Social Security Amendment Bill

2.1. Are there any publicly available inquiry, review or evaluation reports that have informed, or are relevant to, the policy to be given effect by this Bill?

YES

The Ministry of Social Development (MSD) provided the Welfare Expert Advisory Group (WEAG) with advice on a number of areas to inform the group’s work in 2018, including Rapid Evidence Reviews commissioned by the WEAG from MSD. A number of these are relevant to the policy to be given effect to in this Bill. These papers can be found here: https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/information-releases/welfare-expert-advisory-group-report-evidence-review-papers.html

2.2. Does this Bill seek to give effect to New Zealand action in relation to an international treaty?

NO

2.3. Were any regulatory impact statements provided to inform the policy decisions that led to this Bill?

YES

Changes to welfare settings to support people into employment and off benefit, Ministry of Social Development

The RIS can be accessed at: https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/regulatory-impact-statements/changes-to-welfare-settings-to-support-people-into-employment-and-off-benefit.html 

2.3.1. If so, did the RIA Team in the Treasury provide an independent opinion on the quality of any of these regulatory impact statements?

NO

The Regulatory Impact Statement (RIS) identified above did not meet the threshold for receiving an independent opinion on the quality of the RIS from the RIA Team based in the Ministry for Regulation.

The RIS was reviewed by a panel of representatives from MSD. It received a ‘partially meets’ rating against the quality assurance criteria for the purpose of informing Cabinet decisions. The assessment recognised that there were constraints on the range of options able to be considered by the authors and that there was no specific public consultation on the proposals at the time of drafting (although MSD subsequently engaged with some community organisations to test Community Work Experience settings).

2.3.2. Are there aspects of the policy to be given effect by this Bill that were not addressed by, or that now vary materially from, the policy options analysed in these regulatory impact statements?

YES

We note that certain aspects of the policy proposals analysed in this RIS have been modified slightly since the time this RIS was developed, however, they remain in line with the overall intent as agreed to by Cabinet. For example, as part of the Cabinet consultation process, a set period of four weeks was subsequently introduced for the non-financial sanction of Money Management. Some other key changes include: targeted consultation has since been undertaken with community organisations on the non-financial sanction of Community Work Experience; the duration (four weeks) and number of hours (five hours per week) that clients will be required to complete under Community Work Experience have since been confirmed; only a Grade 1 financial sanction (rather than Money Management) will be assigned as a replacement sanction to clients who are unable to find or complete a Community Work Experience placement with a good and sufficient reason; obligation failures will be counted against a client over a period of 24 months (rather than 104 weeks); and the requirement to complete a mandatory jobseeker profile as a pre-benefit activity will also apply to partners or spouses of applicants of certain benefit types (in addition to the applicants themselves).

2.4. Has further impact analysis become available for any aspects of the policy to be given effect by this Bill?

NO

2.5. For the policy to be given effect by this Bill, is there analysis available on:

(a)   the size of the potential costs and benefits?

YES

(b)   the potential for any group of persons to suffer a substantial unavoidable loss of income or wealth?

YES

The changes in this Bill seek to make changes to welfare settings to support people into employment and off benefit, and an objective of the policy proposals in this Bill is to clearly communicate expectations of benefit receipt to avoid potential losses of income for clients. The costs and benefits of the Bill are difficult to articulate, however further analysis can be found in the RIS (specifically pages 22-26): https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/regulatory-impact-statements/changes-to-welfare-settings-to-support-people-into-employment-and-off-benefit.html 

2.6. For the policy to be given effect by this Bill, are the potential costs or benefits likely to be impacted by:

(a)   the level of effective compliance or non-compliance with applicable obligations or standards?

YES

(b)   the nature and level of regulator effort put into encouraging or securing compliance?

YES

Work-related obligations have been present in the welfare system since the introduction of the Unemployment Benefit in 1938, and social obligations since 2012. This Bill does not change these obligations, but increases the range of responses MSD can use in response to non-compliance with these obligations. The Bill also increases the period of time that failures of these obligations are counted.

The policy proposals in this Bill are focused on people complying with their obligations for benefit receipt. The Traffic Light System, introduced in August 2024, has ensured clear communication to clients of their obligations, and the consequences if they do not meet their obligations. The policy changes in this Bill will provide the alternative options of non-financial sanctions as a consequence if clients (in specific target cohorts) are not compliant with their obligations for benefit receipt (for the first obligation failure).

Further, as part of the 26-week reapplication, clients must agree to continue meeting their obligations as part of their reapplication for benefit. This enhances clients’ understanding of obligations, and compliance with obligations in order to receive a benefit. This ensures that clients understand and comply with their obligations in order to continue receiving a benefit. By incorporating clients’ obligations into their reapplication more intentionally, this helps to provide a greater level of support to move off benefit and into employment, allowing for financial independence.  

3.1. What steps have been taken to determine whether the policy to be given effect by this Bill is consistent with New Zealand’s international obligations?

No specific issues relevant to international obligations were identified in the development of the policy in this Bill. As such, there have been no formal steps to determine whether the policies to be given effect by this Bill are consistent with New Zealand’s international obligations.

3.2. What steps have been taken to determine whether the policy to be given effect by this Bill is consistent with the principles of the Treaty of Waitangi?

A full analysis can be found in the RIS (page 23): https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/regulatory-impact-statements/changes-to-welfare-settings-to-support-people-into-employment-and-off-benefit.html 

3.3. Has advice been provided to the Attorney-General on whether any provisions of this Bill appear to limit any of the rights and freedoms affirmed in the New Zealand Bill of Rights Act 1990?

YES

This is currently underway and the Ministry of Justice’s advice to the Attorney-General will be publicly available at Advice on consistency of Bills with the Bill of Rights Act | New Zealand Ministry of Justice upon the Bill's introduction to the House. The proposals in this Bill do not create any significant implications to right and freedoms under the New Zealand Bill of Rights Act 1990 and the Human Rights Act 1993. However, as noted in the RIS, there may be differential treatment of groups or disproportionate impacts on certain groups.

3.4. Does this Bill create, amend, or remove:

(a)   offences or penalties (including infringement offences or penalties and civil pecuniary penalty regimes)?

NO

(b)   the jurisdiction of a court or tribunal (including rights to judicial review or rights of appeal)?

NO

3.5. Does this Bill create, amend or remove any provisions relating to the collection, storage, access to, correction of, use or disclosure of personal information?

YES

While the Bill does not change the purpose for the collection of personal information under the Social Security Act 2018, it does provide for additional personal information to be collected to achieve this purpose and effectively implement the new non-financial sanctions – Money Management and Community Work Experience. This is in accordance with Information Privacy Principle 1 of the Privacy Act 2020.

The Bill also creates a provision for collected personal information to be subject to a new Automated Decision Making (ADM) process.

We will be carrying out a comprehensive Privacy Risk Assessment to ensure MSD is meeting its obligations under the Privacy Act 2020 and the compliance requirements of the MSD ADM Standard.

3.5.1. Was the Privacy Commissioner consulted about these provisions?

YES

The policy proposals in this Bill have been consulted on with the Office of the Privacy Commissioner (OPC).

During consultation, OPC noted the following: The Privacy Commissioner was not consulted during the policy development of the 26-week re-application and non-financial sanction initiatives as required by the Cabinet Manual. ADM can provide significant efficiencies, but we also know from overseas experience that it needs to be used judiciously and with care to avoid privacy and other harms to individuals. It is not clear from the documentation that privacy risks were assessed as part of the policy development process. The Privacy Commissioner expects to see privacy risk analysis built into all phases of a policy initiative life cycle (from inception to implementation), and see that analysis reflected in the Cabinet papers and supporting documentation to ensure decision-makers are well informed.

3.6. Has there been any external consultation on the policy to be given effect by this Bill, or on a draft of this Bill?

YES

Officials have been unable to separately consult on the proposed changes. However, the proposals in the Bill have been campaigned on by the Government in their pre-election manifesto and through coalition agreements and are publicly available.

We have also consulted with the Legislation Design and Advisory Committee (LDAC), particularly on aspects of the Traffic Light System. Following LDAC’s advice, significant policy matters and details of non-financial sanctions are now set out in primary legislation, with minor and technical matters related to non-financial sanctions set out in secondary legislation. LDAC’s advice was that doing this could increase the durability and flexibility of the legislative regime and enable MSD to ensure that non-financial sanctions are targeted in the right way.

3.7. Have the policy details to be given effect by this Bill been otherwise tested or assessed in any way to ensure the Bill’s provisions are workable and complete?

NO

4.1. Does this Bill contain any provisions that could result in the compulsory acquisition of private property?

NO

4.2. Does this Bill create or amend a power to impose a fee, levy or charge in the nature of a tax?

NO

4.3. Does this Bill affect rights, freedoms, or impose obligations, retrospectively?

NO

4.4. Does this Bill:

(a)   create or amend a strict or absolute liability offence?

NO

(b)   reverse or modify the usual burden of proof for an offence or a civil pecuniary penalty proceeding?

NO

4.5. Does this Bill create or amend a civil or criminal immunity for any person?

NO

4.6. Does this Bill create or amend a decision-making power to make a determination about a person’s rights, obligations, or interests protected or recognised by law, and that could have a significant impact on those rights, obligations, or interests?

YES

This Bill introduces other types of benefit sanctions that are not financial, enabling opportunities for clients to continue receiving their entire welfare payment, rather than being financially sanctioned (refer to clause 15 in the Bill). 

This Bill also introduces new requirement for applicants (and their partners) of certain benefits to have a completed jobseeker profile (referred to in the Bill as a jobseeker profile questionnaire) before they can be granted a benefit, which could affect whether a person is granted a benefit or not (refer to clause 10 of the Bill).

Further, this Bill extends the obligation-failure count period to 24 months, which could increase the likelihood that a client will be subject to a sanction and have their benefit cancelled (refer to clause 18 in the Bill).

4.7. Does this Bill create or amend a power to make delegated legislation that could amend an Act, define the meaning of a term in an Act, or grant an exemption from an Act or delegated legislation?

YES

The Bill replaces section 334 to provide for exceptions to benefit expiry rather than the current regime which provides exemptions from expiry if granted by MSD in its discretion (refer to clause 47 in the Bill). The exceptions will instead apply automatically in circumstances prescribed by regulations made under section 441(1) (refer to clause 55 in the Bill) (also refer regulation 189).

4.8. Does this Bill create or amend any other powers to make delegated legislation?

YES

The Bill amends section 325, 332 and 441 (refer to clauses 45, 46, and 55 in the Bill) to allow for conditional payments of a specified benefit and all other assistance that would have continued to be payable to the person had their specified benefit not expired. This applies when the person qualifies for an extension to complete the requirements after the expiry date, to ensure the client is not put in hardship. Provision is also made for these conditional payments to be repaid if the requirements are not completed by the end of the extension period, or if during the extension period it is determined that the client is no longer eligible for the specified benefit (refer to clause 68 in the Bill).

The Bill also includes a new power to make regulations prescribing transitional and/or savings provisions, if agreed by the Minister, to ensure a workable transition to the amendments made by this Bill. This regulation-making power, and any regulations made under it, cease to have effect at the start of 1 July 2028 (refer to clause 57 of the Bill which inserts clause 103 into new Part 10 of Schedule 1 of the Social Security Act 2018).

The Bill also includes a regulation-making power for specific minor and technical aspects of non-financial sanctions (refer to clause 54 of the Bill). These aspects include:

·         the required manner of payment for Money Management (e.g. the proportion of a person’s main benefit on Money Management or the definition of participating supplier)

·         the duration of Money Management and Community Work Experience

·         the required hours per week of Community Work Experience.

4.9. Does this Bill contain any provisions (other than those noted above) that are unusual or call for special comment?

YES

As part of the policy proposals in this Bill, there will also be specific transitional arrangements for those clients on Jobseeker Support receiving a sole-parent or grand-parented rate of benefit. Weekly income assessment periods will become a feature of Jobseeker Support (for all clients) and therefore for those who currently have an annual income assessment period, they will have special transitional provisions. Proposals to manage those clients who already are subject to annual income assessments and have recorded income will retain their 52-week expiry. This allows those clients to complete their current assessment period and have a final review of annual income before transitioning to a weekly income assessment period thereafter (refer to clause 70 of the Bill which amends Schedule 1 of the Act by inserting new Part 14).

These same groups can also receive an exemption to allow for temporary full-time employment of up to 26-weeks where the income does not fully abate the benefit over a period of 52 weeks. This exemption will no longer be workable in the context of a 26-week benefit expiry and will be removed by the Bill. Although, there will be transitional provisions to prescribe that temporary full-time employment can continue to the date the client’s income can no longer be assessed over 52 weeks (refer to clause 70 of the Bill which amends Schedule 1 of the Act by inserting new Part 14).

This Bill will also expand legislative authority to use Automated Decision Making (ADM). The provisions in Section 363A of the Social Security Act 2018 will be broadened to support the use of ADM for these proposals, as this currently only applies to charging information share child support payments as income. MSD has an ADM Standard to govern the development of any new MSD process that proposes to use ADM. It contains a range of appropriate safeguards that must be met when automating decisions (refer to clauses 52 and 53 of the Bill).

This Bill also introduces a novel concept in MSD’s legislation, which is the introduction of non-financial sanctions (currently Money Management and Community Work Experience) that MSD may impose on a person’s first obligation failure.