point.

💬 Hon Alfred Ngaro: A point of order, Madam Chairperson.

CHAIRPERSON (Poto Williams): We have moved on to Part 2, I’m afraid, so we cannot go back.

💬 Hon Alfred Ngaro: Madam Chair, I did seek to take that call. I had spoken in the first reading and the second reading, and you’ll notice that there, but I did try to seek the call. I wasn’t successful inside of that, hence the reason I wanted to take a point of order to be able to speak to this. The Minister may have referred to other SOPs that were there, but she did not refer to this, which was tabled on the Table.

CHAIRPERSON (Poto Williams): Unfortunately, we have moved on—

💬 Hon Louise Upston: Speaking to the point of order—

CHAIRPERSON (Poto Williams): No, I’m not taking any more speaking to the points of order. I’m making a ruling. Thank you. I thank the member. Thank you. We’ve moved on now to Part 2, and I apologise to the member that you didn’t have an opportunity to do that. You did actually have a call during the committee of the whole House debate on Part 1. You could have spoken about your SOP at that point; you did not. I’m not taking it—are you seeking the call?

💬 Hon Louise Upston: No, it’s a new point of order. I raise a point of order, Madam Chairperson.

CHAIRPERSON (Poto Williams): Point of order, the Hon Louise Upston.

Thank you, Madam Chairperson. In the debate on the first part, the Minister referred to a number of Supplementary Order Papers (SOPs), including ones that were not in Part 1, which meant the debate that we had stretched beyond Part 1—

That is not a point of order, and we’ve moved on to Part 2 now. Please, I ask the member to resume her seat.

I am very pleased to take a call on Part 2. I must admit it has come quicker than I anticipated, but fortunately I am quick to react. I want to attend mainly to clause 16—in effect, an amendment to the Child Support Act, and this amending section 9. In this case, it’s intending to take in section 9(5B), which says, “before ‘the chief executive of the department for the time being responsible for the administration of the Social Security Act 2018’, insert ‘either the Commissioner or’.”

There are two things I would like clarity on from the Minister, if they can. First and foremost, which commissioner are we talking about? I suspect I know what it is in so far as there used to be called, in the Ministry of Social Development, “regional commissioners”. Is that what is being referred to, or is it a commissioner to oversee, well, in effect, Madam—oh, sorry, Mr Chair. I do apologise; we’ve had a change. In effect, we need a little bit more clarity about who this commissioner is, and I want to be clear, particularly to the Minister’s officials, that I’m not looking for the name of said person but what commissioner we are dealing with. To try and show the lack of clarity, of course, this Parliament’s very aware that we have a multiplicity of commissioners, from family commissioners to human rights commissioners to a multiplicity—

💬 Chris Bishop: Too many, probably.

Probably—arguably—too many. But, in all seriousness, I think there is a lack of specificity here about who this commissioner is, particularly in their relationship to the chief executive, which I assume is the chief executive of the Ministry of Social Development. But I just want to make absolutely clear, because another colleague, Nicola Willis, spoke earlier that, actually, we’ve seen rushed legislation like this before and it’s led to mistakes. So, in short, and I suppose slightly tongue in cheek, I don’t want to see the Commissioner for the Environment involved with applying social benefits, and that’s no offence to that particular person. The other is, then, that if there is a chief executive and a commissioner both able to be responsible, who has precedence? I assume it’s the chief executive, but, again, I think there is a lack of clarity in what’s been presented to us here. So it would just be good to get some clarity from the Minister around that proposed clause 16.

Again, if it’s of assistance, Minister: who is the commissioner? Actually, there’s a third question. So who is the commissioner? Secondly, what is their jurisdiction in relation to the chief executive—do they outrank, under-rank, or are they of equivalence? I think that’s fairly important. And, thirdly, the drafting of this legislation has been quite particular that it’s singular. Again, I suspect we’re not talking about the regional commissioners, but if we are, of course, that’s a plural, and I want to make sure that, if there are commissioners, we don’t have a drafting error here.

I raise a point of order, Mr Chairperson. I’ve had a further tabled amendment also around the United Nations obligations. It’s similar to the one that was, obviously, tabled and voted down in Part 1. If I have an intention to table one that’s, I will be honest, very similar, is that out of order instantly, or because of a new part—I just don’t want to cause disorder.

CHAIRPERSON (Adrian Rurawhe): The way forward for the member is to actually table it through the proper process. The clerks will bring it to the Table and provide me with advice, and I will decide at that point. I can’t make a ruling on something I haven’t seen.

Thank you, Mr Chair. Look, I will then just indicate that I am writing and amending a proposed Supplementary Order Paper that I do intend to table here, which is just asking the Minister to, effectively, provide written confirmation to this committee that these changes remain agreeable to the United Nations Convention on the Rights of the Child, and in particular within clauses 4 to 7, where it suggests in New Zealand—

CHAIRPERSON (Adrian Rurawhe): I must tell the member that he can’t debate something that’s not before the committee. So you’ve advised me that you intend to do that. You cannot debate that until you actually do it. Thank you.

Very good. Thank you, Mr Chair. I will seek advice on that later but not disrupt the conversation now. I’m happy, then, to jump to veterans. I’ve probably got a lot more to discuss there. This is Subpart 2. I think the Minister in the chair will, hopefully, answer a couple of questions for me. First and foremost, the House is working at the moment through a different process for another veterans’ affairs bill. This bill is going to be, effectively, expanding the scope of those who are deemed to be veterans. I would welcome the Minister’s indication to the committee whether or not some thought by her officials has been given to the implications of that particular bill—in fact, it is to the Veterans’ Support Act of 2014. That is only going into committee now, but it would be good to get some assurance that the notion of abatements as discussed in this Subpart 2 has been considered by the Minister and the officials.

Why that’s relatively important is that there are, fundamentally, cost implications. As I’ve indicated in earlier speeches, I think it’s actually a really good part here. I myself am very supportive of what the Minister is doing to look at the abatements, but I think it’s quite important, as we are looking towards financial implications, that we not only look at the current practice but that we’re also about to—[Bell rung] Mr Chair?

CHAIRPERSON (Adrian Rurawhe): Simon O’Connor.

💬 Hon Carmel Sepuloni: Mr Chair?

CHAIRPERSON (Adrian Rurawhe): Oh, sorry, I’ve already given the call.

Thank you. The fates are on my side for once. This is good. I think it would be useful just that there’s some affirmation from the Minister, who’s showing great eagerness, which I am very keen on, that with this proposed legislation—as was indicated in the House earlier in the week, there does appear to be unanimity from the House, so we can anticipate that probably hundreds if not thousands of veterans will now be officially declared as veterans and therefore will come under the role of this abatement. So I just want some assurance, as far as the Minister is willing and able to indicate, that that’s been taken into account.

The other area that I would like to just touch on—and I signalled it, I think, in my first or second reading—is whether or not there’s scope for us as a Parliament, in particular yourself, Minister, as the holder of the purse, if you will, as a Minister of the Crown, to be more generous to our veterans. So, while I acknowledge that what is here in Subpart 2 and the subsequent clauses is about aligning the abatement rates for veterans, in fact, is there a possibility or has any consideration been given to making it slightly more generous? I know that probably puts us into issues of discrimination. It probably, in this case, would be a positive discrimination rather than a negative one, but if any thought has been given by the Minister to that, that would be welcome. If any advice has been sought, that would be particularly useful. I myself haven’t served, but I know a number of members in this Chamber have, and, of course, we are in a Chamber that is a war memorial. These people have served the Realm with honour and, obviously, they seek their entitlements through Veterans’ Affairs. They, like anyone else receiving support from the Crown, can look to work. I’m wondering whether or not there’s a possibility, therefore, in the abatement to be slightly more generous. I’m not going to give a particular number. I think that gets a little bit fraught, but any assistance there would be incredibly, incredibly welcome.

As we move into Part 2—this is to do with the new schedule under Part 2—just some clarity around the dates there. I know we get into title and commencement of the whole package later, but I am wondering why we have April 2020 and why it is so far out? I’m looking for some transitional arrangements there. I may have missed those in Part 2, but any indication from the Minister, again, as to why this is taking so long, would be welcome. I suspect—but the Minister may wish to confirm this—that this is to keep it in line with the other abatement changes, but perhaps it would be a partial solution, as it were, to assisting our veterans in a more generous form, that we actually move to have their abatements put in place fairly quickly.

That probably leads me to my last question: is the Minister able to provide us some details about, of course, the abatement rates across the main benefits, like sole parents and employment support? Also, as a consequence, is she able to give us the numbers of those that she’s anticipating in the veterans’ support space will be affected by her changes?

So there are a few things there that I’ve tried to raise for the Minister in the chair. As I said, primarily it’s around clause 16: the notion of who is a commissioner. Have we used the right term? Is it pluralised sufficiently or is singular OK? Their relationship with the chief executive—I would love, if I can, to have absolute assurance that we know specifically who the commissioner or those commissioners are, and that we’re not going to end up with any confusion there. Then, to assist the Minister around the abatements—again, first and foremost to acknowledge a good piece of work overall—has thought been given to how that’s affecting the current amendment bill to the Veterans’ Support Act? I suppose the fundamental point there, Minister, is that we have a large number of veterans coming on board, I suspect. It’s a fairly large budget. As I flipped through the documents, I saw that that’s being taken care of. And then, really, it’s not a philosophical question but a broad question—whether or not any thought’s been given for us to be more generous to those women and men who have rightly served the Realm.

I might take a different tack this time and not only respond to Simon O’Connor’s questions but actually talk through what Part 2 does—so, hopefully, pre-empting some of the questions that the Opposition could have. So I’ll take my time in explaining it this time, right at the beginning, and hopefully we can pre-empt some of those inquiries.

Part 2 of the bill makes amendments to both the Child Support Act 1991, Subpart 1, and the Veterans’ Support Act 2014, Subpart 2. Subpart 1 is the amendment to the Child Support Act 1991; so Subpart 1 of Part 2 of the bill amends the Child Support Act 1991 so that the Commissioner for Inland Revenue or the chief executive of the Ministry of Social Development (MSD) can decide whether a social security beneficiary is not required to apply for child support under section 9 of the Child Support Act 1991. Subpart 2 is the amendment to the Veterans’ Support Act 2014. Subpart 2 of Part 2 of the bill repeals the definition of income test 3 and amends the Veterans’ Support Act 2014 to remove the detail of the abatement thresholds for income-tested veterans’ pensions from the Veterans’ Support Act 2014 and creates a new regulation-making power. This regulation-making power will result in the detail of the abatement thresholds being shifted into the Veterans’ Support Regulations 2014. This means that, in the future, changes to the veterans’ pension abatement thresholds can be made through regulations by Orders in Council rather than by relying on amendments to the primary legislation, which is why we didn’t have to bring that whole policy proposal to the House today. Most of it can be done through Order in Council, but the veterans’ component couldn’t be, so hence why we’re making the amendment.

In terms of the clauses, I know the member had questions about clause 16, but let’s start with clause 15. Clause 15 of the bill sets out that Part 2, Subpart 1 of the bill amends the Child Support Act 1991. Clause 16 of the bill amends section 9(5B) of the Child Support Act. Section 9 of the Child Support Act sets the obligation for a person receiving a social security benefit, as defined in the Social Security Act, to apply for child support. The amendment at section 9(5B) will authorise the Commissioner of Inland Revenue, as well as the chief executive of the Ministry of Social Development, to decide whether a social security beneficiary is not required to apply for child support under section 9 of the Child Support Act.

Currently, only the chief executive of the Ministry of Social Development is authorised to make that decision under section 9(5B) of the Child Support Act. This change allows a client to have the conversation about whether they need to apply for child support with either the Inland Revenue Department or the Ministry of Social Development. Under current legislation, only MSD can make the decision that a client is not required to apply as one of the exemptions applies. This can result in some clients having intrusive conversations, as we discussed earlier, about private matters with both and the Inland Revenue Department and MSD in order to be exempted from the obligation to apply for child support.

Subpart 2 is the amendment to the Veterans’ Support Act 2014. If we move to clause 17, this clause of the bill sets out that Part 2, Subpart 2 of the bill amends the Veterans’ Support Act 2014. Clause 18 of the bill will repeal the definition of income test 3 under section 158(1) of the Veterans’ Support Act. This has been done so that income test 3 can be defined in regulations, which can then be changed more easily to incorporate future changes to the abatement thresholds.

Clause 19 of the bill inserts new section 171 on the abatement of the veteran’s pension into the Veterans’ Support Act. Under new section 171, a veteran’s pension payable under sections 161 and 164 is subject to income tests and abatement thresholds set out in that section. New section 171 instead makes a veteran’s pension payable under section 161 or section 164 subject to abatement, in accordance with regulations made under section 265 of the Veterans’ Support Act. This will mean that the abatement thresholds will be defined in the regulations in the future. New sections 171(2) to (4) in clause 19 also make clear what may and must be done by the new regulations.

Clause 20 of the bill enables the creation of regulations in relation to abatement thresholds under the Veterans’ Support Act. This is because clause 20 amends section 265 of the Veterans’ Support Act by inserting new section 265(1)(29A), which authorises regulations to be made for the purposes of new section 171. So you kind of need to refer back to clause 19 on that.

Clause 21 of the bill will insert a new Part 4 in Schedule 1 of the Veterans’ Support Act. This new Part 4 is set out in Part 2 of the Schedule of the bill and relates to the transitional arrangements for the repeal of the detail on abatement thresholds from 1 April 2020. This Schedule enables the regulation-making power to be exercised before 1 April 2020, but that the regulations will have effect only on or after 1 April 2020.

Just talking to a few of the points in regards to the amendments to the Child Support Act, with respect to enabling the Commissioner of Inland Revenue to determine whether a person is not required to apply for child support. As I briefly touched on, currently only the chief executive of the Ministry of Social Development is also authorised to make that decision, under section 9(5B) of the Child Support Act 1991. This change allows a client to have a conversation about whether they need to apply for child support with either the Inland Revenue Department or the Ministry of Social Development. Under current legislation, only MSD can make the decision that a client is not required to apply as one of the exemptions applies. This can result in some clients having to have sensitive conversations—as I said, private matters—with both the Inland Revenue Department and MSD in order to be exempted from the obligation to apply for child support.

Just speaking to the amendments to the Veterans’ Support Act 2014—specifically generic points on increases to abatement thresholds—under current policy settings, people receiving a main benefit can earn up to a certain level of income per week, known as the abatement threshold, before their benefit begins to reduce, which is known as the abatement “rate”. This Government has committed to increasing the minimum wage to $20 in 2021, and we want to make sure, in anticipation of that, that people getting main benefits could still continue to work the same number of hours before that benefit is reduced. Under the Budget 2019 income support changes, abatement thresholds are set to increase by between $5 and $10 each year for the next four years to respond to the expected increases to the minimum wage over that same period. It’ll benefit around 73,000 low-income individuals and families by an average of $5 per week on 1 April 2020, increasing to $12 per week in 2023. Obviously, that amount is more for those that work the maximum number of hours or earn up to the threshold. Increasing abatement thresholds of main benefits costs $97.1 million over four years; so that’s the cost implication, if anyone was going to ask.

The changes to the Veterans’ Support Act 2014 mean that future increases to the abatement thresholds can be made in regulation rather than amending the Act. So it’s really just aligning it so that we’re not in this position again where we would need to treat them separately, so that it can actually be done by Order in Council, as is the rest of what we’re attempting to do with our commitment to raising abatement thresholds.

This bill will remove the detail of the different abatement thresholds currently contained in sections 158 and 171 from the Veterans’ Support Act 2014 and create a regulation-making power under section 265 of that Act to enable the detail of abatement thresholds to be included in the veterans’ support regulations 2014. This approach makes adjusting the veterans pension abatement thresholds through regulations more legislatively efficient. It is also similar to the way abatement thresholds are increased for superannuitants and main beneficiaries, which is generally done through Order in Council, as I mentioned before.

Hopefully that—actually, I’m confident that that—responds to the questions that were put to me by Simon O’Connor, and hopefully it pre-empts some of the questions that will come from the other side. Thank you, Mr Chair.

Thank you very much, Mr Chair, and I also thank the Minister for Social Development for her detailed explanation of Part 2. She was attempting to set out as much information as possible to forestall any questions, and that’s noted and acknowledged. But there are some questions, none the less, that remain and other debating points, and, in fact, there’s a couple of questions that have arisen from her explanation that might be usefully thrashed out now—if you’ll excuse the term.

First, to the amendments to the Child Support Act 1991, and the Minister has explained that that applies to where a decision is made about whether a formula assessment needs to be sought by a social security beneficiary. What the bill is seeking to do is to set up a regime whereby the Commissioner of Inland Revenue, as an alternative to the chief executive of the department that administers the Social Security Act, could also make such a decision, effectively, to waive that requirement. But my question to the Minister is: what happens if those two persons might disagree? I can imagine a scenario whereby a beneficiary might perhaps apply for a formula assessment to both bodies—that is, to the IRD, and have the commissioner take that into consideration, and also to the relevant Government agency as determines the entitlements under the Social Security Act. It might be that those two people come to a different answer, and so which of those would prevail in that circumstance would be my question to the Minister and her officials.

There’s a related question in relation to the IRD element, whereby the commissioner, under separate legislation, has the ability to delegate decision making. So I wonder if it’s intended that the commissioner might have the ability to delegate this particular decision, or if it is perhaps intended by the Minister very much to be the commissioner herself or himself at the time, as the case might be.

A further and final question relating to clause 16 of this bill would be whether there was anyone else that was contemplated by the Minister and her officials to have such a power of waiving assessment. It might be, for example, that the administration of another Act is carried out by the chief executive of another Government department, and it might be that that person is well placed to make a determination in relation to the particular beneficiary involved. So if she can give some guidance on that, that will be helpful for our consideration and for the record as this bill goes through.

I would also request the Minister’s guidance in relation to the provisions that relate to amending the Veterans’ Support Act. My colleague Simon O’Connor has noted that elsewhere in the House, or in another part of the House’s proceedings, the Veterans’ Support Act is being amended, and I join him and others in the House, no doubt, in commending that. But in relation more particularly to Part 2 of this bill, in new section 171, “Abatement of veteran’s pension”, in clause 19, it is noted under subsection (2) that “Regulations made under section 265 may require different abatement”, and the Minister herself has just a few minutes ago talked about this subsection in relation to abatement that “may” or “must” be made. But, in fact, the wording of the clause is quite clear. It’s “may”—it’s discretionary—and yet, actually, I think she might be right in her commentary, more so than in the wording of the proposed legislation.

I think it would be appropriate to make it mandatory that different abatement will apply when regulations are made under section 265—for example, the veterans pension, under sections 161 and 164. Different examples are given under new section 171(2), and they’re phrased as examples—so it says, “(for example, different income tests, abatement rates, and abatement thresholds”—but if there are other bases on which a different abatement might be made, then why would the legislation not simply spell those out? It is unclear to me.

So if the Minister can advise whether that list is meant to be exhaustive or not, and if it’s not, then explain why she wouldn’t just simply set those out. But if it is intended to be exhaustive, then perhaps simply pointing to the relevant section would actually be just as good a way to do it. It’s the difference between “i.e.” and “e.g.”—between providing an exhaustive list and perhaps just giving particular instances that might apply.

My other, final question to the Minister, if I can continue over the five-minute break—[Time expired]

Thank you, Mr Chair. Just a short call to speak to the point about moving the abatement rate for veterans’ support into regulation and how happy we are to see that, and this policy work in general. This is an area that has been long neglected. The initial intent of this was to enable beneficiaries, to really help people to transition into full-time employment through part-time employment so that if they were parents and, actually, that didn’t work for their children, for them to be in full-time employment, they could get that additional financial benefit from those added hours of work, or if they were a person with an illness or a disability—and I suspect many veterans may be in that situation—where, actually, full-time work is not possible for them while maintaining their health. So we want people to get the value of the work that they do, and it’s appropriate for that to sit on top of the benefit that they get.

I think it’s also important to recognise too that this sits within the context of the needs of people within our community and how many people, veterans and others alike, have mental health challenges and disabilities and caregiving responsibilities—so how important these provisions are for so many New Zealanders.

It also sits in the context of the structure of our labour market, because, actually, New Zealand has very precarious employment conditions for many New Zealanders. I think that’s been evident by, in part—this links to, and the abatement discussion does as well—the discussion we’ve been hearing from the Opposition about the need for people to be in paid work and this being the solution to poverty. They typically are talking full-time work, when that’s the discussion, and how you need to be growing the economy to do that. But I was looking at a Salvation Army submission from 2016 where they were noting that, since 2010, the economy had grown by 16 percent while the number of jobs had risen by about 11 percent, yet the number of people on the margins of the labour market without work, with unreliable work, or with short hours remained at a constant of 10 percent of the working-age population—of around 350,000 to 370,000 people. So that’s actually a signal to us that this is built into the very structure of our economy. When we hear the Opposition quite often talking about the need for flexibility for employers, actually, they’re arguing for precariousness of employment for working people in this country. This is built in.

It’s going to take us time. This Government has it on the agenda to deal with that underlying structure of our labour market to give people more security, but, in the meantime, we need to make sure that we’re not penalising people for the situations that they find themselves in—whether that be out of work altogether, or whether that be in precarious work, or limited hours of work. The abatement rate is essential in that, and so we support the increase of that and like it being in regulation, because we’re hoping to see what’s been signalled already by this Government—an increase of $5 more a week each year until 2023.

The Greens hope that, because it’s in regulation, we’re going to speed that up even more so that, actually, it’s not just keeping up with the changes to the minimum wage but enabling the initial intent, when it was first set, of how many hours people would get up to that point, so that we actually recognise we want people to get value from their paid work. I remember a woman who told me that she worked for two years for nothing because she didn’t want to let her employer down, but she was better off on the benefit—that’s got to change.

I will respond to Simon O’Connor, and maybe make some comments to Under-Secretary Jan Logie’s comments as well. So Simon O’Connor asked, “Has any thought been given to the implications about abatement and the other changes to the Veterans’ Support Act 2014 currently before select committee?” Can I just assure the committee that the Minister for Veterans is aware of the proposals. The abatement thresholds will apply to whoever meets the definition of veteran in the future.

Can I respond to what Under-Secretary Jan Logie has just pointed out. I think they were very good comments, and I would agree with the comments made by Under-Secretary Logie. I also want to point out that this issue around the abatement thresholds and the fact that they haven’t been shifted for a number of years—since the 1990s except for one of the measures, I think—has been raised with me as Minister for Disability Issues and, even prior to that, from disabled people who access the supported living payment, who are able to take up a few hours of work but have been put off from taking up maybe two or three more because of the fact that they are actually punished for doing so. So I think this does provide a pathway for people to maintain the level of work that they are taking currently or, if they’re actually undertaking less work, to pick up a little bit more. Moving forward, we do need to continue to look at this, because we’ve always seen—and I think the Greens and New Zealand First would agree—that part-time work provides a pathway to full-time work.

For some people, part-time work is more appropriate given their circumstances. Perhaps they can’t work a full day because of their health condition or disability. Perhaps they can’t work a full day because of their parenting obligations. Perhaps they have children with particular needs that mean they can’t work a 40-hour-a-week job. However, for those who are able, part-time work does provide that pathway to full-time employment. So we support that and we see this as a very important measure to actually incentivise people to take up work and ensure that people aren’t penalised for doing so.

Thank you, Mr Chair. It’s a pleasure to be talking on the Social Assistance Legislation (Budget 2019 Welfare Package) Amendment Bill. It’s very good to hear the Minister—I’ve got to compliment her for standing up and answering the questions that have been put to her. I’ve got to say, I totally agree with what she’s just said. That is, we do want to see people working where they can and if possible, and part-time work is a pathway to full-time work in many occasions. So that’s what we believe in the National Party, and that’s a strong underlying tenet of any change that should be brought about. We all know that, for those who do work, the dignity that comes with that, the improvement in their living standards, and consequential social and health outcomes are so radically improved through getting into work that that is a vital part of making sure that we assist anyone and everyone into work where possible.

Just in terms of this particular legislation, I thought my colleague Mr Penk made an excellent contribution. Just before we carry on, for many of the people sitting at home now late on a Friday—I presume there are not many glued to the TV at work; most of them will be out enjoying themselves socially—it’s interesting to just sort of recap on what we’re trying to achieve here, and I’m talking, particularly, in relation to the veterans abatement component. The abatement rates refer to the amount of money that someone on a benefit can earn while they’re employed before it affects their main benefit—i.e., if you were earning some money outside, if you’re getting a benefit, then there’s an abatement if you’re earning more than what you otherwise might have got just on your benefit. So, for instance, if you’re earning between $100 and $200, there will be, under current rules, a 30c reduction in the dollar to the pension, such as what we’re talking about here under the veterans pension. If you earn over $200, that increases to 70c in the dollar. So this abatement thing is a really crucial part.

The indexing is about tying those benefits to the percentage increase in the net average wage rather than the Consumers Price Index (CPI), as it currently is, and I’m going to return to that in a moment. But I just want to talk about this issue around abatements because, in section 171, “Abatement of veteran’s pension”, it states that “(3) Regulations made under section 265 [will] increase an amount of an abatement threshold (prescribed by regulations of that kind) for abatement of a veteran’s pension under section 161 or 164—”, and under paragraph (a)—this is the crucial part—“must state the date on which they are to have effect (which may be a date before the date on which they were made);”. So the important thing is—and this is something I’d like the Minister to respond to—is this a retrospective section? This could work against the favour of the person receiving that abatement—namely, a veteran. That could mean that a veteran ends up earning less income. That is actually a bad thing.

I don’t think anyone in this committee, even looking across the other side, would like to see a rule come in where a veteran thought he or she was entitled to a certain level of income, probably has gone out and spent it—because a lot of our veterans aren’t earning a lot of money and they’re getting a veteran’s pension for a reason—and then finds that they’re being cut down at the knees by a Minister or a commissioner who has come in and decided to change the rules. I think that is a very worrying thing.

The other thing is that the indexing is about tying benefits to the percentage increase in the net average wage rather than CPI, as it currently is. I thought it was interesting. I’ve just been sitting here looking at some of the numbers, and one of the things, to me, is this move from CPI to this definition of average ordinary time weekly income or earnings. I think it’s interesting—I looked at the series of CPI figures from March 1989 right through—[Time expired]

I’ll speak quickly to some of the points that have been raised by both the member Andrew Bayly and the member Christopher Penk. Just with respect to Andrew Bayly’s comments, there were some comments made about indexation. Indexation is not within the scope of Part 2 at all; so I won’t respond to those. There were other questions, though, that were relevant to Part 2 that I can respond to. The question around whether or not this is a retrospective clause—the answer to that is no. It is prospective from the date the regulations come into effect. I can assure the member that there are no veterans who will be worse off as a result of the abatement changes.

Then also, to the member Christopher Penk—he asked earlier about what happens if the Ministry of Social Development (MSD) or Inland Revenue disagree on whether an exemption applies—I’ve had the assurance that both departments will have quite stringent operational guidelines so there will be consistency in any decision that will be made there.

He also asked whether the clause will be delegated down to members in those organisations—the clause with respect to the commissioner. Yes, clause 16 has been written consistently with the Child Support Act 1991. Therefore, referral to the commissioner and the chief executive are defined under that Act, and both are able to delegate those decisions as part of the State Sector Act.

In asking if there is any intention to allow decision-making regarding child support exemptions to departments other than MSD and IRD—the answer is no.