The Social Security (Social Assistance) Amendment Bill is currently open for submissions to the Parliamentary Social Services Select Committee. Submissions close on 31 January 2005. For guidelines on how to write a submission on a Bill, click here (pdf file needs Adobe Acrobat). An on-line copy of the Bill is available here.
Submissions are likely to be given more attention by Select Committees if you present an oral submission, as well as your written submission. You can ask for the Select Committee to travel to hear your oral submission in a location near you, but it is their decision whether they do this. This usually depends on the number of submissions they get from a particular area. If you have to travel to present the oral submission, you will have to bear the cost of this.
Introduction:
This Bill amends the Social Security Act in two significant areas of social welfare benefit law. In particular:
- The Bill proposes to increase the reduction in benefit for sole parents who fail or refuse to meet the requirements under section 70A of the Act to identify in law the other parent of a dependent child, or to make a child support formula assessment application, after they have been given the opportunity to reconsider their decision. It also provides for an additional exemption from the reduction in benefit under section 70A for sole parent beneficiaries where they, or their children would be at risk of violence should they take steps to name the other parent of their child or apply for child support. It further provides for an additional exemption from the reduction in benefit under section 70A for sole parent beneficiaries in compelling circumstances and where no child support could be collected from the liable parent in the foreseeable future.
- The Bill also proposes to ensure that benefit applicants who work for part of the year, for example seasonal workers, are not financially disadvantaged, by enabling all applicants for benefit assistance to elect a 52-week or 26-week income assessment period for the calculation of their stand down period.
The Bill also contains a number of minor and technical amendments to the Act that are not address by this submission guide.
Clause 7 - Reduction of sole parent benefits for section 70A non-compliance
Analysis of the current section 70A:
Discriminatory nature of s. 70A
Section 70A applies only to sole parents. A sole parent subject to a s. 70A deduction who marries or enters into a relationship in the nature of a marriage ceases to have the s. 70A deduction implemented, even if she or he then remains on a married rate of a social security beneficiary. The section is therefore not consistent with s. 19 of the NZ Bill of Rights Act 1990, in that it discriminates on the grounds of marital status.
It is difficult to see how such discrimination can considered a justified limitation under s. 5 of the NZ Bill of Rights Act 1990. What possible justification can there be for penalising a sole parent invalid's beneficiary for not making a child support formula assessment application, while the making of such an application by a married invalid's beneficiary (in respect of a dependent child not of that marriage) is completely voluntary? The implication of this is that non-custodial parents have a lesser financial obligation to their children if the custodial parent of their children has repartnered.
Hardship casued by section 70A
The current deduction of $22 applies for each child in respect of whome a sole parent is non-compliant with section 70A - i.e. it is cumulative. If a sole parent has, say, 3 children in respect of whom child support formula assesment applications have not been made, a total of $66 will be deducted from a domestic purposes benefit of only $256.52. Such deductions therefore add to the financial hardship of families who, because of their ineligibility for child tax credit, are already among the most financially vulnerable in our society.
Failure to identify in law non-custodial parent - inadequate administration by Ministry of Social Development
A significant number of sole parents currently subject to s. 70A deductions for failing to identify the other parent in law have, in the experience of beneficiary advocacy groups, had the deductions imposed incorrectly. Frequent historical cases come to advocates' attention in which the Ministry has failed to advise sole parent beneficiaries or benefit applicants that the deduction will apply if the other parent is not identified in law, failed to advise them what steps are required to identify the other parent in law, and/or failed to issue a formal written decision advising of the imposition of the s 70A penalty when the non-custodial parent is not identified in law. In some cases, there is no record on the beneficiary Work and Income file of anything relating to the deduction at all — the file simply records the benefit as having been granted at a "non-standard rate".
In these cases, the s. 70A deduction is being made unlawfully. Such beneficiaries have not failed or refused to identify the other parent in law, because they have never been asked to do so. Yet the deductions are still made. It is difficult to estimate how many such unlawful deductions are being made — anecdotal evidence would suggest the number is significant — perhaps as much as one in three instances of a deduction having been imposed for failure to identify in law the other parent.
Note: The Ministry of Social Development is currently undertaking a review of section 70A deduction cases to give the beneficiaries concerned the opportunity to reconsider their decision to refuse to identify in law the non-custodial parent or to make a child support formula assessment application. However, the review does not appear to be designed to identify those beneficiaries in respect of whom the irregular imposition of the deduction described above has been imposed, nor to refund to them money that unlawfully deducted, in some cases over many years.
Children over 6 years of age
There are considerable difficulties facing some sole parents required under section 70A to identify in law a child over the age of 6 in the event of the non-custodial parent avoiding parental responsibility.
Section 49 of the Family Proceedings Act 1980 imposes a limitation on the making of an application to the Family Court for a paternity order. If the child is over 6, the purported father has never admitted he is the father, and has not lived with the mother or made provision for the maintenance of the child within the 2 years preceding the application, the Family Court has no jurisdiction to determine a paternity application.
It is still technically possible for a beneficiary unable to establish paternity for the purposes of s. 70A because of s. 49 of the Family Proceedings Act 1980 to make an application to the High Court for a declaration of paternity under s. 10 of the Status of Children Act 1969.
However, there are problems with this. Firstly, the cost of High Court action is now very high, and well beyond the means of many beneficiaries. Secondly, as a declaration under s. 10 of the Status Act establishes paternity for all purposes its effect is far reaching including issues surrounding succession and property. While it may be reasonable to require an applicant to establish paternity for child support and maintenance purposes so the Crown can recoup some costs from liable parents, it seems quite a different matter to require an all purpose declaration of paternity.
Fear of domestic violence / Child conceived as result of incest or sexual violation
Advocacy groups report that fear of domestic violence is a frequent reason for refusal to identify the non-custodial parent in law and/or refusal to make a child support formula assessment application.
Shared custody and substantial non-custodial parent access situations
There are instances in which the custodial and non-custodial parents of a child come to an arrangement that the custodial parent will not make a Child Support Formula Assessment application and will be subject to the s. 70A deduction. It is such cases that appear to be part of the Government's motivation for legislating for the additional $6 penalty imposed by the Bill.
Such arranged non-compliance with s. 70A is frequently a response to the inflexible nature of the Child Support Act 1991 regarding the amount of Child Support payable in shared custody and substantial non-custodial access situations. Section 35 of the Child Support Act 1991 provides for a reduced child support percentage to be payable only in circumstances where a parent is liable to pay child support…and "the parent shares the ongoing daily care of one or more of those children substantially equally with another person".
If section 35 of the Child Support Act 1991 does not apply, then the full child support percentage is payable by the non-custodial parent or the parent with the lesser responsibility for the ongoing daily care of the child(ren).
- For example, say Mary and Hemi have one son, whom Mary cares for Monday morning to Friday morning and Hemi cares for Friday morning to Monday morning, meaning that Mary cares for him 57% of the time, and Hemi 43% of the time.
If Mary makes a Child Support Formula Assessment application (which, if a sole parent, she is obliged to under section 70A), Hemi's child support payments will be calculated according to the full child support percentage (18%), despite his caring for his son 43% of the time and likely having a similar share of costs associated with that care.
This is widely perceived as unfair — Hemi has 43% of the caring responsibility for his son, yet he is treated by the Child Support regime no differently than if he took no responsibility at all.
Even if Mary and Hemi decide to share responsibility for the care of their son equally, and thereby both become subjected to Child Support liability under section 35 of the Child Support Act 1991, the child support percentage for each of them does not drop to 9% (0.5% of the full child support percentage for one child of 18%) — it only drops to 12%. To compound this inequity, there is the risk in a 50-50 custody arrangement that Mary will no longer be considered by the Ministry of Social Development as having the primary responsibility for the care of her son and, under s. 70B Social Security Act 1964, lose her entitlement to a sole parent rate benefit completely.
It is easy to see why, when the non-custodial parent is a sole parent beneficiary, such parents come to "arrangements" under which custodial parent refuses to make the formula assessment application, while the non-custodial parent compensates for the s.70A deduction by spending a little extra directly on the children or even depositing funds on a regular basis to a bank account in the children's names to which the custodial parent has access.
Changes to section 70A
Clause 7(3) - Exemption for fear of domestic violence
This clause proposes to add an exemption from compliance with s. 70A in circumstances where a sole parent beneficiary, or their children, would be at risk of violence should they take steps to name the other parent of their child or apply for child support.
Advocacy groups report that fear of domestic violence is a frequent reason for refusal to identify the non-custodial parent in law and/or refusal to make a child support formula assessment application. This appears to be adequately addressed by the proposal contained in the Bill to provide for an exemption from the imposition of a section 70A deduction in circumstances where the "beneficiary or any of the beneficiary's children would be at risk of violence" if the beneficiary complies with section 70A.
The definition of "violence" to be applied in the proposed legislation is that contained in the Domestic Violence Act 1995, which includes acts of intimidation, harassment damage to property and threats of violence. The exemption proposed by the Bill in cases of risk of violence is therefore welcomed by the Green Party.
There is, however, a concern under the current wording that Work and Income Case Managers will be assessing the risk of domestic violence that beneficiaries may be subjected to — something they clearly have no competence to do.
Current policy instructions regarding the "incest or sexual violation" exemption from s. 70A requirements state "Proof is not required. If the custodian is reluctant to discuss the issue don't insist on unnecessary details. Police reports are not essential".
However, despite these policy instructions, inappropriate questions regarding the circumstances of sexual violation conception have been asked in the context of s. 70A. The Green Party is concerned that such inappropriate questions will continue to be asked, both in of the existing exemption in circumstances of conception through sexual violation or incest and in the proposed exemption in circumstances of fear of domestic violence.
Recommendation: That submitters support the proposal in Clause 7(3) to introduce an exemption in instances of risk of domestic violence, but submit is support of further amending s. 70A of the Act to include a requirement that proof not be required (as is currently in the policy). It is suggested submitters support amending the wording of the relevant subsections of to read: "the beneficiary advises that the child was conceived as a result of incest or sexual violation" and "the beneficiary advises that the beneficiary or any of the beneficiary's children would be at risk of violence if the beneficiary carried out or took steps to carry out any of the actions referred to in subparagraphs (i) to (iii) of subsection (1)(c)" or something similar.
Clause 7(3) - Exemption for other compelling reason where little likelihood of child support being collected
The Green Party recognises that fear of violence is not the only compelling reason that a sole parent beneficiary may have to not comply with the s.70A requirements to identify in law the other parent of the child or to make a Child Support formula assessment application. We also recognise that there is little point in requiring compliance with s. 70A when there is little chance of any child support being collected from the non-custodial parent.
However, we are concerned that however compelling the reason for non-compliance, the amendment as proposed by Clause 7(3) of the Bill will only provide exemption from compliance in circumstances where if there is little chance of child support being collected.
An example of a compelling circumstance could be where there is a fear that the non-custodial parent will abduct the child. The abduction of a child does not always involve physical violence or psychological abuse such as harassment or intimidation. In the absence of such factors, fear of child abduction would not result in an exemption from compliance under the "violence" category discussed above.
The Green Party therefore considers that the exemption categories of "other compelling reason" and "no real likelihood of child support being collected" should be separate and conclusive reasons for granting an exemption from compliance with s.70A.
Recommendation: That submitters request that the proposal in Clause 7(3) to provide exemption from s. 70A compliance should be amended to provide the exemption when there is either an "other compelling reason" or "no real likelihood of child support being collected".
Clause 7(4) — Increase in penalty for s.70A noncompliance
This Clause proposes to increase, by $6 per week, the penalty imposed on a sole parent who fails to comply with section 70A after being given notice of a requirement to do so.
While the Green Party supports measures to encourage non-custodial parents to be financially responsible for their children, we do not consider that the increase in the penalty for non-compliance with s. 70A will achieve this. The analysis above of the reasons sole parents would not indicate that a further penalty provision would be effective in encouraging compliance.
Where non-compliance is by arrangement, non-custodial parents will likely simply increase their direct contribution towards the care of their children, if they can afford to do so, to compensate for this. In situations where the non-custodial parent cannot afford to do this, all that will result is there will be $6 a week less spent on children of parents already struggling to make ends meet financially. The most significant effect of increasing the penalty will therefore be to increase the hardship of families of sole parents who, because of the deductions already imposed under the current legislation, are among the most impoverished of families in Aotearoa -New Zealand.
We consider that a reduction in arranged non-compliance is only likely to be achieved by a review of the Child Support Act 1991 to address the inequities described above.
Recommendation: That submitters oppose Clause 7(4) of the Bill, and that submitters further request that the deduction rate imposed second and subsequent children in respect of whom there is non-compliance with section 70A be reduced because of the severe hardship the current $22 deduction rate for each such child causes.
Clauses 9 and 10 — Benefit stand-down
These Clauses will amend the stand-down provisions of the Social Security Act 1964 to provide that benefit applicants who work for part of the year, for example seasonal workers, are not financially disadvantaged, by enabling all applicants for benefit assistance to elect a 52-week or 26-week income assessment period for the calculation of their stand down period.
The current provisions of the Act assess the income-related stand-down on the basis of an employee's average earnings over the 26 weeks before his or her employment ceases. This provision will alleviate a long-standing inequity under which workers whose employment is, because of its nature, seasonal, have a period of unemployment for, say, four months of every year, but then have a lengthy stand-down because that period of unemployment is not considered when their income-related stand-down is assessed for their next seasonal lay-off.
The Green Party welcomes this amendment. However, we are concerned that it alleviates only one of the many inequities that result from the income-related benefit stand-downs. These benefit stand-downs are based solely on income received before becoming a beneficiary. They take no account of what a beneficiary's circumstances may have been, or whether they had any real ability to save money to get through a benefit stand-down. Nor do they have any hardship provisions allowing stand-downs to be waived in circumstances where benefit applicants, through no fault of their own, have insufficient funds to meet their essential financial commitments during a stand-down period.
Benefit stand-downs are one of the main causes of poverty in beneficiary families. The Green Party therefore supports the abolition of all stand-downs, other than that for failing to comply with the unemployment benefit work test.
Recommendation: That submitters support Clauses 8-10, but use the submission opportunity to highlight the inequity and hardship caused by the income-related stand-down and call for its complete abolition.
