Legal Services Amendment Bill

Members, we are in committee on the Legal Services Amendment Bill. We come first to Part 1.

💬 Camilla Belich: Point of order. I seek leave for all provisions to be taken as one question.

CHAIRPERSON (Hon Jenny Salesa): Leave is sought for that purpose. Are there any objections? There are none. The question is that Parts 1 and 2, the Schedule, and clauses 1 to 3 stand part.

Madam Chair, thank you for the opportunity, and I look forward to engaging with the Minister in the chair, Rachel Brooking, on this subject, as well as other members of the committee as we consider this important area of legal services. And I should start by saying that our reservations about the legislation remain from previous stages of the debate and also the select committee stage, and also the overall context of our justice system and, more particularly, the dysfunction of our courts, which is quite simply that they are in disarray. The backlogs are unforgivably large; far too little of substance has taken place to reduce these, and, if any doubt existed in that matter, the results and the implications for Kiwis’ lives struggling to access justice should leave no watcher, or listener, of the debate in any doubt of that.

So while we would acknowledge that legal services through the legal aid regime are important, and that’s naturally a system that needs protection so far as it goes, the elephant in the room is not being addressed, and we are far too far along the road of fundamental issues in our court system not being addressed to be content merely with such tinkering as this. In particular, I’d like to ask the Minister to address the subject of whether this measure will do anything to improve access to justice when it comes to timeliness of justice and the expense involved in taking matters to court, as opposed to merely kicking cans down the road whereby we have, for example, the waiving of interest on debt, which, in itself, we think will have an unintended consequence of making people less likely to be prepared to pay and the moral hazard that’s associated with that of some choosing to pay as is required and others not doing so and facing no sanction, or, more to the point, no incentive for not acting in that way.

So those are some initial points. Some have been framed as questions; however, it’s a statement of position and I’d welcome the Minister’s response on any or all of those and I look forward to the discussion that, no doubt, will continue at that point.

Thank you, Madam Chair. As the member Chris Penk has just noted, this bill does have a very narrow scope and it is just about repealing that user charge and also getting rid of interest on unpaid legal debt.

Going to his point about access to justice, this bill is all about access to justice and it definitely is related to the expense incurred by people who are going to struggle to pay legal fees in the civil jurisdiction and need legal aid. So it will help with the expense issue. The bill is not about timeliness, and that’s out of scope.

Thank you, Madam Chair. I wonder if the Minister in the chair, Rachel Brooking, could respond with her view on whether it would improve legal access, even within the realm of legal aid, to actually increase its applicability, for example, to victims of crime or those involved in the coronial system where eligibility doesn’t currently exist. Would that not be a better use of the equivalent resources, as compared with allowing those to access services without any cost or co-payment or interest payable whatsoever?

Thank you, Madam Chair. I suppose the first question is the question of the impact of removing interest on legal aid debt. Just for the background of people tuning in to this debate on the Legal Services Amendment Bill, when people go before the courts, it’s an expensive business. I think one of the first things that one learns from reading Dickens or anything is to try and avoid going to court if at all possible, because it’s never a good situation, whether it’s a civil case or criminal.

There are sort of three categories: those who just are on their own—they pay for it—then there’s another category of people who qualify for legal aid based on income and the ability to pay, and that legal aid covers the cost of all their work and it’s a grant. So they are helped to defend themselves if they need to, or if they’re wanting to take some sort of case and they meet that threshold. So that’s the most vulnerable group who don’t have the resources and they get a grant of legal aid to help pay their defence, or whatever the case may be. The intermediary group are people who have a higher income and a greater ability to pay, and so the legal aid that they get to pay for their defence or their lawyers is given by way of a loan, with the expectation that it should be paid back. Currently, there is some interest that is applied to that in order to encourage people to pay back that debt.

This bill does away with that interest, and, of course, there is a real cost in that. I’d be interested to hear from the Minister the best estimates of the cost. Of course, it’s more highly relevant at the moment, because interest rates are going up because inflation is running amok, and that’s a broader topic around economic management which I won’t go into.

If you look at it in the context of student loans, the rule of thumb was that every $10,000 that was loaned out had to be written down immediately by about 40 percent on the Government’s books, because that was the cost of it being paid back over a long period of time and the value of that $10,000 reducing in purchasing power because of inflation. I would’ve thought that with interest rates rising again, then that cost will be going up and so the write-down will be more significant.

So, in terms of the many—and, you know, we spend a lot on legal aid; I haven’t got the figure right in front of me, but a couple of hundred million a year springs to mind, or something in that vicinity. So the amounts that are loaned out—if we’re immediately writing down 40 percent of that loan because there is no interest applying, then that becomes a problem.

The simple question is: is that the best use of scarce resources in the broader justice system? Because I don’t think anybody would deny that there is a huge amount of need in the broader justice area for well-targeted and well-focused interventions. So my fundamental question to the Minister is: how has she assured herself—and, of course, if you look at the documents, it was Kris Faafoi who kicked this all off as Minister of Justice, and then it was Minister Kiri Allan that, I think, introduced the bill to the House, and now Ginny Andersen trying to ram it through in the very dying days of this Government.

So my question to the Minister in the chair is: how is she assured that this is the best use of spending? Our basic proposition is that, actually, the better thing for the Government to be focused on is actually the much broader and more difficult issue of speeding up the process of the courts. So it’s a question of priorities there, and that’s my first question to the Minister.

Thank you, Madam Chair, and thank you to the Hon Paul Goldsmith for referencing Dickens and a number of other matters in his contribution. Going to his point, I think the main question there was around the interest and the cost of that. Of course, those decisions were made in the Budget, because at the moment the Budget has already provided, since the start of this year, that there is no charge and no interest, but the cost of that will be about $600,000 per annum. The decision goes back—as the member noted, a number of different justice Ministers have been involved and there was the 2018 review, and this piece of legislation goes back to that review. Of course, it is, as I’ve already said, narrow in scope.

The previous speaker Chris Penk was asking about the coroner’s court, and I’m told that, in fact, legal aid can be assessed in coronial matters if the coroner declares an inquest.

Thank you very much, Madam Chair. I’m delighted that we’ve reached the stage of the urgency business of the House that we’re discussing Charles Dickens. For newer members who might not have watched my maiden statement—or those who did or forgot or were not paying attention at the time—I referenced no fewer than four Dickens novels. I sort of wove them into it, and Great Expectations was an obvious one. Bleak House, too, which kind of feels quite appropriate right now, and I forget the others.

In any case, I think what we have reached is the stage where the Minister has explained the current regime and the justification for it, but what I think is important for everyone who is listening to the debate to note—anyone who may be listening to the debate. I don’t know how many there are outside the Chamber; I don’t know how many are inside the Chamber, either, for that matter. But there already exists a mechanism for “just and equitable reasons”—that there can be an exemption of legal aid debt already, so this relates to grounds of financial hardship or any other reasons the applicant believes should be considered. So I wonder if the Minister can explain how—with such a mechanism already available—it should be necessary to apply a blanket rule such as this, whereby the application of a waiver or an exemption can, effectively, be applied to all and therefore miss the opportunity to narrow down that assistance to those cases where it is most needed?

Look, the only other question I have is around the Minister’s confident assertion that it will cost about $600,000 a year—I question that. And I suppose the obvious place to start is the impact that it may or may not have on behaviour: firstly, in taking on more debt because it doesn’t necessarily have to be paid back or there are no consequences for taking much longer to pay it back. And then, secondly, the changing attitude towards paying it back if there is no incentive to do so.

Then I look at the regulatory impact statement, and it says “We’ve included analysis done on the second option”—but the basic constraint that the reviewers said was that there was a limited and unreliable data is collected on legal aid applications and recipients, which seemed like a pretty broad statement. So we’ve got a very confident assertion that it’s going to cost $600,000, which doesn’t sound like much, but we’ve also got statements saying that, you know, basically, the analysis is done on limited and unreliable data collected on legal aid applications or recipients. So I’m just wondering how confident the Minister is in her assertions, because ultimately—like I say, it’s just a question of judgment. Are you better to spend the money, even further changing the thresholds, for example, for people to get access to legal aid? Or is a Government—really, if it’s interested in dealing with this problem—better to be focused on the core issue which is speeding up the processes of the courts? And I suppose our fundamental critique of the Government’s justice policies—or one of the fundamental critiques—is that a question of priorities, and the priority on speeding up process of the courts and the efficiency of the courts hasn’t been as high as we would have liked it. They’ve been distracted with such things as hate speech, reducing the voting age, and a whole bunch of other things which may not be of interest but are not fundamental to the way the justice system works as this is.

Thank you, Madam Chair. I think again—obviously I repeat that the scope of this bill is narrow and does not go to the speed of the justice system, as the member’s just been discussing and realises—

💬 Hon Paul Goldsmith: Context, context.

Yeah, giving the context! And both the previous speakers are really asking the same question, and that is about the justification for spending the money on not having the interest cost versus other things within the justice system. That question was looked at by the Legal Services Commissioner in 2018 in the report, and they determined that “removing the requirement of the payment of interest for all users of the legal aid scheme—rather than writing off more debt—best met the objective of reducing financial barriers to legal aid so that people of insufficient means could better access justice”.

Mr Speaker, the committee has considered the Legal Services Amendment Bill and reports it without amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

The bill is set down for third reading immediately.

Third Reading