Review of crippling debts to government now delayed to the Never Never.

I have complained loud and often about how the last government conducted multiple ‘reviews’ of social policy. Typically, an expensive bureaucratic process was set up, a glossy full colour document produced, and endless rounds of consultations, written submissions, and zooms were conducted with the ever-patient voluntary and poorly resourced NGO sector. The well-paid bureaucrats ticked their boxes, did nothing, and lived another day to set up the next round of exploitative consultation. NGOs and other unpaid participants were left feeling both used and disillusioned. 

Remember for instance, the fiasco of the consultation on the Purposes and Principles of the Social Security Act. This was one of the worst examples, because in 2018 government had already commissioned an expensive Welfare Expert Advisory Group (WEAG) to advise on the critical changes needed to the Act. The rounds of consultation that WEAG conducted exposed the extent of the problem and how lives were damaged.   But their report was basically ignored, and the Ministry of Social Development began its own crusade to maintain the status quo while looking as if it was genuine about reform.

The Purposes and Principles are critical as starting points to any welfare reform. Yet inexplicably in 2007, Labour itself had inserted the current offending amendment to the Social Security Act that stressed self-reliance and paid work. National was delighted with this paving of the way for their reforms. Elected in 2008, they used those principles to justify harsh treatment of welfare beneficiaries.   The depth of relative child and family poverty inevitably increased. 

When Labour was elected in 2017 it should have had a ‘mea culpa’ moment and fixed these principles as a matter of urgency. Social Security should be about making sure that there is income adequacy and poverty prevention, not about forcing paid work as if it is the only worthy source of wellbeing and parenting or caregiving treated as  unworthy.

Six years of messing about and so-called consultation, the Minister came up with this troubling statement  when questioned about the  lack of reform of the purposes and principles just before the 2023 election:  

“ Some people thought that we should have started there with the overhaul, but one of the reasons why we didn’t start with that at the beginning was because, unfortunately, given the nature of some of the policies in the legislation and throughout the welfare system, potentially any revised purpose and principles could have ended up being completely unaligned with the practice and what is happening in the welfare system. So we’ve been doing what we can to overhaul the whole system whilst in the back of our minds knowing we want to get to the point where we can change the purpose and principles in a way where everything aligns.” (Hansard August 2023)

The coalition government has thus been bequeathed a perfectly legal basis again for making paid work the (only) answer to poverty. Compounded by the recession, the result of the work first approach can only be more poverty. 

I won’t even start on the Working for Families (WFF) review. Suffice to say, because if started with the principle that this programme for children was primarily about the paid work of the parents, the needs of children got lost. The review produced multiple redacted documents at huge cost and like all the other reviews was a waste of everyone’s time. But Labour’s election policy on WFF that increased the work-related In Work Tax Credit (IWTC) payment was copied by National showing how both parties were wedded to the paid work principle for income support of children.  

Last week we learnt that the consultative review on debt to government agencies was a total flop too.

Outlined in The Detail Radio NZ: The benefit system that holds the poor in poverty,  Sharon Brettkelly, and Susan Edmunds and Jennie Sim a researcher for a non-governmental organisation called Kore Hiakai (Zero Hunger). explain that

The debt owed by hundreds of thousands of people to government agencies has soared in recent years, but a plan to tackle it has been put on hold.

Figures from Ministry of Social Development show that total debt has climbed by more than $1 billion since 2018 to $2.61 billion in the year to this March, and the number of people with debts has increased by tens of thousands, to 621,541.

Other ministries – including Justice and Inland Revenue – are also owed hundreds of thousands of dollars, though the total overall debt has not been updated since September 2020 when a figure of $3.5 billion was published by Inland Revenue.

I well remember the consultative process on debt.  The NGO sector were experiencing  so many families owing debts to multiple government agencies. When families are unable to pay for basics, the shortfall in budgets must be filled with charity or borrowing every year. Servicing the debt causes the next year’s shortfall to be worse, pushing families into a vortex of unmanageable debt.   

Fairer Future in their excellent report, Lifting the Weight, describes how individuals and families are affected by MSD (Ministry of Social Development)  debt. CPAG outlines how WFF debts to Inland Revenue have doubled since 2018.  Then on top, many families are also repaying hefty student loans and Justice Department reparations and fines.

When last year a review of the overall debt to government agencies was announced, NGOs prepared submissions in the belief that the outcome of the review would result in policies to restore some fairness and sanity.  

But the IRD, MSD and other agencies saw their task as a high-level ‘framework’ discussion. In a two hour zoom, I asked what the outcome would be for the NGOs present who cared so passionately about getting attention to this issue. We were told there would a Cabinet paper in June (2023) and if, and only if, government approved, we would see it.  Thanks, and no thanks.  

The Detail goes on to note the high level framework was finally adopted:

“That framework was adopted by the government in July last year with the aim of improving “fairness and consistency of how people are treated across government agencies, to put more emphasis on debt prevention in policy design and ensure people get appropriate relief if they’re in hardship”.

This month, a year on, we learn of a report back to Cabinet to assess “whether the framework has been effective.” But Inland Revenue told The Detail that this report will now not go ahead. “Instead, the framework is scheduled to be evaluated in 2026.”

So, we had a time-wasting consultation during 2023 that was not focussed on the urgent need to tackle the never-ending accumulation of debt affecting so many families. A framework paper was then produced mid-2023, and now we hear there was another report to evaluate the framework paper due this month (a year later).  But even that ‘make work’ report will not go ahead until 2026.

If I was Martyn, I’d be swearing big time at this point. WTF? 2026? Election year? 

We can expect no attention to this critical issue in the foreseeable future. Meanwhile the acute needs of families suffocating under the debt load are ignored in typical Tory fashion.