Speech at Tātou Kaha National ForumRevenue
Kia ora koutou katoa,
Thank you for inviting me to address you today. I’m sorry I couldn’t be there with you in person, but I’m confident that you’ll be well catered to by the brilliant line-up of speakers today.
It is encouraging for me that you are all attending under this theme of building stronger communities together.
This proves we share a common purpose of wanting to relieve people of financial hardship.
We are living in extraordinary times. We barely got through COVID before we were hit by an economic downturn, in part brought on by the war in Ukraine and then on top of that, we have experienced some of the worst flooding this country has had to endure.
All of that puts a massive strain on the economy and an even worse strain on the people who are already struggling.
So we have been trying to help.
In May for example, my colleague David Parker introduced legislation which proposes to help people – mostly women – who take time out of the workforce to look after children. We are proposing that the Government will pay KiwiSaver contributions to recipients of paid parental leave. It’s specifically aimed at the issue of women retiring with a smaller nest egg.
Another change is the Child Support Pass-On legislation, which will mean that for the first time, child support will be paid to the sole parent beneficiaries, rather than being held by the Crown to offset the cost of the benefit.
This change is estimated to lift as many as 14,000 children out of poverty and give families a median of $20 extra a week.
The first payments will be passed on to parents from 22 August 2023.
There is one aspect of the new rules that I wanted to mention.
As you may know, Child Support from Inland Revenue is a monthly payment, while benefit payments from MSD are weekly or fortnightly.
This mismatch could result in debt for the beneficiary if MSD considers the Child Support as belonging to a past period.
The new income rules therefore include specific provisions which will treat Child Support payments as income on a weekly, forward-looking basis, eliminating the risk that debt arises.
That’s a perfect example of two things I wanted to talk to you about – what Government can do to avoid putting people in debt and the importance of this being an all of government approach.
Agencies have widely differing approaches to managing debt, depending on factors such as legislation, systems, or resourcing.
That’s why back in February, the Government sought consultation on a policy framework for an all-of-government approach to prevent and manage debt incurred by individuals.
Essentially, what we are proposing is a framework to guide the establishment, management and recovery of debt owed to government. It follows recommendations from the Welfare Expert Advisory and Tax Working Groups.
What we’re aiming for is a fairer and a more consistent approach to debt, with a particular focus on reducing debt-related hardship for families and individuals on low incomes.
The framework is intended to be used to help agencies design, implement and evaluate policy and operational processes which relate to the creation, collection or write-down of debt.
The framework first explores the overarching principles for government creating and managing debt for an individual. It then seeks to balance two objectives:
First - the policy settings for debt. Government imposes different types of debt for different policy objectives. For example, we might want to have different collection policies for fines versus benefit overpayments.
The second objective is the wellbeing of the individual. The framework outlines how agencies might collectively take into account an individual’s personal circumstances, including amounts owed to other government agencies, and their ability to repay the debt both when the debt arises and during the life of the debt.
Officials are currently going through all the feedback we’ve received from consultation and will adjust the proposals where appropriate.
There were also a number of insightful, practical suggestions for how mentor services could work more closely with government agencies – such as joint training opportunities - and I have asked agencies to explore these further over the coming months.
We hope to have that framework in place around the middle of next year. The test of success will be whether we start to see concrete policy changes both within individual agencies, and at ministerial level. We intend to capture this information through regular reporting on the framework.
That’s about all I can tell you today, but I want to say that I know that a number of you will have seen the proposal and provided feedback. I thank you for that.
Your first-hand experience and knowledge is invaluable for helping us build stronger communities together.
Thank you, and E noho rā