Auckland Action Against Poverty welcomes the High Court’s decision that says that loans are not income for social security purposes and joins Child Poverty Action Group and law experts calling on the Minister of Social Development to immediately remove all debts, cases and prosecutions against people on the benefit where loans have been treated as income.
“The current welfare system means that people on the benefit are living below the poverty line and are often forced to take loans in order to meet essential needs. The Ministry of Social Development’s approach to our current inequality crisis should be one of compassion and assistance, not of punitive legal prosecutions”, says Ricardo Menendez March, Auckland Action Against Poverty Coordinator.
“The Ministry of Social Development tried to argue before the High Court that Ms F*, a sole mother of two children who took out loans in order to meet essential needs such as supporting herself and her children, should have to repay more than $120,000 of her benefit payments. Even though she explained that she needed the loans because she wasn’t able to meet the costs of bills because of low benefit levels, MSD still classified the loan as ‘overpayments’ by MSD. This is indicative of the Ministry’s interpretation of the law that aims to punish people instead of helping them.
“The High Court ruling that loans cannot be counted as income for the purpose of social security should pave the way for a wider review of High Debt debt recovery cases against people on the benefit. We expect, at the very least, for all debt recovery cases to be put on hold while a review is happening.
“It should have not taken this long for the Ministry of Social Development to be called out for clearly misinterpreting the law and punishing people. This is not the first time that the Ministry ignores its duties to help people. In March, the Social Security Appeal Authority ruled that the Social Development Ministry staff has been ignoring their duties to assist people seeking assistance under the Social Security Act. The case with the Social Security Appeal Authority came about after Work and Income staff refused the right for a woman to apply for a food grant because it wasn’t her local office.
“New Zealand’s welfare system does not seem to fit the values of compassion and kindness the Labour led Government often speaks about. While a wider review of the welfare system is happening, the Government has a moral obligation to implement immediate changes that would help alleviate the financial hardship too many people in our communities face. Removing all debts, cases and prosecutions against people on the benefit where loans have been treated as income is a reasonable and simple step the Government can take to act on its values.