Rates Rebate (Statutory Declarations) Amendment Bill

Thank you, Mr Chairman. I do have a couple of questions, and I’m very pleased to see the Minister in charge of the bill, the Hon Nanaia Mahuta, therefore is in the chair, so that she has an opportunity to respond to them directly.

The first is to make the observation that while this bill will certainly be welcomed by some—it could be welcomed by quite a few people; I acknowledge that—nevertheless, it is, to some extent, a stocking filler. I would ask the Minister to explain to us why she considers that it is appropriate for this bill to be being dealt with under urgency in the House at this time. That is a serious question, because, unfortunately, we have reached a stage now where governing, or legislating, under urgency has become the norm for this Government. One only needs to look back over the last few weeks to see that we have spent a huge amount of time passing legislation under urgency that doesn’t in any way meet the usual test for that sort of thing. All Governments use urgency from time to time, particularly in a post-Budget period. But here we have a bill that under no stretch of the imagination fits that description, and so I do ask the Minister to explain to us why it is being done.

We saw what happened with the prisoner voting bill, just a few days ago. Legislation that is passed under urgency fails, frequently, to receive the appropriate scrutiny and leads to mistakes. I’m not wishing to relitigate the debates of last night or previous days, other than to point out that when we sit under urgency, the potential for things to be done incorrectly is obvious. In fact, last night, most of the sitting hours of Parliament—up until about 25 to 10—were taken in rectifying a matter that shouldn’t have been necessary if the Government hadn’t been rushing the week before. So I ask the Minister if she could deal with that.

I also want to turn, if I may, to probably what is the most significant aspect of Part 1 and, if I can, just for the benefit of those who are listening, point out that clauses 4 to 7 amend sections 5, 6, 7, and 7A of the principal Act, which prescribe requirements for different types of rate rebate and refund applications. In particular, the relevant point here is that the amendments remove the requirement that applications be verified by the applicant making a declaration, which had the effect of obliging an applicant to attend a local authority office or make some other arrangement to have their application witnessed by a person authorised to take statutory declarations under the Oaths and Declarations Act 1957. Of course, that is where the fundamental disagreement between our side of the House and the Government arises.

It is our concern, and we raised it in previous readings—particularly, I was in the House when we dealt with this matter at its second reading, I think it was last Friday, where the National Party raised our concern that while we think the vast majority of New Zealanders are honest and would not look to defraud the system, unfortunately, we know from past experience that there are some who are not. That’s the whole reason why the statutory declaration, of course, has existed, because if somebody is to make a declaration that is to their financial benefit and it is false, then they are, effectively—to use the vernacular—ripping off the taxpayer. I used the analogy, actually, last week, that this is, effectively, a bill that robs Peter to pay Paul, because we’re looking at benefits for ratepayers that, effectively, have to be paid for by taxpayers. The money still has to come from somewhere. Of course, at this stage in particular, we know that local government is under particular pressure—all agencies are—because of COVID. We understand that, and we understand that there are many ratepayers who therefore would welcome the rebate. So it’s not that we oppose the principle of a rebate; it is that we oppose the principle that a rebate could be obtained fraudulently.

The obligation, therefore, to have a statutory declaration—to say in front of somebody who is of good standing in the community, “What I am signing here is true, and I therefore am entitled to claim the rebate that is available to me.”—is not something that we should throw away lightly. As I say, I have no doubt that the vast majority of people who seek that rebate do so honestly, but here we are removing the protection that all ratepayers and taxpayers should be able to enjoy so that their honesty won’t be taken advantage of by the few who are dishonest. This is the worst possible time for enabling some dishonesty to creep into the system, which simply means that the honest people pay more.

So I ask the Minister if she would please respond to that, in particular, and give us her view as to why she thinks that is appropriate. I understand that there is an argument of making it simpler for people and that some people don’t have ready access to transport, and all the rest of it. But surely those arguments are not strong enough to override the important principle I’ve mentioned.

Well, the first thing I would say to that member, Tim Macindoe, is “Cheer up!” That’s a pretty dim view to start a debate on a matter that actually makes a fundamental difference and contribution to those on low fixed incomes—many senior citizens, many people, that actually have a physical disability. So let’s just get back to the substance of the bill.

Yes, it is a small change but it’s an important one because enabling eligible applicants to apply for the rates rebate, by removing the requirement to make a statutory declaration, fundamentally changes quite a lot of things for a lot of people in a practical way. They don’t have to travel into a council office to get a statutory declaration; they can do this from the comfort of their own home and, in fact, the changes enable an online process to be adopted. But verification is key, so the bill also ensures that the verification form that is provided for is in a manner that is approved by the Secretary for Local Government. And it also ensures that the existing regime in relation to fraudulent claims on a verification form will lock in the provisions in the principal Act. I know, and I heard the debate from members of the Opposition in the second reading, about potential for fraud. That is always a potential in any circumstance, but I do not believe it’s going to be caused simply by moving from a statutory declaration process to a verification process.

However, can I also state that some of the things that were very useful in terms of the committee’s deliberations were to ensure that the immediacy of the bill comes into effect as soon as possible. I am signalling that on the Table, there is Supplementary Order Paper 529, which amends clause 2 of the bill to change the commencement date from 1 July 2020 to “the day after the date of Royal assent”, and that takes on board the many comments around the immediacy of provisions taking effect so that people can access the rates rebate in the form that we are proposing as soon as possible.

Now, I, unlike the member who previously spoke, am very confident that the group of people who access the rates rebate—those on low fixed incomes; mainly senior citizens—by and large, welcome this practical change to enable them to have access to a contribution that makes a big difference in their annual rates payments. In 2019, in that rating year, 103,000 people had successfully applied for the rates rebate. If we improve access in the way that people apply for this small but substantial contribution to the annual rates, I think we are making a good contribution and a little bit of difference for good in a lot of people’s lives.

Firstly, can I just point out to the Minister that I am a very cheerful fellow, and I don’t believe that I have said anything this morning that indicates that I am not of good cheer—

💬 Matt Doocey: Debatable point.

Ha, ha! But I’m also somebody who takes my responsibility seriously, and I don’t think that a fairly gratuitous comment of that sort suffices as an answer to a question. Because while I accept—in fact, I agree with the Minister that there are many who will welcome a system which can make this easier. As I said before, there’s no question that a rates rebate is a desirable thing for many people, particularly those on low and fixed incomes, and particularly in this post-COVID environment, when many household incomes are under even greater stress.

But that doesn’t explain—in fact, the Minister didn’t even begin to answer my question—why we are dealing with this matter under urgency. I say it again because it’s a very important point, and if Opposition members don’t stand up for the authority of Parliament and the need for legislation to be dealt with in a considered, appropriate fashion, then we would be really letting down the public of New Zealand.

I made the point that when bills are dealt with under urgency, quite frequently, mistakes are made, and I drew attention to one where that happened just a few days ago. I’m disappointed that the Minister didn’t explain to us why, when there’s been plenty of time during this parliamentary term, here we are on a Wednesday morning sitting under urgency to deal with this matter.

It is a significant point, because, of course, that has a domino effect on select committees. My select committee had to begin at 8 o’clock this morning and then suspend at 9 o’clock. Leave wasn’t granted—and the reason for that is, of course, many of us have to be in the House to debate these bills, and you can’t be in two places at once. So the Minister does need to explain to us why urgency is being used for a non-urgent matter and has become so common under the regime of this Government that people are beginning to forget what due parliamentary process is.

I heard her answers on the rates rebate matter and why it is being introduced, but I do not believe she’s given an assurance to others who are law-abiding citizens yet as to how the potential for fraud, or to prevent fraud, is being dealt with in this bill. She’s mentioned that it’s simplifying that, and it certainly is. But, really, the requirement to obtain a statutory declaration in the existing provisions, the status quo, are not that taxing. They’re not that difficult. In fact, for those who perhaps live with disabilities or would find travel particularly difficult, arrangements can be made. So why is it felt that it is reasonable to put in place a regime that could be ripe for exploitation and abuse in order to fix the problem that the Minister has identified? Surely there needs to be a better remedy than this.

So I invite the Minister to respond to those, and if we get a satisfactory answer, we probably don’t need to prolong this debate much further.

I’d say that the Government has such a full legislative programme that we have to take every moment, including urgency and extended sittings, to be able to work through some pretty substantial and also some small but meaningful changes that will make a difference in people’s lives. It’s not for me to respond to the issues regarding business of the House, but I would make that observation and absolutely support putting this small but substantial amendment through under these provisions, because the issue has gone to select committee. It’s not as if the select committee hasn’t had time to consider submissions, ask questions of submitters, and then make a determination, and if that’s the best the member can come up with, oh my gosh.

💬 Hon Member: Ooh.

Well, look, we—but let’s come back to the point of contention in relation to the potential for fraud, which I still maintain is a dim view of things, and it’s actually a dim view of people who work long and hard within the local government sector, in councils, and often there are dedicated people who understand this space who are interacting on a daily level with people in relation to the rates rebate, because of the profile of that demographic who actually benefit from the rates rebate. I’m informed that around about five, possibly five to 10, matters get investigated annually in this area, but in the living memory of, certainly, people who are working at the policy level in Department of Internal Affairs, there’s been no prosecution to date. So that, in a sense, highlights that while it has been identified by members in the Opposition as a potential, the reality is a very different thing.

The other point that was made—and, again, it’s been made again and again and again through the second reading and the committee stages of the House—is that a statutory declaration is not a taxing process for many, but if you’re living in a rural community, if you don’t have access to a car and you have to rely on your niece or your nephew or your neighbour to take you in to council to actually verify your rates rebate form—those are the people that this particular change will benefit. Actually, I think, more and more, if we can improve processes for ratepayers to have access to the rates rebate through, potentially, what will inevitably be an online process, with the right verifications, with the ability of people who understand the group of people, the demographic, who will benefit from this type of support, then you will get a more efficient service, less administrative costs for councils, but actually an improved uptake of the rates rebate, which is eventually where I want to get to—an improved uptake of the rates rebate scheme.

I thank the Minister for her advice and input. Generally, I’m very supportive of the rates rebate scheme, and in my previous life have been hugely supportive of getting it out in the community. But, Minister, the judgment here—and I invite you to respond to this—is I support online and other provisions that make the rates rebate scheme more accessible, but as you go down that path, you do run the risk of more people fraudulently using the system. I accept that, up until now, the figures you’ve given are very small numbers, but I liken it to the wage subsidy, effectively, where a whole lot of people applied for the wage subsidy, and then there was an auditing and verification process that sought to make sure that people were following the rules.

Minister, what I’m not clear on here is in the Department of Internal Affairs (DIA), or under the Secretary for Local Government, how, in fact—or are you signalling that there will be a more rigid investigatory regime of auditing? Because I think this side of the Chamber would be somewhat more satisfied with this if we knew that applicants actually knew that there was an auditing regime of quite regular basis to confirm what data was being given. Because, effectively, we’re signing away statutory declarations, and I know from previous history, if you go to a council, or a council officer comes to your home with a statutory declaration, they will very likely go through the information with you. There is a much greater degree of accuracy when that occurs. So if we’re going to trade that off, is the Minister signalling that DIA will have an extra capacity to effectively conduct audits on a more regular basis, to ensure compliance? Because I think if people knew that there’s a regular auditing process, they’re more likely to give accurate information. That, in many ways, would take away some of the concerns this side of the Chamber has. I’d be interested to know if any work has been done on that, Minister.

Thank you for the question. In terms of the removal of the statutory declaration in favour of verification, there must still be supporting documentation required, so the existing processes of being able to verify the supporting documentation will remain in place, as will the current considerations around any potential risk in terms of the decision making. So from an operational point of view, it’s my sense, in the implementation, that councils will remain robust in the way that they look to authorise the verified documents, and that it will continue to be a matter of assessment as they look to the uptake of the rates rebate.

I do believe, however, that when we talk about the issues around improving access and online formats, we are getting better and better at ensuring that there’s less prospect for fraudulent activity, but it’s not a 100 percent assurance. That is the challenge in many, many things. If we look at the most robust way of using identity to verify applications, RealMe for passport applications, we would say as members of this House that there is a high level of assurance and integrity of using that system for a document of that nature. Is it 100 percent? We would hope so, but in your risk analysis of the process, there will inevitably, potentially, be opportunities for people to penetrate the system, and that is always going to be a challenge.

Now, I don’t want to compare apples with pears but I just say that when we introduce the potential for an online process, we must try and assure ourselves—and councils will do this. This paves the way for an online process. This paves the way for councils to be able to build a robust architecture around any online process in relation to this matter, and I’m confident that there has been a lot of thinking within local government about how to improve the processes and how to introduce online systems in a way that not only gives decision makers greater confidence but also ratepayers as they access the system as well.

Thank you, Minister, for some of those comments. I’m just picking up on words, and I’m not quite sure I got the context right, but you referred to my “sense” of what councils will do when picking up the amended regime that this bill creates. So my question for you is: what is that sense based on? What’s your understanding? What are the conversations that you’ve had with councils, who will, obviously, have to dedicate staff to verify information in that application process that this bill outlines?

You can sense where we’re coming from on this side of the House—it’s very simple: the difference between the inconvenience of going to apply for the rates rebate versus accountability. We need assurance, on this side of the House, of accountability for taxpayer money and not opening ourselves up to a regime which will, in fact, create more breach or fraud—or however you want to phrase it—that’s our concern. So, more than just a “sense”, what assurance do you have that council and council staffing will be able to dial up to make sure that the new verification process is watertight?

Well, let’s be really clear so that there’s no mincing of words. In terms of the potential for fraud, there is always a potential for fraud in many places, in many ways. The risk assurance system within councils, I think, tries to mitigate absolutely around this happening through many of its processes. But let’s go to the facts so it’s not a sense.

There have been annually between five to 10 investigations, not prosecutions, in this particular area, which indicates in itself that there are robust measures within councils in terms of how they process things. So, again, I won’t mince words. I’ll be very clear. If there are only five to 10 investigations annually, no prosecutions in the living memory—and I’m happy to provide further information around this—then that actually speaks volumes in terms of the potential that you’re proposing today and the reality of what has happened

I wish to follow up with the Minister on her commentary. I understand the number of cases that have been investigated, and I’m not suggesting for a minute it’s widespread, but it could be far greater—the element of fraud—than what is being assessed. A question for the Minister: I notice in the papers that it talks about—and I encourage this as we get into more online application—the use of Inland Revenue numbers and data and the sharing of information, because in my view, that’s probably where the greatest fraud potential can exist in terms of the assessment of somebody’s income and the ability to say that the income is X but by the end of it it’s Y. I know that in the papers it says it’s possible to get Inland Revenue tied in, but there are some consequential changes that need to be made. Are those consequential changes requiring legislation or are they changes that can be made by regulation or by the chief executive of the Department of Internal Affairs, as an example?

Those were matters outside the scope of the bill, but they were worthy matters worth considering, as you rightly pointed out, Mr Yule. The ability to have applicants include their IRD number to verify their income is a very useful suggestion, and it’s one that we are going to ensure that the Secretary for Local Government can consider. And, as I say, this bill paves the way for the potential of an online application. As you consider online applications of any nature, you start to build the architecture that provides your risk—a profile around that whole approach. I welcome the suggestion from the Social Services and Community Committee around the IRD number matching. I think that’s a worthy suggestion that should be considered, and it will be. However, it’s outside the scope of this bill.