Goff Phil: Legal Services Amendment Bill (No 2) — First Reading 
Goff Phil: Legal Services Amendment Bill (No 2) — First Reading 
[Volume:625;Page:20633] 
Hon PHIL GOFF (Minister of Justice) 
: 
 I move  
That the Legal Services Amendment Bill (No 2) be now read a first time. 
 It is my intention that the bill be referred to the Justice and Electoral Committee for consideration and that the committee has the authority to meet at any time while the House is sitting except during questions for oral answer and during any evening on a day in which there has been a sitting of the House and on a Friday in a week in which there has been a sitting of the House despite Standing Orders 191 and 194(1)(b) and (c). 
The Legal Services Amendment Bill (No 2) aims to ensure better access to legal representation and therefore to justice. It updates the criteria for eligibility for legal aid and introduces a new repayments and debt management regime. More people will qualify for legal aid. The costs of additional grants will be partly offset by requiring a higher proportion of legal aid recipients to repay some or all of their grant. 
Reform of the legal aid scheme is overdue. The Legal Services Act 2000 sets out the framework for the existing legal aid scheme. It outlines the criteria for determining who is eligible for legal aid and provides for the administration of the scheme by the Legal Services Agency. Eligibility for legal aid depends on a number of factors such as the applicant’s financial circumstances. The present eligibility criteria are not inflation-proofed and have not been revised since 1987. The income limits are no longer realistic and have resulted in many lower-income working people being ineligible for legal aid even though they cannot afford legal representation. This Government is committed to ensuring that inability to pay is not a barrier to justice. We are also committed to ensuring that public funding is used responsibly. The reforms introduced by the Legal Services Amendment Bill (No 2) effectively balance these objectives. I turn now to address the key features of the bill. 
Financial eligibility thresholds will be updated. This measure will increase the pool of those eligible for legal aid from 765000 to 1.2 million New Zealanders. Funding in Budget 2005 will enable an estimated additional 25000 grants of aid to be made each year. The bill also builds in inflation-proofing by linking the thresholds for financial eligibility to movements in the quarterly consumer price index. 
A new simplified gross income test is established. Benefits are included in the definition of “income” to correct an anomaly whereby some beneficiaries have been granted aid when those on equivalent working incomes are not eligible. The definition of “disposable capital” makes provision for those assets that are not readily disposable and excludes assets such as the car and an allowance of equity in the home. Regulations made after the bill is passed will also enable better assessment of assets held by trusts and assets that are disposed of immediately before aid is sought. 
The bill makes two minor changes to the eligible proceedings criteria. It clarifies that people outside New Zealand cannot be granted legal aid for immigration-related proceedings when people in New Zealand would be ineligible and that legal aid is not available for commissions of inquiry. 
The bill retains merit tests to ensure that aid is provided only when there are good grounds for a case to proceed. There will be a new merits test for certain Family Court and Youth Court proceedings when the existing “prospects of success” test is difficult to apply particularly in relation to vulnerable people such as children. The applicant will still have to show reasonable grounds for taking or defending the proceedings. The bill also clarifies the criminal legal aid merits test to ensure that those facing criminal charges have representation when it is necessary because of the seriousness of the offence or the complexity of the proceedings. 
It is fair and reasonable to require those who can afford to pay to contribute to the cost of their legal aid. The current repayment scheme is complex and does not enable applicants to determine the costs that they may face. In addition civil and criminal legal aid are treated differently meaning that there are very few recipients of criminal legal aid who are required to make repayments. 
The bill addresses those problems by introducing a new repayments regime that corrects the anomaly between criminal and civil aid recipients and is transparent easy to understand and administratively simple. Under the bill approximately 22000 legal aid recipients will be required to repay their legal aid grant either partially or in full. This is an increase of 14000 in the number of recipients required to make payments under the current regime. The same proportion of repayments will apply to criminal and civil legal aid thereby increasing the proportion of criminal aid recipients required to make repayments. Applicants will know from the outset the maximum repayment that they will face and with the assistance of their lawyers they will be able to obtain an estimate of the likely total cost. The amount of repayment will be determined by regulations. Aid recipients who are successful in their proceedings and who receive funds in settlement will repay the cost of the grant of legal aid. Those who do not receive funds as a result of their proceedings will repay the lesser of the amount of repayment set by the regulations or the cost of the grant of aid. The new repayment requirements are not intended to be onerous and there will still be a group of low-income legal aid recipients—approximately 74 percent—not required to make repayments. By addressing the requirements for repayment of legal aid grants in some cases the bill ensures that increased access to legal aid is affordable. 
The bill will empower the agency to better manage and recover debt. The agency will have powers to adjust payment requirements as people’s financial circumstances change. It will be able to require repayments from the time that the aid is granted to request financial information from debtors and seek verification of that information to charge interest on debt if there is a default in payments and to register a caveat against property to secure debt. It will also be able to write off debt in cases of serious hardship. There will also be changes to the offence provisions for failure to provide information and for knowingly providing false and misleading information. 
These changes confirm and support the obligations of the aided person. These changes contribute to the goal of ensuring that public funding of legal aid is responsible. Access to justice is a fundamental principle. The Legal Services Amendment Bill (No 2) will help us to achieve this objective by ensuring that people are not denied legal representation through the inability to pay and will ensure that public funding of legal aid is used responsibly. I commend the bill to the House.