Ardern Jacinda: Social Security (Youth Support and Work Focus) Amendment Bill — In Committee 
Text is incorporated into the Bound Volume 
Ardern Jacinda: Social Security (Youth Support and Work Focus) Amendment Bill — In Committee 
[Sitting date: 18 July 2012. Volume:681;Page:3647. Text is incorporated into the Bound Volume.] 
JACINDA ARDERN (Labour) 
: 
 While Holly Walker’s Supplementary Order Paper remains live one question I want to raise is whether or not perhaps the member may consider splitting the two clauses that are sought to be amended in this Supplementary Order Paper. It seems that at present the financial veto hangs quite closely to the recovery of payments made in excess of authorised rates—the section 86 amendment. The Minister for Social Development has given an explanation that suggests that the financial veto is because this provision would incur a cost on the Crown because of its inability to do debt recovery. I think that sits quite separately to clause 37A because debt recovery allows the discretion of recouping costs from an individual at a very low rate over a particular period of time whereas clause 37A in contrast instead gives the discretion to the chief executive not to impose a sanction—and a sanction is quite a bit more onerous in terms of the amount of money it would remove from an individual than for instance debt recovery.  
This Supplementary Order Paper talks about giving discretion to the chief executive not to impose a sanction on an individual if they have not complied with their work obligations if the chief executive determines that that sanction would deprive a child of food or shelter or would be otherwise detrimental to the well-being of a child. The Minister when she referred to this amendment suggested that that could come at a cost to the Crown of between $200 million and $300 million. That was not stated in the financial veto so I would expect that if the department is going to go away and rework that financial veto if that indeed is the cost of this discretionary provision that could be incurred by the Crown that should be included in the financial veto. I would be extremely surprised if using the sanctions set out in section 117 of the Social Security Act meant that $200 million to $300 million per annum in sanctions was being imposed on those on the domestic purposes benefit with a dependent child. If that is the case this Committee should know about that.  
We are not talking about incremental sanctions here. What we are talking about is if an individual on a domestic purposes benefit refuses to take up work—for instance when their child is 1 year old potentially if they have had a second child if they refuse to take up part-time work as instructed by the Ministry of Social Development under the Social Security Act section 117 the sanctions that the chief executive must apply in respect of those failures is: “(i) the person’s benefit must be reduced by 50% until the person recomplies; and (ii) if the person has not recomplied within 4 weeks after the date on which the reduction took effect the person’s benefit must be reduced by a further 50% (so that the total reduction is 100%) …”. A second failure and a third failure finally means the cancellation of a benefit. These are not incremental sanctions; they are significant.  
If the Minister is telling me from the chair that imposing the ability of a chief executive to have discretion over the use of those sanctions where a child is involved would cost the Crown $200 million to $300 million per year then I would be interested in that. If that is not true I invite the Minister to clarify her statement when she rises from the chair because otherwise I would have assumed that the cost to the Crown of giving discretion to a chief executive would not be that significant—certainly not enough to warrant a financial veto—because it is ultimately a discretionary power because it relies on the individual circumstances being taken into account. What we are asking is that the chief executive take into account whether or not the sanction would have an undue impact on a child if involved where a sanction is being imposed. I think it was a very reasonable amendment. I would like to see it considered separately to the amendment relating to the recovery of payments and perhaps if the Supplementary Order Paper is still live the member may have a chance to submit that amendment on a Supplementary Order Paper separately and it may therefore be salvaged from a financial veto unless the Minister can explain where those figures she used came from.  
I would like in my remaining time to speak to a couple of other parts of Part 3. Of course these are the substantive parts around work-testing provisions. We have already—[ 
Bell rung 
] Mr Chair. 
The CHAIRPERSON (H V Ross Robertson) 
: I call the honourable member Jacinda Ardern. 
JACINDA ARDERN 
: Thank you. I am pleased to finish my substantive points on Part 3. Obviously this part brings in work-testing provisions and is an extension on the Government’s existing programme. Future Focus was the first tranche of work-testing reforms that the Minister brought in so we do already have some evidence to suggest what is happening particularly with those on the domestic purposes benefit around declared earnings because that is basically the measure we can use to assess whether or not those on the domestic purposes benefit when extra work-testing is being applied are moving into part-time work.  
Interestingly enough the figures when Future Focus was introduced sat at around 16 percent of those on a domestic purposes benefit having some declared earnings. Although there have been some incremental changes it has not moved away from being roughly between 16 and 17 percent. So that does suggest that work-testing provisions are still very heavily dependent on the nature of work available. When you are in a recessionary environment obviously the availability of work is affected but so is the nature of the work that is available. In particular demand—we have seen from the household labour force survey—for additional hours has increased significantly. The number of people taking on part-time work has increased. Therefore the number of available part-time jobs for those who are having part-time work tests against them—that pool of jobs—is reduced. I would say that that would be my assessment of why we have even when new work-testing regimes are being introduced very little movement around those who are declaring additional earnings. In fact if you want to see where there was a significant increase in declared earnings the last time—and I am going from memory here—we saw it sitting higher than that was roughly 2006-07 when from memory it was sitting at about 20 percent.  
The economy and the nature of the job market certainly matters and we have implored the Government all the way through here to consider allowing greater flexibility in the imposition of sanctions because of the nature of the economic environment in which these measures are being imposed. So that is why I would contend that Supplementary Order Papers like those from Holly Walker are very fitting given what the evidence suggests is happening in our job market at present.  
The second point that I want to raise in Part 3 is that given the nature of the economic climate matters given the ability to demonstrate the education and skills required for the jobs available and given that the third issue we know that affects the ability to fulfil work-test obligations is childcare arrangements I am interested as to whether or not the Minister for Social Development considered the extension of the subsidy for childcare which she has—I think rightly—extended for teen parents. So the subsidy now sits at $6 which we are told by the Ministry of Education should substantively cover the cost of childcare for those teen parents. Did she consider extending that to a wider range of domestic purposes benefit recipients? I do commend the Government for that subsidy increase but there are a large number of DPB recipients who would have benefited enormously from that extension being applied to them also. Was it simply a fiscal consideration? Was it not considered necessary for the over 90000 who have sole parent obligations? I would be interested in that from the Minister.  
I also have a question for the Minister around the discretion used by Work and Income when it is making a decision over a part-time work-test obligation versus plans establishing planning for employment and whether or not there is a hierarchy between the two. I would like to give an example. I recently had a case brought to my attention where a DPB recipient wanted to enter into training in order to complete a nursing diploma. She needed to seek some assistance from Work and Income in order to enter into that programme. The information she received from Work and Income was that it was not interested in assisting with that because she was already in part-time work and as far as it was concerned that was the goal that it had for her as a welfare recipient. She was still dependent on the domestic purposes benefit. She had only 10 hours of work per week and it was not enough to sustain her and her child. She felt that without getting the training required to move her into a higher-wage job she would for ever remain dependent while her child was of school age at least. Minister I would be interested to see whether or not—