OnPoint by Keith Ng

JTF: Beneficiary debt & FTA

“The percentage of Ministry of Social Development clients who owe debts is 19.8% of their total current clients – this is a very small increase since 2000, when 18.8% of Ministry clients had debts with the Ministry. The percentage is not 70% as Judith Collins says.” - Ruth Dyson

It's a good comeback – shame that she took 6 months to come up with it.

During Question Time at Parliament in September last year, Judith Collins grilled Dyson about why “70% of beneficiaries are in debt to Work and Income”. Dyson avoided the point, but now, six months later, has discovered that Collins came up with the 70% figure only because she failed to count superannuitants as part of the equation.

Dyson is right to point out that the debt figures includes superannuitants, and so the total number of MSD clients should, too. But because superannuation isn't income tested, accidental overpayment are less likely to happen and they are less likely to owe money to Work and Income. With half a million superannuitants in New Zealand – compared with 270,000 on benefits – the final numbers draw attention away from the genuinely large number of beneficiaries who owe money to Work and Income.

In 2007, 178,359 beneficiaries and 129,775 former beneficiaries owed money to Work and Income. Whether you divide that by 270,000 beneficiaries or by 770,000 MSD clients, these are still big numbers.

More importantly though, Dyson's focus on the number of debtors neglects the size of the debt. Current and former beneficiaries owe a total of $763.8m – that's up from $450m in 1999. And in 2006/07, even after 15,000 in-person client check-ups and 39,000 investigations and reviews, Work and Income still overpaid $150m worth of benefits, further adding to beneficiary debt. This is down from $190m of overpayments in 2001/02.

But what does a high level of beneficiary debt actually mean? Overpayment by Work and Income is a significant part of it, in addition to benefit fraud. These are avoidable elements that the government is trying to reduce – with limited success. More than a quarter of the debt, however, is “recoverable assistance”, interest-free loans that help beneficiaries cover unexpected costs, so this element of debt is due to Work and Income loaning – rather than giving – money to beneficiaries.

“I support advances of payment to beneficiaries when they meet the criterion, which is that that person or his or her family has an immediate and essential need,” Dyson said in Parliament. “I would prefer that to be the way to remedy the situation, rather than the alternative of their having to pay high interest to a loan shark.”

“This House will decide on whether there is a free-trade agreement with China at the end of the day.” - Annette King (answering on behalf of Phil Goff)

When a significant treaty between two countries is signed, the treaty and an accompanying National Interest Analysis is brought before Parliament to be reviewed by a Select Committee. Then the Select Committee decides on... well, not a lot. Under Parliament's Standing Orders, they have to “consider whether the treaty ought to be drawn to the attention of the House”.

Why is it so watered-down? “Parliament does not have the right to say no [to the treaty],” says Victoria University international law lecturer Joanna Mossop. “The power to enter into treaties rests solely with the executive, which is cabinet.”

“Before this process was introduced, there was no requirement for the government to report to Parliament about what treaties it was entering into. This process raises the profile of important, significant treaties and [give] the opportunity for Parliament to debate these treaties. [It] was designed to improve democratic discussion and debate, but ultimately, Parliament cannot refuse.”

Parliament still decides on whether or not to pass legislation that will implement the treaty in New Zealand, but that, along with the Select Committee consideration of the treaty, both happen after the treaty is already signed. But the treaty still has to be ratified after that – something the government won't do unless Parliament passes the legislation.

“Historically, it was the monarch who bore the obligation to other monarchs,” says Mossop. “In our system, we have the separation between the executive, legislature and judiciary, and that the power of the monarch has generally been absorbed by cabinet [the executive]. New Zealand is represented on an international level by the executive, so it makes sense that it's the executive or cabinet that has the power to enter into those international obligations.”

“It's not necessary that that's the way it's always going to be, but that's the way it's worked out as a result of our constitutional history and the way we run thing.”