Ardern Jacinda: Support for Children in Hardship Bill — In CommitteeText is incorporated into the Bound VolumeArdern Jacinda: Support for Children in Hardship Bill — In Committee[Sitting date: 01 December 2015. Volume:710;Page:8405. Text is incorporated into the Bound Volume.]JACINDA ARDERN (Labour): Coming to Part 2 this amendsthe Education Act 1989 as my colleague Carmel Sepuloni mentioned and also ensures via a number of technical amendments that adjustments made as part of the legislation do not allow duplication in Consumers Price Index adjustments.I just want to come to that point. If I am reading Part 2 correctly via using the regulatory impact statement it talks about the way that generally within the bill benefit indexation and the annual Consumers Price Index adjustments will apply to this new $25 increase. I just want to reflect on the statements made in the regulatory impact statement. Paragraph 193 states: “Annual increases to benefit rates to reflect upward movement in the Consumer Price Index (CPI) were legislated for in 2010 and occurred prior to that by convention.” That is a point I think is important to make. So we legislated that Consumers Price Index adjustments would be made to benefit rates in 2010. It continues saying “[t]he Bill does not amend the legislative requirement that base benefit and student allowance rates”—which are talked about in Part 2—“must be adjusted by any upward percentage movement in the CPI.” so it does not change that legislation.There was some discussion as discussed in this summary—actually I think it is the departmental report I am referring to excuse me rather than the regulatory impact statement. It states: “[i]ndexation to wages or relative to rates of New Zealand Superannuation as proposed by some submitters is outside the scope of the Bill.” We accept that. It states: “The Bill does however include benefit and student allowance provisions that specify the Consumer Price Index treatment of the $25 on 1 April.” This is the bit where it gets interesting: “On 1 April 2016 the $25 increase is effectively added after the annual CPI increases to the base benefit and allowance rates are applied. This means that on 1 April 2016 the relevant benefit or student allowance base rate as at 31 March is increased to reflect the annual CPI increase. The additional $25 is then added to form a new base rate.”So for the next Consumers Price Index adjustment that we have on 1 April 2016 our base rate adjustments will occur and then the $25 is added to that base rate. So the $25 when it is first added will not have a Consumers Price Index adjustment made to it. Why is that? That seems like a bit of hair splitting to me. If the $25 is meant to be an increase to the base rate make it to the base rate straight off the bat and give the whole thing a Consumers Price Index adjustment. Because if the Consumers Price Index adjustment is meant to reflect increases in the cost of living then why would we exclude the increase in the base rate from that when already I think that it is fair to say the $25 increase should have happened at the time that it was announced rather than projecting it out to 1 April 2016? To then add insult to injury and not have that adjusted as part of the Consumers Price Index adjustment seems a little Scrooge-like from my perspective.I would be really interested to hear from the Minister for Social Development what difference that made to the overall cost of the package. I mean we already know that that $25 is affected by a range of other deductions. Surely—surely—the Government could have been generous enough to at least just allow that $25 to be included in that Consumers Price Index adjustment if it is indeed a part of a base benefit rate.And we certainly know that the Government has crowed about the fact that it calls this the first benefit increase in however many years. Putting aside the fact that that is actually incorrect—the first significant benefit increase was via the family tax credit as part of the Working for Families package. That was the last generous increase to the benefit rate. It might have had a different name but it had the same effect. So if it is truly a base increase then I would have thought that the Government would not need to be quite that Scrooge-like. I am interested in the Minister’s response to that.But as Part 2 obviously is talking again about the interaction between these different payments—Consumers Price Index adjustments and so on—I think that it is also worth pointing out some of the wider interaction between benefit provision particularly for sole parents and our student allowance regime. Credit where credit is due—the Government has made some tweaks to the interaction between the student allowance regime and sole parent benefits to remove some of the anomalies and I want to say to the Government that that was a good thing to do. Because we did have a situation for a while there where if you were one of the people affected by section 303 of the Education Act if you were a sole parent but you were in study so you were in receipt of a student allowance your access to accommodation support was less generous thus incentivising you to be on a sole parent payment. Then some of the requirements around the sole parent regime changed. That meant that you could not really study particularly and be on that regime so it then forced you back on to that less generous support. So it is good that some of the accommodation changes have been made in that area to remove those anomalies.But I would still like to point out that for the group of people who are affected by Part 2 who are in the category of being on a student allowance and might be in receipt of this base benefit increase—that is people who are in study and have children—we do still see a situation where for instance parents who are eligible for benefit support but are studying have work-testing requirements on them that are just unrealistic and do not take into account the longer-term benefit for taxpayers let alone for those families.Let me give you an example. I had a case brought to my attention not too long ago of someone who was in study. They were studying to be a nurse they had been in part-time work and on a benefit and they realised that at that rate they were going to be on a benefit for a very long time and that that was not of use to her her child or to the State. So she transitioned into study was able to still be in receipt of a benefit but Work and Income pulled her in one day and said: “Look we have found part-time work that you are obliged by virtue of the age of your child to be in regardless of your study and which we would like you to take up.” She pointed out that that part-time work which from memory was in hospitality clashed with her course work meaning she would be unable to continue with her studies. Based on the legislative requirements for that particular individual she was required to take up that part-time work obligation and withdraw from her study.We would advise taking a longer-term view for this bill in particular. For those individuals who are captured by student allowance payments or are in part-time study or what have you if we take the longer-term view that allows the discretion to say: “Regardless of any of the obligations set out in Part 1 if you are in study we take a broader view. If for instance we find some hours that the law actually would require you need to work say in dishwashing and that happens to clash with some study that you are doing that in 2 years’ time will mean you are not reliant on a benefit at all then we will take some leniency in those situations.”Because if the ultimate goal is to have someone independent some of these part-time service industry jobs will not necessarily lend themselves to that. At that point we are in a position where we are cutting off our nose to spite our face. If the longer-term goal is assisting those in hardship and children in hardship we know that well-paid decent stable work is the goal not just work at any cost. We know there are a number of jobs where there is a significant amount of cost subsidy going on by the State to sustain people at an income level that means that they are able to support their children and to support their family.So in summary Part 2—yes it is a fairly minor part of the bill. The number of people who are covered by it are an interesting cohort who deserve greater discretion but actually what they also deserve is a Consumers Price Index adjustment to their base benefit and their base benefit as argued by the Government is meant to now include that extra $25. So why do we not treat it like that from the beginning and not just at a designated year that is convenient for the Government to prescribe?