Social Security (Benefit Categories and Work Focus) Amendment Bill

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Explanatory note

General policy statement

This Bill amends the Social Security Act 1964 (the Act). It forms part of a package of reforms being introduced over 2 years that will fundamentally shift the focus of the benefit system towards encouraging and supporting beneficiaries to move into paid work. These reforms are a response to the review of the benefit system undertaken by the Welfare Working Group in 2010. The changes also support the key result area of reducing long-term benefit dependency as part of the Government’s Better Public Services programme.

The objectives of this Bill are to reform New Zealand’s social security system so that it—

  • reduces benefit dependency:

  • is work focused, and expects and rewards independence:

  • supports an investment approach that focuses resources where they will be most effective:

  • is able to work with a greater number of beneficiaries to support them into work:

  • reinforces social norms and improves social outcomes through the introduction of social obligations for parents, and encouraging beneficiaries with warrants to arrest to clear them.

Key changes to be made by the Bill include the following:

  • a new system of main benefits, to embed a work focus throughout the benefit system; and

  • delivering a new approach to working with people in the benefit system who are either sick or disabled; and

  • introducing drug testing requirements where a beneficiary is referred to a job or training programme where drug testing is a prerequisite, matched with financial sanctions for non-compliance; and

  • using the welfare system to reinforce some important social norms relating to children’s education and health, through the use of obligations that beneficiaries with children must meet in order to continue receiving Government assistance; and

  • stopping benefit payments to beneficiaries with a warrant to arrest that remains unresolved after 28 days from issue, provided (except where public safety is at risk) the beneficiary is given appropriate notice and the opportunity to clear the warrant to arrest.

The package of reforms in the Bill will improve social and economic outcomes for individuals, families, and the country, and will improve outcomes for children by helping more parents out of poverty through paid work and through improving participation in beneficial programmes such as Well Child and Early Childhood Education.

Context

Alongside changes to legislative settings, Work and Income will be implementing a new investment approach to welfare and transforming service delivery to meet the intent of the reforms.

The investment approach will shift the focus of the benefit system towards better use of resources to reduce long-term benefit dependency. It will require a different approach to working with beneficiaries based on their individual circumstances, supported by best available evidence. By learning from what works and better focusing support to where it will have the most impact, this approach will reduce benefit dependency, improve a range of socio-economic outcomes, and reduce the long-term cost of the benefit system.

Other non-legislative changes include the following:

  • a range of new assessment tools for gaining a better understanding of people’s work ability:

  • an additional financial incentive for sole parents with young children and those receiving the supported living payment if they take up work earlier than expectations require them to:

  • a process of simplified access to the supported living payment for people with little or no work capacity, or those who are terminally ill, to ensure they can access support without the need for unnecessary assessment:

  • a service delivery approach that would involve making better use of contracted service providers and drawing on the expertise of non-governmental organisations and the private sector to achieve employment outcomes for more people (supported by an amendment in the Bill setting out obligations to work with contracted service providers):

  • working with a range of government agencies to improve outcomes, particularly for vulnerable children.

The first phase of work-focused welfare reform changes was changes made through the Social Security (Youth Support and Work Focus) Amendment Act 2012. The changes to deliver the new youth service and new youth payments commenced in August 2012. Young people are a group at risk of long-term benefit dependency and can have high long-term costs if they fail to achieve positive educational outcomes. The service model for young people involves outcomes-based, third party contracted case management.

From 15 October 2012, the changes in that Act introduce new or extended work availability or work preparation expectations for the domestic purposes benefit–sole parent, widow’s benefit, domestic purposes benefit–women alone, and for partners of beneficiaries.

The second and more substantial tranche of welfare reform changes are contained in this Bill and will be implemented from 15 July 2013.

Introduction of new benefit categories

Central to reforms in this Bill is the introduction of 3 new benefits—jobseeker support, sole parent support, and supported living payment—to replace the 7 current categories of main benefit.

The new benefits recognise that most beneficiaries can and want to work, and the focus of the new categories is to set reasonable expectations for the majority of working-age beneficiaries to be available to take up work. Reducing the number of categories also makes the system simpler, more transparent, and easier to understand.

Jobseeker support

The new jobseeker support benefit covers beneficiaries with a full-time work focus within a single benefit category with a set of rules that reinforce the work focus by requiring them to be actively seeking and available for work.

The new jobseeker support benefit will include all people who currently receive—

  • unemployment benefit, or sickness benefit; or

  • domestic purposes benefit for solo parents whose youngest child is 14 years old or older; or

  • widows benefit whose youngest child is 14 years old or older or who have no children; or

  • domestic purposes benefit for women alone.

All people on jobseeker support have work obligations based on their ability to work. This is either a full-time work expectation or a part-time work expectation. If a beneficiary is temporarily unable to work because they are sick or injured, some of their work obligation can be deferred for a period. However, they will still have a base expectation to take reasonable steps to prepare for work, and may be directed to undertake specific activities.

Currently only a small proportion of beneficiaries that are either sick or injured are assessed as able to work, which is out of step with international evidence about the benefits of work for health, and the contribution that people can make with the right support. Including people who would currently receive the sickness benefit within jobseeker support marks a fundamental shift in supporting beneficiaries who are sick or injured to take up or prepare for work.

Sole parent support

Sole parent support will be available to sole parents and widows with a child younger than 14 years old. They will have part-time work expectations if their youngest child is 5 years of age or older and work preparation expectations if their youngest child is under the age of 5 years. Where a sole parent has a subsequent child on benefit, their work expectations will be deferred for 12 months and will resume based on the age of the previous youngest dependent child.

Supported living payment

The support living payment benefit will be for people who currently receive—

  • invalid’s benefit; or

  • domestic purposes benefit for care of sick or infirm.

Benefit eligibility for these groups will not be changed, and they will continue not to have work availability expectations. Where capacity allows, work preparation expectations can be applied to recipients of this benefit.

Partners and spouses of main beneficiaries

Expectations for partners and spouses of main beneficiaries are set based on the age of the youngest dependent child (if any).

Transition of current benefit recipients to new benefit categories

On 15 July 2013, existing benefit recipients will automatically transfer to the appropriate corresponding new benefit. Overall, eligibility for benefit assistance will not be affected by the introduction of the new benefit categories.

Benefit settings that support the focus on work

To reinforce the focus on supporting beneficiaries to move into paid employment, the Bill introduces a suite of detailed rules for the new benefits that work collectively to create a much more active benefit system that encourages independence. These include the following:

  • aligning the current pre-benefit activity provisions with the new benefit categories and expanding the range of benefit applicants who can be required to undertake pre-benefit activities. Pre-benefit activities have a significant effect in reducing the number of people going on to receive a benefit:

  • applying annual benefit expiry and reapplication provisions to all beneficiaries on jobseeker support with flexibility to apply reapplication provisions to other types of benefits in the future. Annual reapplications have proven very successful in reducing the number of unemployment benefit recipients by allowing Work and Income to look into the reasons why a beneficiary has remained on a benefit for an extended length of time, and what additional support is required to assist them to move off the benefit. The details of the benefit expiry and reapplication process for future groups will be set out in regulations:

  • simplifying rules for the commencement and ending of benefits:

  • strengthening restrictions on when benefits (other than New Zealand superannuation and veterans' pensions) can be paid to people while they are outside New Zealand, to ensure that beneficiaries meet their obligations and to improve the work focus of the benefit system. Currently beneficiaries with work availability expectations cannot be paid a benefit while overseas, unless an exception is granted for special circumstances. This restriction will be extended to beneficiaries with a specific work preparation requirement, and to people receiving an emergency benefit. Special circumstances where this can be departed from will be set out in regulations:

  • requiring all beneficiaries to inform Work and Income of any international travel plans to prevent their benefit being automatically suspended when they leave the country:

  • extending the current provision that no person is eligible to be granted an unemployment benefit while studying full-time to all of jobseeker support will reinforce the strong full-time work focus of this benefit:

  • cancellation of benefit and a 13-week stand down to any beneficiary who fails to accept an offer of suitable employment, regardless of the number of work test failures, to send a strong message to beneficiaries with work availability expectations that they are expected to accept any offer of suitable employment. Beneficiaries with children will not lose more than 50% of their benefit:

  • providing Work and Income with the discretion to require people on the supported living payment to undertake certain work preparation activities where they have capacity, to ensure there is some flexibility to require people to take steps to improve their work readiness.

Requirement for assessing a person’s work ability

Extending the focus on work to a wider range of beneficiaries will mean that Work and Income will need to be able to obtain more information about people to determine their work or work preparation expectations, the sort of work or activities they can do, and what sort of support they might need to get into work.

Assessments will be able to be undertaken by Work and Income or by a contracted provider.

Requirement to work with contracted service providers

To allow access to a wider range of best practice services to improve work outcomes, the Bill includes provisions for Work and Income to require a person to work with a contracted service provider.

In all instances, Work and Income will retain responsibility for decisions relating to eligibility for benefits, setting obligations, and imposing sanctions.

Drug testing

Changes in this Bill give effect to the Government’s manifesto commitment to introduce pre-employment drug testing requirements for beneficiaries. The requirements will apply where undertaking and passing a pre-employment drug test is required as part of a job application, or as part of a training programme to which beneficiaries are referred by Work and Income.

Making it clear that people should not be taking recreational drugs will reduce the incidence of people receiving income support actively undermining their job prospects through recreational drug use. This will also address a barrier whereby employers may be reluctant to interview beneficiaries for drug-tested jobs due to a perception that they are more likely to fail drug tests. Those people taking prescribed dosages of medications, or people addicted to or dependent on drugs, will not be affected by the policy.

Beneficiaries who fail a pre-employment or training programme drug test (or fail to apply for a drug-tested job they are referred to) without good and sufficient reason will have their benefit sanctioned using the financial sanctions that apply for failing to meet other work expectations. In the first instance, their benefit will be cut by 50%, but they can re-comply with the obligation by agreeing to stop using drugs and receive their full benefit. If they fail a drug testing obligation a second time within 12 months, they can re-comply by undertaking to pass a drug test within 30 days (to allow any drugs they have taken to leave their system). Where they fail or refuse this test, their benefit will be cancelled with a stand down period of 13 weeks.

This will send a strong message to beneficiaries that recreational drug use is not an excuse for refusing to apply for jobs. Sanctions for beneficiaries with children will never result in a loss of more than 50% of their benefit.

Employers will be reimbursed for the cost of failed drug tests for beneficiaries sent to them by Work and Income, which will be recovered from the beneficiaries themselves (as will the cost of any re-compliance drug test).

Beneficiaries will not be referred to jobs with pre-employment drug tests if they are dependent on drugs or undergoing drug treatment. Sanctioning these people for their drug use would be ineffective, as sanctions are about changing behaviour, but those dependent on drugs are generally unable to change their behaviour without support. Instead, people addicted to or dependent on drugs will be offered support to deal with their addiction.

Social obligations

Amendments to introduce social obligations are the result of commitments, in both the Government’s manifesto and the Prime Minister’s Key Result Areas, to increase the following:

  • child enrolment at birth with a general practitioner (GP) or Well Child service, and immunisation rates; and

  • participation in Early Childhood Education (ECE), particularly for Māori and Pacific children; and

  • regular attendance at school; and

  • the proportion of 18 year olds achieving level 2 NCEA.

This Bill establishes social obligations that beneficiaries with dependent children must meet in order to continue receiving Government assistance. This will help to promote the take-up of Government-funded programmes that support social objectives important to New Zealanders, and break intergenerational cycles of disadvantage and welfare receipt.

Four social obligations are introduced. These require beneficiary parents to take all reasonable steps to have their dependent child:

  • aged 3 years or over, enrolled in and attending early childhood education until they start school; and

  • enrolled in and attending school from age of 5 (or 6) years depending on when the child first starts school; and

  • enrolled with a primary health care provider; and

  • up-to-date with the core Well Child checks.

These obligations will apply universally to all beneficiaries with dependent children (including spouses or partners, if any).

The normal graduated financial sanction process will apply to beneficiary parents who fail to meet these expectations. However, in the interests of their children, a financial sanction cannot be initiated unless 3 stages of support contact have failed to encourage compliance.

Stopping benefit payments to beneficiaries with a warrant to arrest

Changes in this Bill also give effect to the Government’s manifesto commitment to stop benefit payments for beneficiaries with a warrant to arrest in criminal proceedings, to prevent benefit income being used to help beneficiaries to evade the law.

Where a warrant to arrest has been issued to a beneficiary, after 28 days Work and Income will be able to initiate a process to stop payment of their benefit where a person does not clear the warrant. The beneficiary will be given at least 10 days' notice to challenge the notice or resolve the warrant. A warrant to arrest can be resolved by making contact through a court or police station. No more than 50% of benefit payments will be stopped for beneficiaries with dependent children.

Where the Police Commissioner notifies Work and Income that in the Commissioner's opinion a beneficiary with a warrant to arrest poses a risk to public safety, benefit payments can be stopped immediately with no notification period or prior notice.

Some technical details will be set out in regulations on the implementation and administration of the warrants to arrest policy.

Protecting benefit rates and abatement rules

The Bill protects the higher benefit rates of current domestic purposes benefit–women alone and widow’s benefit recipients who do not have children when they transfer to jobseeker support on 15 July 2013. As current recipients of these benefits move off welfare over time this rate differential will gradually work its way out of the system.

It also preserves the benefit abatement rules (ie, part-time abatement rules) that apply to current domestic purposes benefit for women alone recipients, widow’s benefit recipients, and sole parents after they are transferred to jobseeker support. In addition, sole parents who transfer from sole parent support to jobseeker support when their youngest child turns 14, and new sole parent applicants for jobseeker support, will also have part-time abatement rules.

Procurement and disability allowance

The Bill will allow the Ministry of Social Development to introduce preferred supplier arrangements for the procurement of goods and services for welfare recipients in certain circumstances, and will enable the Government to better target disability allowance expenditure. These changes will improve value-for-money in social assistance expenditure.

Transitional arrangements

A number of transitional arrangements are necessary to minimise the impact on current beneficiaries, including to—

  • confer entitlements; and

  • manage transfers under this Bill from existing benefits to new benefits including incomplete applications; and

  • carry over current medical exemptions or deferrals; and

  • preserve current appeals and reviews; and

  • enable existing failures and sanctions to be carried forward.

Specific transitional provisions include the following:

  • a one-off transitional arrangement to enable those beneficiaries on jobseeker support who have already started full-time study prior to 15 July 2013 (as appropriate under their current benefit), to complete their studies within a 2 year timeframe:

  • discretion to allow benefits to be paid for overseas travel that was booked before 15 July 2013 during the transition to ensure that beneficiaries who purchase tickets to travel overseas before the rules concerning overseas absence come into effect are not unexpectedly disadvantaged.

Implementation date

The changes will generally come into effect on 15 July 2013.

Regulatory impact statements

To help inform the main policy decisions taken by the Government relating to the contents of this Bill, the Ministry of Social Development produced the following 4 regulatory impact statements on the following dates:

  • Work Availability Expectations for Domestic Purposes and Widows Beneficiaries and Merging Benefit Categories—15 September 2011:

  • Phase 2 Welfare Reform (detailed changes)—27 July 2012:

  • Warrants to Arrest—16 August 2012:

  • Benefit rates and abatement rules—23 August 2012.

The first of those 4 statements also supported policy decisions taken by the Government relating to the contents of the Bill enacted as the Social Security (Youth Support and Work Focus) Amendment Act 2012. A copy of those 4 regulatory impact statements can be found at—

Clause by clause analysis

Clause 1 is the Title clause.

Clause 2 relates to commencement. Most of the amendments in the Bill are to come into force on 15 July 2013. But clauses 28, 38, 49, 50, and 53 — on the use of the disability allowance to fund specified expenses, and preferred suppliers of goods or services for beneficiaries or others — come into force on the day after Royal assent.

Clause 3 identifies the principal Act amended: the Social Security Act 1964. A reference in this analysis to a provision is, unless the context otherwise requires, a reference to a provision of that Act.

Part 1
Substantive amendments

Overview

Clause 4 gives an overview of Part 1.

Social obligations of certain beneficiaries with dependent children

Clause 5 replaces section 1A(d). Under new section 1A(d), the principal Act's purpose includes to impose, on persons receiving certain financial support under the Act, social obligations relating to the education and primary health care of their dependent children.

Pre-benefit activities, couple rate and work-test couple rate, and ordinarily resident in New Zealand

Clause 6 amends section 3. The amendments to section 3(1)—

  • insert a new definition of the term main benefit under this Act (used in new section 11E(1)(b) inserted by clause 9):

  • replace the term married rate with the term couple rate; and

  • adjust the definition of ordinarily resident to make it clear that it relates only to residence in New Zealand; and

  • replace the term work-test married rate with the term work-test couple rate.

Part 2 contains related consequential amendments.

Status of examples

Clause 7 inserts new section 3B to make clear the status of examples used in an enactment in or made under the principal Act. Enactments in or made under the principal Act, and that currently use examples, include the following:

  • section 11D(2)(b) (which relates to the application process for benefits):

  • section 125D(1) (which relates to information-sharing in relation to young persons):

  • regulation 9B of the Social Security (Long-term Residential Care) Regulations 2005:

  • regulation 13 of the Social Security (Temporary Additional Support) Regulations 2005.

Ordinarily resident in New Zealand

Clause 8 amends section 11D(9) so that it applies to a person ordinarily resident (not just resident) in an overseas country.

Pre-benefit activities

Clause 9 inserts new sections 11E to 11H, on pre-benefit activities.

New sections 11E to 11H follow closely and replace existing provisions (in the following sections) on pre-benefit activities for—

  • widows' benefits (section 21A, as inserted on 15 October 2012 by section 35 of the Social Security (Youth Support and Work Focus) Amendment Act 2012, and replaced by clause 11):

  • domestic purposes benefits (DPBs) under section 27B or 27C (section 27CA, as inserted on 15 October 2012 by section 38 of the Social Security (Youth Support and Work Focus) Amendment Act 2012, and replaced by clause 12):

  • unemployment benefit (sections 96A and 96B, replaced by clause 40).

But new sections 11E to 11H apply to all applicants for jobseeker support, including applicants for jobseeker support on the ground of sickness, injury, or disability (which is the new benefit to which sickness beneficiaries are to be transferred). New sections 11E to 11H also extend pre-benefit activities to—

  • applicants for emergency benefits; and

  • spouses or partners of applicants for jobseeker support, a supported living payment on the grounds of sickness, injury, disability, or total blindness, or an emergency benefit.

In addition, new section 11E(7) enables the chief executive to revoke a requirement that a person undertake a pre-benefit activity if the chief executive considers the requirement is no longer reasonable.

New sections 11G and 11H also change the consequences of a failure to undertake a required pre-benefit activity within the required timeframe, or a failure without a good and sufficient reason to comply with a requirement to attend and participate in an employment interview or to accept any offer of suitable employment. Currently those consequences are for failure by the applicant only. They are changed to extend them as well to failure by the applicant's spouse or partner. The changes ensure that,—

  • for a failure by the applicant, the consequences are lapse of the application for the benefit, refusal to grant the benefit, or termination of a grant of the benefit already made to the person; and

  • for a failure by the applicant's spouse or partner, the consequences are that the applicant receives the specified benefit, and any specified supplementary assistance, at half of the otherwise applicable rate or rates.

Part 2 contains consequential amendments relating to new sections 11E to 11H.

Rights of appeal: work test obligations: drug testing obligations

Clause 10 amends section 12J, on rights of appeal to the Social Security Appeal Authority. The amendment relates to decisions of the chief executive under new section 116C(2)(a) (inserted by clause 44). Those decisions are ones to the effect that a beneficiary does not have a good and sufficient reason, on the grounds that the beneficiary is addicted to, or dependent on, controlled drugs, for either or both of the following:

  • not complying with a drug testing obligation under new section 102B(1) (inserted by clause 43):

  • failing to apply for suitable employment that requires candidates to undertake drug tests.

The amendment ensures that no appeal against those decisions lies under section 12J(1)(a) to the Authority if an appeal against them lies under new section 10B (inserted by clause 56 and Part 1 of Schedule 2) to the medical board.

Sole parent support

Clauses 11 and 12 ensure that new sections 20A to 20H, on the new benefit called sole parent support, replace—

  • sections 21, 21A (as inserted on 15 October 2012 by section 35 of the Social Security (Youth Support and Work Focus) Amendment Act 2012), and 24, on widows' benefits; and

  • sections 27A to 27D and 27H(1) and (2), on domestic purposes benefits for solo parents and for women alone.

Women receiving the domestic purposes benefit for women alone under section 27C immediately before 15 July 2013 are on that date to be transferred to the new benefit called jobseeker support—see clause 9 of new Schedule 32 inserted by clause 132.

Supported living payment

Clauses 13 to 19

  • repeal sections 27G and 27H(1B), on domestic purposes benefits for care at home of the sick or infirm:

  • renumber and amend or, as the case may be, replace, sections 39F, 40, 42, 42A, 43, 44, and 44A, on invalids' benefits.

These changes rename invalids' benefits as a new benefit called the supported living payment. Sections 39F, 40, 42, 42A, 43, 44, and 44A are renumbered and amended as or, as the case may be, replaced by, new sections 40A to 40K. The supported living payment benefit may be granted—

  • on the grounds of sickness, injury, disability, or total blindness under new section 40B (which is section 40 as renumbered and amended); or

  • on the grounds of caring for a patient requiring care, under new section 40D.

Sections 40(1)(b) and 80(5)(ca)(i) contain the outdated terminology disability from congenital defect. Clauses 15(6) and 85 replace that outdated terminology with substantively equivalent references to disability existing from birth.

Sickness benefit abolished

Clause 20 repeals provisions related to the sickness benefit, which is to be abolished. However,—

  • the eligibility grounds in section 54(1)(a) and (b) for sickness benefit become eligibility grounds under new section 88B(1)(b) and (c) for jobseeker support; and

  • sickness beneficiaries will be transferred by transitional and savings provisions to jobseeker support on the ground of sickness, injury, or disability—see clause 7 of new Schedule 32 inserted by clause 132.

The chief executive must, after granting a person jobseeker support after 14 July 2013 and on the ground of sickness, injury, or disability, determine whether the person has, while receiving that benefit, capacity to seek, undertake, and be available for part-time work: new section 88F(2) inserted by clause 40. If the chief executive determines that the person has capacity of that kind, the chief executive must by a written notice require the person to comply with the work test on and after a date specified in the notice: new section 88F(4). The person is also for the principal Act's purposes both a work-tested beneficiary and a part-time work-tested beneficiary—see the definitions of those terms in section 3(1) as amended by clause 93(2) and (3). Appeal rights are in new section 10B (re-enacting section 53A)—see clause 56 and Part 1 of Schedule 2.

Beneficiaries having additional dependent child: exempting people resident in certain overseas countries, and eligibility for sole parent support

Clause 21 amends section 60GAE (as inserted on 15 October 2012 by section 39 of the Social Security (Youth Support and Work Focus) Amendment Act 2012). Section 60GAE relates to a person (the beneficiary parent) who (whether or not by having given birth) becomes a caregiver, or the principal caregiver, of a dependent child (an additional dependent child) while the person is receiving a specified benefit and is already a caregiver, or the principal caregiver, of a dependent child or children. Section 60GAE requires an additional dependent child aged 1 year old or over not to be included in the determination for the purposes of specified provisions of—

  • the age of the youngest dependent child of the beneficiary parent concerned; and

  • whether the beneficiary parent concerned has a dependent child or children under 5 years or 14 years (and if so, how many).

One amendment exempts a person from the additional dependent child requirements in section 60GAE. The exemption operates at a time when—

  • the person is ordinarily resident in an overseas country; and

  • a reciprocity agreement or convention with the government of that overseas country is being given force and effect by an order under section 19(1) of the Social Welfare (Transitional Provisions) Act 1990.

A second amendment includes in those specified provisions new section 20D(1)(c). The effect of the amendment is that an additional dependent child aged 1 year old or over is not included in the determination of those stated matters for the purposes of eligibility for sole parent support.

The third amendment inserts a new section 60GAE(3A), which varies section 60GAE(2) as applied to a determination of a specified kind of beneficiary's eligibility for sole parent support. The variation requires an additional dependent child of the beneficiary not to be included in the determination not merely once that child is aged 1 year old or over, but instead at all times after that child is born. A beneficiary is of a specified kind if he or she is—

  • a beneficiary transferred to jobseeker support on 15 July 2013 by clause 2(9) of new Schedule 32 (inserted by clause 132); or

  • a beneficiary whose sole parent support under new section 20D expired on the date that the beneficiary's youngest dependent child turned 14 years old, and has been replaced with jobseeker support, under section 20H.

Obligations to work with contracted service providers

Clause 22 inserts new section 60GAG after section 60GAF (as inserted on 15 October 2012 by section 39 of the Social Security (Youth Support and Work Focus) Amendment Act 2012). New section 60GAG imposes on specified beneficiaries obligations to work with service providers contracted under section 125A (as amended by clause 51). The chief executive must take reasonable and appropriate steps to make every person on whom obligations are imposed under new section 60GAG(1) aware of those obligations and the consequences of failure to comply with them. The sanctions in section 117 must be imposed on a person on whom an obligation has been imposed under new section 60GAG(1) if the chief executive considers that the person has, without a good and sufficient reason, failed to comply with it: new section 116B (clause 44).

Work preparation exercise

Clause 23 repeals section 60HA, on requests and obligations to participate in mandatory interviews or other work preparation exercises. Obligations of a similar kind will be able to be placed on appropriate beneficiaries, and on their spouses or partners, under section 60Q (as replaced on 15 October 2012 by section 40 of the Social Security (Youth Support and Work Focus) Amendment Act 2012).

Certain obligations may be placed on beneficiaries and their spouses and partners

Clause 24 amends section 60Q (as replaced on 15 October 2012 by section 40 of the Social Security (Youth Support and Work Focus) Amendment Act 2012). Section 60Q places, or enables the placing, on beneficiaries and their spouses and partners, of obligations (including a general obligation to take all reasonably practicable steps to prepare for employment).

One amendment ensures that section 60Q applies to sole parents—

  • with a dependent child under the age of 1 year; and

  • who are recipients of jobseeker support under new section 88B instead of sole parent support under new section 20D solely because that child is an additional dependent child (within the meaning of section 60GAE(1) (as inserted on 15 October 2012 by section 39 of the Social Security (Youth Support and Work Focus) Amendment Act 2012)).

Sole parents of that kind may also apply for a deferral of their work test obligations, under new section 88H(1) inserted by clause 40.

Other amendments ensure that section 60Q also applies to—

  • recipients of a benefit under new section 40B (supported living payment on the grounds of sickness, injury, disability, or total blindness) if the chief executive is satisfied that they have the capacity to comply with obligations under section 60Q(3)—see also the related new section 40F inserted by clause 16:

  • recipients of a benefit under new section 40D (supported living payment on the grounds of caring for a patient requiring care) if the chief executive is satisfied that they have the capacity to comply with only requirements under section 60Q(3), as they are excepted from section 60Q(2) (which imposes a general obligation to take all reasonably practicable steps to prepare for employment)—see also the related new section 40H inserted by clause 16:

  • a person who is a work-tested beneficiary, and has been granted under new section 88I a deferral of the person's work test obligations.

The final amendment inserts new section 60Q(3)(aa) and (ab), which enable the chief executive to require a person to whom section 60Q applies to do either or both of the following:

  • attend and participate in an interview with an officer of the department or other person on behalf of the chief executive:

  • report to the department or to any other person acting on behalf of the chief executive on the person's compliance with the person's obligations under section 60Q as often as, and in the manner that, the chief executive reasonably requires.

Social obligations of certain beneficiaries with dependent children

Clause 25 inserts new sections 60RA to 60RC.

New section 60RA(1) indicates whether a beneficiary has social obligations (relating to the beneficiary's dependent children) under new section 60RA(3). New section 60RA applies to a person if the person—

  • is a person with 1 or more dependent children; and

  • is receiving (either as the person granted the benefit, or as the spouse or partner of the person granted the benefit) a benefit that is jobseeker support, sole parent support, a supported living payment, or an emergency benefit.

New section 60RA(3) ensures the person has these social obligations:

  • to take all reasonable steps to ensure that every dependent child aged 3 years or more but less than 6 years and who is not enrolled at and regularly attending a registered school (as defined in section 2(1) of the Education Act 1989) is—

    • enrolled in an approved early childhood education programme (as defined for the purposes of new section 60RA(3) in childcare assistance regulations made under section 132AC); and

    • attending that programme to the minimum extent prescribed, and otherwise in the manner prescribed, for the purposes of this subparagraph by regulations made under section 132; and

  • to take all reasonable steps to ensure that every dependent child aged 6 years or more but less than 16 years, or aged 5 years or more but less than 6 years and who is not enrolled in and regularly attending an approved early childhood education programme, is (except insofar as the child is aged 6 years or more and is excepted or exempted from the requirements of sections 20 and 25 of the Education Act 1989)—

    • enrolled at a registered school (as defined in section 2(1) of that Act); and

    • regularly attending that registered school; and

  • to take all reasonable steps to ensure that every dependent child is enrolled with a primary health care provider (for example, a primary health organisation, an integrated family health centre, or a medical practitioner whose scope of practice is or includes general practice); and

  • to take all reasonable steps to ensure that every dependent child under the age of 5 years is up to date with checks under the Well Child programme or any similar programme established in its place; and

  • when required by the chief executive, to attend and participate in any interview with an officer of the department or other person on behalf of the chief executive; and

  • when required by the chief executive, to report to the department or to any other person acting on behalf of the chief executive on the person's compliance with the person's social obligations as often as, and in the manner that, the chief executive reasonably requires.

New section 60RB requires the chief executive to take reasonable and appropriate steps to make every beneficiary who has social obligations under new section 60RA(3) aware of—

  • the beneficiary's social obligations under new section 60RA(3); and

  • the consequences of failure to comply with them.

New section 60RC relates to sanctions for failures to comply with social obligations.

New section 60RC(1) ensures that a beneficiary who fails without good and sufficient reason to comply with a social obligation is, except as provided in new section 60RC(2) and (3), subject to the sanctions in section 117.

New section 60RC(2) relates to a beneficiary's failure to comply with a social obligation relating to specified dependent children being enrolled at and regularly attending a registered school. It ensures that the failure cannot be the subject of sanctions under section 117 if it is also the subject of a prosecution commenced against the beneficiary, and not withdrawn before it is finally determined, for an offence against section 24(1) (failure to enrol) or section 29(1) (irregular attendance) of the Education Act 1989.

New section 60RC(3) prevents the chief executive from giving the beneficiary a notice under section 113, and imposing a sanction under section 117, for a failure to comply with a social obligation unless the chief executive is first satisfied that, on at least 3 previous occasions, the department has had communication (of any kind, and in any manner) with the beneficiary in respect of the beneficiary's compliance with, or an actual or potential failure of the beneficiary to comply with, any social obligation of the beneficiary.

New section 60RC(4) to (6) relate to a beneficiary on whom sanctions in section 117 have been imposed in respect of a failure by the beneficiary without good and sufficient reason to comply with a social obligation. They enable chief executive to give the beneficiary a notice (to be delivered in accordance with section 86J) to the effect that the department is to intensify its case management support in respect of the beneficiary. A beneficiary to whom a notice of that kind is in that manner delivered must, when required by the chief executive, attend and participate in any interview with an officer of the department.

Clause 26 inserts a new section 61AA on the social obligations under new section 60RA(3) of a person receiving an emergency benefit.

Clause 27 amends section 61A(1A)(a), which enables the chief executive, by notice in writing, to require the spouse or partner of a person granted an emergency benefit at a work-test married rate to comply with the work test if the chief executive is satisfied that it is appropriate and reasonable to require that spouse or partner to seek, undertake, and be available for part-time work, in the case of a spouse or partner whose youngest dependent child is aged 6 or older but under 18 years. The amendment replaces aged 6 with aged 5. Clause 27 also amends section 61A so that it refers to the social obligations under new section 60RA(3) of a person with 1 or more dependent children, and who is receiving an emergency benefit as the spouse or partner of another person granted that benefit.

Disability allowance: preferred supplier and funding of specified expenses

Clause 28 amends section 69C, on the disability allowance.

Clause 28(1) and (2) relocate qualifying words at the start of section 69C(1) into a new section 69C(1A). New section 69C(1A) also requires the chief executive's discretion under section 69C(1) to grant a disability allowance to be exercised in accordance with regulations (on use of the allowance to fund specified expenses) under new section 132AD (inserted by clause 53).

Clause 28(3) inserts new section 69C(7A) to (7D).

New section 69C(7A) applies to a person if—

  • any additional expenses arising from a disability relate to the supply of any goods or services to the person or a member of the person's family; and

  • all or a specified part of a disability allowance is granted in respect of the supply of the goods or services, and is not under section 82(3) wholly directed to be paid for any other purpose; and

  • the goods or services are of a class, description, or kind supplied by a preferred supplier under a contract entered into with the chief executive under new section 125AA (inserted by clause 50).

New section 69C(7B) ensures, if new section 69C(7A) applies to a person, that—

  • the person must buy the goods or services from a preferred supplier nominated in writing by the chief executive at the price determined by the contract under new section 125AA with that supplier; and

  • the chief executive must pay all, or the specified part, of the disability allowance that is granted in respect of the goods or services to that supplier in consideration of the supply of the goods or services to the person or the person's family member.

However, if the disability allowance granted to the person to whom new section 69C(7A) applies is granted at the maximum appropriate rate specified in Schedule 19, new section 69C(7C) empowers the chief executive, in the chief executive's discretion, to determine in writing that, despite new section 69C(7B),—

  • all, or the specified part, of the disability allowance that is granted in respect of the supply of the goods or services must be paid to the person for use only to purchase any 1 or more of the goods or services in respect of the supply of which the disability allowance is granted; and

  • if the goods or services that the person purchases (using all, or the specified part, of the disability allowance paid to the person) are goods or services supplied by the nominated preferred supplier under the contract entered into with the chief executive under new section 125AA, then the person must purchase them from that supplier at the price determined by that contract.

New section 69C(7D) ensures, by analogy with section 82(4) (which prevents appeals against determinations about the manner and place of payments), that no appeal under the principal Act lies against any chief executive's decision under new section 69(7B) or (7C).

Residential requirements for certain benefits: people ordinarily resident overseas

Clause 29 amends section 74AA, which specifies residential requirements for certain benefits. The amendments ensure the requirement for 2 years' continuous residence in New Zealand will apply to a person who is ordinarily resident in an overseas country a reciprocity agreement or convention with the government of which is being given force and effect by an order under section 19(1) of the Social Welfare (Transitional Provisions) Act 1990.

The 2 years' continuous residence will have to be at any one time, but may be before the person applies for the specified benefit, or before a decision on his or her claim for the benefit is made under section 12. The reciprocity agreement or convention may contain provisions to the effect that years of continuous contributions to the social security system of the overseas country are, for the purposes of entitlements to the specified benefits, to be treated as years of continuous residence in New Zealand.

Effect on benefit of warrant to arrest beneficiary

Clause 30 inserts new section 75B, on the effect on a benefit of a warrant to arrest a beneficiary. New section 75B applies, in accordance with new section 75B(1), to a beneficiary who is not a young person (as defined in section 2(1) of the Children, Young Persons, and Their Families Act 1989) if the chief executive is satisfied (based on information available to the chief executive) that—

  • criminal proceedings have been commenced against the beneficiary in a New Zealand court for an offence (other than an offence of a class, description, or kind excluded from the operation of new section 75B(1)(a) by regulations made under new section 132L (inserted by clause 54); and

  • a New Zealand court has in, or in connection with, those criminal proceedings, issued a warrant for the beneficiary's arrest; and

  • at least 28 days have elapsed since the date on which the warrant was issued.

New section 75B(2) provides for the chief executive to give the beneficiary a notice (to be delivered in accordance with section 86J) that—

  • allows a period of 10 working days within which the beneficiary may dispute that he or she is the person to whom the warrant to arrest applies or take steps to resolve the warrant; and

  • specifies the steps that the beneficiary may take to dispute that he or she is the person to whom the warrant to arrest applies or to resolve the warrant; and

  • specifies the consequences of the beneficiary's not resolving the warrant within that 10-working-day period.

New section 75B(3) applies to the beneficiary unless, at the end of the reasonable period specified in the notice, the chief executive is satisfied (based on evidence provided by the beneficiary, or other information available to the chief executive, or both) of 1 of the following:

  • that the beneficiary is not the person to whom the warrant applies; or

  • that the warrant has been resolved.

New section 75B(4) ensures that the benefit of a beneficiary to whom new section 75B(3) applies is not payable until the chief executive is satisfied (based on information provided by the beneficiary, otherwise available to the chief executive, or both) of 1 of the following:

  • that the beneficiary is not the person to whom the warrant applies; or

  • that the warrant has been resolved.

New section 75B(5) enables the chief executive to suspend immediately the benefit of a beneficiary to whom new section 75B(1)(a) and (b) apply if satisfied that—

  • the department has received from the New Zealand Police a written request to suspend the beneficiary's benefit on the ground that the Commissioner of Police on reasonable grounds considers the beneficiary to be a risk to public safety; and

  • that request is signed by the Commissioner of Police or a constable who is of or above the level of position of inspector.

New section 75B(6) requires the chief executive, as soon as is reasonably practicable after a suspension under new section 75B(5), to give the beneficiary a notice (to be delivered in accordance with section 86J) that—

  • communicates the fact of, and reason for, the suspension; and

  • specifies the steps that the beneficiary may take to dispute that he or she is the person to whom the warrant applies or to resolve the warrant.

New section 75B(7) ensures sections 80C, 120, and 121 (on how sanctions affect entitlements to supplementary benefits, affect spouses or partners, and affect sole parents' benefits) apply to a benefit that is not payable under new section 75B(4), or that is suspended under new section 75B(5), as if the benefit had been suspended under section 117.

When beneficiaries can be paid benefit while overseas, and suspensions of benefits based on discrepancies arising from departure information

Clause 31 amends section 77, which relates to the effect on benefit entitlements of a beneficiary's absence from New Zealand. The amendments—

  • ensure beneficiaries with work preparation expectations (other than the base expectations of taking reasonable steps to improve work readiness) under section 60Q(3), or in receipt of an emergency benefit, are not generally allowed to receive a benefit while overseas, but also that the chief executive has a discretion to allow a benefit to be payable in respect of an absence from New Zealand—new section 77(2A) and (3):

  • provide for the criteria to be complied with before the chief executive may, in the chief executive's discretion, allow a benefit of a kind specified in new section 77(2A) to be paid in respect of an absence from New Zealand, to be specified in regulations made under section 132—new section 77(3):

  • limit the absences in respect of which a benefit is or may be payable under new section 77(2) or (3) (if the chief executive is satisfied that the relevant specified criteria are complied with) generally to 1 or more absences from New Zealand equal to or shorter than 4 weeks in total in any 52-week period:

  • empower the chief executive, if satisfied that exceptional circumstances (as defined for the purposes of new section 77(3AA) by regulations made under section 132) apply to or in respect of a beneficiary, and in the chief executive's discretion, to determine that a benefit may be paid under new section 77(2) or (3) in respect of 1 or more absences of the beneficiary from New Zealand longer than 4 weeks in total in any 52-week period—new section 77(3AA):

  • allow beneficiaries to be paid the supported living payment benefit on the grounds of sickness, injury, disability, or total blindness while overseas for up to 6 weeks if their absence overseas is for the sole or predominant purpose of competing in any overseas multinational or international Special Olympic or Paralympic Games competition—new section 77(3A):

  • prevent a beneficiary from having any entitlement under new section 77(2), (3), (3AA), or (3A) or section 77(4) to be paid a benefit while overseas unless that beneficiary has notified the department, before that absence, of the beneficiary's forthcoming absence—new section 77(6):

  • ensure, if the beneficiary after departing from New Zealand notifies the beneficiary's current absence from New Zealand, that the beneficiary's entitlement under new section 77(2), (3), (3AA), or (3A) or section 77(4) to be paid a benefit while overseas (if the beneficiary is otherwise qualified to be paid that benefit) usually commences no earlier than the date of the notification—new section 77(7):

  • enable the chief executive, in his or her discretion, to authorise the beneficiary's entitlement under new section 77(2), (3), (3AA), (3A) or section 77(4) to commence on or after the beneficiary's departure, despite new section 77(6) and (7), if the chief executive is satisfied that—

    • the beneficiary's failure to notify an officer of the department, before that absence, of the beneficiary's forthcoming absence is justified for 1 or more good and sufficient humanitarian reasons; and

    • the beneficiary after departing from New Zealand notified an officer of the department of the beneficiary's current absence from New Zealand as soon as was reasonably practicable in the circumstances:

  • ensure that nothing in new section 77(2) to (8) applies to New Zealand superannuation, veterans' pensions, or entitlements under reciprocity agreements with other countries—new section 77(9).

Clause 32 amends the Privacy Act 1993. Section 103(1A) of that Act enables the department responsible for the principal Act's administration to suspend immediately without prior notice a specified benefit of an individual on the basis of a discrepancy arising in respect of departure information supplied to that department pursuant to section 280 of the Customs and Excise Act 1996. But the department must, immediately after the decision to suspend, give the individual written notice specifying particulars of the discrepancy and the suspension of benefit, and stating that the individual has 5 working days from the receipt of the notice to show cause why the benefit ought not to have been suspended. The written notice must also specify any other adverse action the department proposes to take, and state that the individual has 5 working days from the receipt of the notice to show cause why the other adverse action should not be taken. The other adverse action must not be taken until the expiration of those 5 working days. Section 103(1A) of the Privacy Act 1993 is amended—

  • to update references to benefits under the principal Act that are abolished and replaced with new benefits or renamed:

  • to remove references to abolished training benefits, and abolished job search allowances:

  • to add references to young parent payments and youth payments under Part 5 of the principal Act (as inserted on 20 August 2012 by sections 2(1) and 24 of the Social Security (Youth Support and Work Focus) Amendment Act 2012):

  • to add references to the new benefits that are sole parent support and the supported living payment.

Removing exemptions from jobseeker support benefit stand down period while person in approved training

Clause 33 amends section 80(5)(a). The amendment removes the chief executive's ability to exempt a person from the jobseeker support benefit stand down period while the person is participating in training approved by the chief executive.

Backdating benefits in specified circumstances

Clause 34 replaces section 80BA(4)(b). New section 80BA(4)(b)

  • confirms the ability to backdate a benefit that is sole parent support, or is a supported living payment, or is jobseeker support that is granted—

    • on the grounds of sickness, injury, or disability; or

    • to a sole parent; but also

  • extends the ability to backdate a benefit to jobseeker support that is granted to a person who has recently lost the financial support of his or her spouse or partner by reason of death, the spouses or partners commencing to live apart, or the ending of a de facto relationship.

Both section 80BA(4)(b) and new section 80BA(4)(b) apply to a benefit that is a youth payment or a young parent payment.

Standardising benefit end dates

Clause 35 amends section 80BD, on ending of benefits. The amendments are to standardise rules on this matter so that, in the following situations, the chief executive has discretion to continue to pay the benefit for up to 28 days:

  • death of a beneficiary who leaves a surviving spouse or partner or dependent child, unless the surviving spouse or partner or child qualifies for a higher rate of benefit, or the death was by accident and the spouse or partner or child is entitled under the Accident Compensation Act 2001 to a survivor's grant:

  • death of a beneficiary's spouse or partner:

  • death of a single beneficiary who had a dependent child, or whose death results in a transitional cost (for example, for shared accommodation) for a family member, or whose death gives rise to exceptional and justified costs (for example, when multiple family members die):

  • death of a child of a beneficiary who is single:

  • death of the patient requiring care concerned where the beneficiary is receiving a supported living payment on the grounds of caring for a patient requiring care:

  • a sole parent stops caring for the dependent child concerned because of a sudden change of circumstances beyond the beneficiary's control (for example, because a court order is made transferring to another person the role of providing day-today care of that child, or because the child is taken into custody under the Children, Young Persons, and Their Families Act 1989):

  • where the beneficiary receiving a supported living payment on the grounds of caring for a patient requiring care stops caring for the patient concerned because the patient is admitted to hospital or enters residential care:

  • when a child ceases unexpectedly, or because of the death of child's caregiver, to be entitled to an orphan's benefit or unsupported child's benefit:

  • when a beneficiary ceases to be eligible for a supported living payment, and the change in circumstances will cause him or her hardship, or his or her eligibility has ceased because of a cancellation decision that is subject to an unresolved appeal on medical grounds.

Expiry and re-grant of specified benefits

Clause 36 inserts new sections 80BE and 80BF on expiry and re-grant of specified benefits.

New section 80BE re-enacts in a new location section 99AA (replaced by clause 40) on expiry of the unemployment benefit, but also—

  • extends expiry and re-grant provisions to other benefits prescribed by related regulations to be made under new section 132M (to be inserted by clause 54); and

  • ensures a specified benefit that expires in the week that is, or is the week immediately before, the week that includes 26 December in a year must (despite section 80BD(1) and the rest of new section 80BE) continue to be paid until the first Monday after 2 January in the immediately following year; and

  • enables the consideration and granting, in circumstances to be specified by related regulations under new section 132M, of exemptions from expiry for all or any specified benefits of an identified beneficiary or of all beneficiaries within an identified class or description.

New section 80BF re-enacts in a new location section 99AB (replaced by clause 40) on requirements for re-grant of the unemployment benefit, but also extends it to other benefits prescribed by related regulations to be made under new section 132M (to be inserted by clause 54).

Review of benefits

Clause 37 amends section 81, which relates to review of benefits. The amendment inserts new section 81(4) and (5).

New section 81(4) applies to a benefit granted, or entitlement to which arises, on a stated ground if, after reviewing that benefit under section 81(1), the chief executive considers that the beneficiary is more appropriately entitled to receive that benefit on another ground. If new section 81(4) applies to a benefit, new section 81(5) enables the chief executive to cancel that benefit on the stated ground and grant it instead on the other ground.

The amendment is considered necessary or desirable as a consequence of sickness benefits and unemployment benefits being merged into the new benefit jobseeker support on 2 grounds, and also as a consequence of invalids' benefits being renamed as, and domestic purposes benefits on the ground of care of the sick or infirm being merged into, the supported living payment on 2 grounds. A beneficiary affected by any such decision of the chief executive has rights of review and appeal under sections 10A (Benefits Review Committee) and 12J (Social Security Appeal Authority).

One-off hardship assistance and redirection using preferred supplier

Clause 38 amends section 82, on payment of benefits.

One amendment inserts new section 82(6AA) and (6AB), on one-off hardship assistance using a preferred supplier. Under section 82(3), except as otherwise provided in the principal Act, every instalment of a benefit must be paid to or on account of the beneficiary personally. Section 82(6) enables the chief executive, in the chief executive's discretion, to make an advance payment of a benefit if satisfied that to do so would best meet a beneficiary's immediate needs. Any such discretionary advance payment may be recovered under section 86(1). Section 82(6A) enables an advance payment of a benefit to be paid to the supplier of goods or services if the immediate needs of the beneficiary relate to the supply of any goods or services to the beneficiary or a member of the beneficiary's family.

New section 82(6AA) (on one-off hardship assistance) applies to the beneficiary if—

  • the beneficiary's immediate needs relate to the supply of any goods or services to the beneficiary or a member of the beneficiary's family; and

  • the goods or services are of a class, description, or kind supplied by a preferred supplier under a contract entered into with the chief executive under new section 125AA (inserted by clause 50).

New section 82(6AB) ensures, if new section 82(6AA) applies to the beneficiary, that the beneficiary must buy the goods or services from a preferred supplier nominated in writing by the chief executive at the price determined by the contract under new section 125AA with that supplier, and—

  • the amount of the advance payment of benefit for purchasing the goods or services is the lesser of—

    • the price so determined; and

    • the maximum amount of advance payment of benefit that is available to the beneficiary for that purpose; and

  • the chief executive must pay the advance payment of the benefit to that supplier in consideration of the supply of the goods or services to the beneficiary or the beneficiary's family member.

No appeal under the principal Act lies against a determination by the chief executive as to the manner in which, or place at which, an instalment of benefit is to be paid: section 82(4).

The other amendment inserts new section 82(6F) and (6G), on redirection using a preferred supplier.

New section 82(6F) applies to a beneficiary if—

  • the chief executive has under new section 125AA (inserted by clause 50) entered into a contract with a preferred supplier for the supply of goods or services (for example, electricity, gas, or telecommunications); and

  • the beneficiary to obtain the advantage of that supply at the price determined by that contract requests the chief executive in writing to pay, for a period identified by the chief executive, an agreed amount or agreed portion of the benefit payments payable to the beneficiary to the preferred supplier in consideration of the supply of those goods or services to the beneficiary or a member of the beneficiary's family.

If new section 82(6F) applies to a beneficiary, then under new section 82(6G),—

  • the chief executive may, despite section 82(3), act on the beneficiary's written request under new section 82(6F), and accordingly pay the preferred supplier for the identified period the agreed amount or agreed portion of the benefit payments payable to the beneficiary in consideration of the supply of those goods or services to the beneficiary or the beneficiary's family member; and

  • the beneficiary cannot withdraw from the redirection arrangement arising from that request unless the chief executive, in his or her discretion, considers a withdrawal during the identified period is justified by special circumstances established to the chief executive's satisfaction.

Work test obligations: drug testing obligations

Clause 39 amends section 88A, which is an interpretation provision, to insert definitions for the drug testing obligations that, under new section 102A(1A) (inserted by clause 42) form part of specified work test obligations.

Jobseeker support (including deferral of work test obligations on grounds of sickness, injury, or disability)

Clause 40 replaces sections 89 to 99 on the unemployment benefit with new sections 88B to 88M on the new benefit called jobseeker support. The new sections include new sections 88H to 88K on deferral of work test obligations on grounds of sickness, injury, or disability.

Jobseeker support is generally the same as the unemployment benefit, so new sections 88B to 88M therefore follow closely sections 89 to 99. The substantive differences are as follows:

  • the eligibility grounds in section 54(1)(a) and (b) for sickness benefit become eligibility grounds under new section 88B(1)(b) and (c) for jobseeker support:

  • new section 88E relates to medical certification and examination for jobseeker support on the grounds of sickness, injury, or disability, and follows closely section 54B on medical certification and examination for a sickness benefit.

Sections 99AA and 99AB, on expiry and re-grant of unemployment benefit, are re-enacted in a new location as new sections 80BE and 80BF — which apply not only to jobseeker support, but also to other specified benefits — by clause 36.

New sections 88H to 88K relate to deferral of work test obligations on the ground of sickness, injury, or disability. New section 88H provides for applications for deferral of work test obligations. New section 88I empowers the chief executive to grant deferrals of work test obligations. New section 88J indicates the effect of deferrals of that kind. New section 88K applies to a person who is, or is deemed to have been, granted a deferral under new section 88I, and requires the person to notify the chief executive as soon as practicable of any change in the person's circumstances that may affect his or her entitlement to the deferral.

Work ability assessment

Clause 41 inserts new sections 100B and 100C, on work ability assessments.

New section 100B enables the chief executive to require a person to whom new section 100B(1) applies to attend and participate in a work ability assessment made to determine, or help to determine, all or any of the matters specified in new section 100B(3). New section 100B(1) applies to a person who is, or who is the spouse or partner of, a beneficiary in receipt of—

  • sole parent support; or

  • a supported living payment (except as provided in new section 100B(2)); or

  • an emergency benefit; or

  • jobseeker support.

New section 100B(2) ensures that a work ability assessment cannot be required of a person receiving a supporting living payment on the ground of sickness, injury, or disability (new section 100B(1)(b) does not apply to the person) if, in the chief executive’s opinion,—

  • the person is terminally ill; or

  • the person has little or no capacity for work, and the person's condition is deteriorating or not likely to improve.

New section 100B(4) requires the assessment to be undertaken in accordance with a procedure determined by the chief executive.

New section 105B(5) relates to the effect of the assessment.

New section 100C provides for reassessment.

Appeal rights against some determinations made in reliance on assessments under new section 100B are given by new section 10B (re-enacting section 53A) inserted by clause 56 and Part 1 of Schedule 2.

Work test obligations: drug testing obligations

Clause 42 amends section 102A, which specifies the work test obligations of work-tested beneficiaries who are not exempted from those obligations. New section 102A(1A) ensures that the drug testing obligations under new section 102B(1) (inserted by clause 43) are included in, and form part of, a work test obligation under section 102A(1)(a), (c), or (f)(iv). Failures, without a good and sufficient reason, to comply with work test obligations are sanctionable under the sanctions regime (see, in particular, new sections 116B and 116C, and section 117, inserted or amended by clauses 44 and 45).

Clause 43 inserts new sections 102B and 102C.

New section 102B(1) specifies the drug testing obligations referred to in new section 102A(1A). Those obligations are to undertake, and to pass, a drug test that a potential employer or training provider requires candidates for employment or training to undertake, and to pass, by a specified time.

A drug test (which, with related terms, is defined in section 88A as amended by clause 39) means a test to determine whether the candidate's capacity to work, or be trained for employment, is impaired, by detecting the presence in the candidate’s body of 1 or more controlled drugs. The drug test may be a screening drug test of the candidate and, if the candidate fails that screening drug test, an evidential drug test of the candidate, or an evidential drug test of the candidate undertaken without any associated prior screening drug test of the candidate: new section 102B(2).

A candidate is taken for the principal Act's purposes to have failed an evidential drug test required by a potential employer or a training provider if the candidate fails an associated prior screening drug test required by the employer or provider, and waives the evidential drug test: new section 102B(3).

New section 102C relates to the drug testing obligations on a work-tested beneficiary referred by the chief executive under section 102A(1)(c) to an opportunity of suitable employment.

New section 102C(2) empowers the employer providing the opportunity to, or to authorise the appropriate drug-testing provider to, provide to the department a copy of the results of the screening drug test, the evidential drug test, or both if the employer requires the beneficiary to undergo, and to pass, by a specified time, a screening drug test, an evidential drug test, or both, and the beneficiary has by the specified time failed that test or those tests.

New section 102C(3) provides for the employer to be reimbursed for the actual and reasonable costs (if, or insofar as, they do not exceed the prescribed maximum reimbursement amount) of the drug test or tests the employer required and the beneficiary failed. The reimbursed costs are a debt due to the Crown from the beneficiary.

Drug test results provided under new section 102C(2) may be used for the purposes of, or for the purposes of a review or appeal under, specified provisions, but must not be used by the chief executive or the department for any other purposes.

Sanctions

Clause 44 replaces section 115 (on failures to comply with the work test) and section 116A (on failures to comply with obligations under section 60Q(2)). Section 116A is inserted on 15 October 2012 by section 43 of the Social Security (Youth Support and Work Focus) Amendment Act 2012. Sections 115 and 116A are replaced with new sections 116B and 116C, on failures (to comply with specified obligations) that require the imposition of sanctions under section 117.

New section 116B re-enacts sections 115(1) and (5) to (7) and 116A, but applies not only to obligations related to work preparation, work test obligations (including drug testing obligations), and interview obligations of beneficiaries exempted from the work test, but also to obligations related to contracted service providers, social obligations, and work ability assessment obligations.

New section 116C(1) and (3) re-enact section 115(3) and (4), which indicate good and sufficient reasons for specified failures to comply. New section 116C(2) specifies good and sufficient reasons for not complying with a drug testing obligation under new section 102B(1), or for failing to apply for suitable employment that requires candidates to undertake drug tests, or for both.

Clause 45 amends section 117, on sanctions that may be imposed for failures. New section 117(1A) to (1C) ensure that beneficiaries who fail to accept an offer of suitable employment are subject to a 13-week non-entitlement period in the same way as people who become voluntarily unemployed without a good and sufficient reason.

Clause 46 amends section 119, on calculation of failures for the purposes of section 117. The amendments are to—

  • ensure that applicable failures count only during a period of continuous payment in respect of the beneficiary of the same benefit or of 2 or more different benefits; and

  • ensure that the level of sanction applied to beneficiaries is based on the number of previous failures of all obligations added together, and that the count of failures will be maintained when beneficiaries move from one benefit to a different benefit; and

  • re-enact section 119(1)(b) in a form that makes clearer that it refers to new section 116B.

Clause 47 amends section 122, which relates to when, in relation to a failure to comply with an obligation, a person recomplies for the purpose of section 117. Some of the amendments are to ensure that, where someone fails to meet more than one obligation, they will be required to undertake all of the obligations they previously failed to comply with before the sanction can be lifted.

New section 122(2) is inserted to indicate how a person recomplies (for the purpose of section 117) in relation to a failure under new section 116B(1)(e) to comply with any drug testing obligation under new section 102B(1) (inserted by clause 43).

New section 122(3) ensures that the calculation of the number of failures for the purposes of new section 122(2) is independent and separate from, and therefore does not affect, the calculation (in accordance with section 119) of the number of failures for the purposes of section 117.

New section 122(4) requires the department to take reasonable and appropriate steps to make a person who has given a recompliance undertaking in accordance with new section 122(2)(b) aware of the following matters:

  • the consequences of failing to comply with the undertaking; and

  • the location of a drug testing provider that the person can use to undertake a drug test of the kind stated in new section 122A(2)(a) or (b); and

  • that the department will pay the actual and reasonable costs the provider charges for performing, once only within the period the undertaking allows for recomplying, a drug test of the kind stated in new section 122A(2)(a) or (b), but that those costs are also recoverable from the person.

Clause 48 inserts a new section 122A, on recomplying after a second failure in a 12-month period to comply with a drug testing obligation. New section 122A applies to a work-tested beneficiary who has undertaken under new section 122(2)(b) to pass a drug test within 30 days after the date of the beneficiary's undertaking (the period).

The beneficiary must at a time that is within the period attend at the location of a drug testing provider for the purpose of undertaking a drug test. The drug test must be either—

  • a screening drug test of the beneficiary and, if the beneficiary fails that screening drug test, an evidential drug test of the beneficiary; or

  • an evidential drug test of the beneficiary undertaken without any associated prior screening drug test of the beneficiary.

The actual and reasonable costs charged by the provider for performing, on 1 occasion only within the period, a drug test, are payable by the department, but also a debt due to the Crown from the beneficiary.

A beneficiary who fails a screening drug test or an evidential drug test or both performed within the period may (in order to try to comply with the beneficiary's undertaking despite that failure) undertake, at the beneficiary's expense, further drug testing within the period. A beneficiary who does not pass a drug test within the period must be treated as a person who has failed a third time within a 12-month period to comply with any drug testing obligations in new section 102B(1). The beneficiary's benefit will therefore be cancelled under section 117(1)(c).

Special assistance under welfare programme: use of preferred supplier

Clause 49 amends section 124, which relates to money payable out of a Crown Bank Account for the purposes of the principal Act. That money includes, under section 124(1)(d), any money that may be appropriated by Parliament for the purpose of granting special assistance under any welfare programme established and approved by the Minister under the authority of, and for the purposes of, section 124(1)(d). The amendment inserts new section 124(1BA) to (1BC). New section 124(1BA) applies to an applicant for special assistance under a welfare programme approved by the Minister under section 124(1)(d) if—

  • any special assistance under the programme relates to the supply of any goods or services to the applicant or a member of the applicant's family; and

  • the goods or services are of a class, description, or kind supplied by a preferred supplier under a contract entered into with the chief executive under new section 125AA (inserted by clause 50).

New section 124(1BB) ensures, if new section 124(1BA) applies to an applicant for special assistance under a welfare programme approved by the Minister under section 124(1)(d), that the applicant must buy the goods or services from a preferred supplier nominated in writing by the chief executive at the price determined by the contract under new section 125AA with that supplier, and—

  • that the amount of the special assistance granted under section 124(1)(d) for buying those goods or services is the lesser of—

    • the price so determined; and

    • the maximum amount for buying those goods or services available under the welfare programme concerned; and

  • that the chief executive must pay that special assistance to that supplier in consideration of the supply of the goods or services to the applicant or the applicant's family member.

New section 124(1BC) ensures, by analogy to section 82(4) (which prevents appeals against determinations about the manner and place of payments), that no appeal lies under section 12J(1)(b) against any chief executive's decision under new section 124(1BB)(b).

Preferred suppliers of goods or services for beneficiaries or others

Clause 50 inserts a new heading and new section 125AA, on preferred supply of goods or services for beneficiaries or others. New section 125AA(1) enables the Minister by written direction to determine the goods or services contracts for the supply of which may be entered into under new section 125AA(3). The Minister's determination must be in respect of goods or services for all or any of the following (and for no other) purposes:

  • to meet additional expenses arising from a disability by way of a disability allowance under section 69C:

  • to satisfy the immediate needs of a beneficiary by way of an advance payment of a benefit under section 82(6) and (6A):

  • for supply to a beneficiary by way of a redirection under new section 82(6G) (inserted by clause 38) of some of the beneficiary's benefit payments:

  • to meet particular needs of a person by way of special assistance under a welfare programme under section 124(1)(d).

Contracts with administration service providers

Clauses 51 and 52 amend sections 125A and 125C, respectively, on contracts with administration service providers. The amendments extend those sections to contracts with providers of administration services in relation to both of the following:

  • persons other than young persons; and

  • specified Parts of the principal Act.

The amendments are related to new section 60GAG inserted by clause 22.

Disability allowance: funding of specified expenses

Clause 53 inserts a new section 132AD, relating to regulations on the use of a disability allowance to fund specified expenses. New section 132AD(1) to (3) give power to make regulations of that kind, indicate their purposes, and indicate ways in which they may achieve their purposes. A related amendment is new section 69C(1A) inserted by clause 28.

Effect on benefit of warrant to arrest beneficiary, and expiry and re-grant of specified benefits

Clause 54 inserts a new section 132L. New section 132L empowers the making of regulations for the purpose of new section 75B (on the effect on a benefit of a warrant to arrest a beneficiary) inserted by clause 30.

Those regulations may be or include provisions authorising information sharing. But the power to make regulations authorising information sharing, and their authorisations, are temporary only (until the close of 14 July 2016). The information sharing concerned is ultimately to be authorised by the new Part 9A of the Privacy Act 1993 to be inserted by the Privacy (Information Sharing) Bill (318—2). The Minister must not recommend proposed regulations authorising information sharing unless satisfied that there has been consultation on them with the Privacy Commissioner, and with persons or organisations representing the interests of people whose personal information the sharing of which is to be authorised by them.

Clause 54 also inserts a new section 132M. New section 132M empowers the making of regulations for the purpose of new sections 80BE and 80BF (on the expiry and re-grant of specified benefits) inserted by clause 36.

Jobseeker support

Clause 55 amends clause 1 of Schedule 9, which (as amended by this Bill) is to specify rates of jobseeker support and related abatement regimes. New clause 1(ab) and (ba) specify new preferential rates, or new rates with preferential abatement regimes.

New clause 1(ab) specifies a new preferential rate for a single beneficiary without dependent children and who was on 15 July 2013 transferred to jobseeker support—

  • by clause 2(8) and (9) of new Schedule 32 (inserted by clause 132, and which transfer a person without a dependent child aged under 14 years who, immediately before 15 July 2013, was receiving a widow's benefit under section 21, or had been granted a widow's benefit under section 21 that was subject to a stand down period under sections 80 to 80BA); or

  • by clause 9(6) and (7) of new Schedule 32 (inserted by clause 132, and which transfer a person who, immediately before 15 July 2013, was receiving a domestic purposes benefit for women alone under section 27C, or had been granted a domestic purposes benefit for women alone under section 27C that was subject to a stand down period under sections 80 to 80BA).

New clause 1(ba) specifies a new rate with a preferential abatement regime for a single beneficiary whose youngest dependent child is aged at least 14 years (including, without limitation, any such beneficiary who is a beneficiary of a kind specified in new clause 5A(a), (b), or (c)).

Clause 1(c) specifies the rate of jobseeker support, and the related abatement regime, for a single beneficiary with 1 or more dependent children. Clause 1(c) is amended to change that related abatement regime from Income Test 3 to Income Test 1 (as those terms are defined in section 3(1)).

New clause 5B gives the chief executive a discretion to disregard, for the purposes of new clause 1(ba) and of clause 1(c), specified income used to meet the cost of childcare.

Reorganising headings and relocating section 53A

In clause 56 and Part 1 of Schedule 2, the opportunity is taken to make clearer the principal Act's structure (mainly without changing its effects) by reorganising headings, and by re-enacting section 53A, which gives a right of appeal to a medical board on medical grounds against specified decisions, as a new section 10B that is located with other provisions on reviews and appeals. New section 10B re-enacts section 53A with consequential changes arising from this Bill's recategorisation of benefits, but otherwise without substantive changes. Consequential amendments related to this reorganisation of headings are made by clauses 129 and 130 and Parts 2 and 3 of Schedule 2.

Part 2
Consequential amendments, and transitional and savings provisions

Overview

Clause 57 gives an overview of Part 2.

Consequential amendments: couple rate and work-test couple rate

Clauses 58 and 59 make, to the principal Act and to other relevant enactments, amendments consequential on clause 6, which amends section 3(1) to—

  • replace the term married rate with the term couple rate; and

  • replace the term work-test married rate with the term work-test couple rate.

Consequential amendments: status of examples

Clause 60 amends enactments made under the principal Act to make revocations consequential on new section 3B inserted by clause 7.

Consequential amendments: pre-benefit activities

Clauses 61 to 63 make, to the principal Act and to the Social Security (Pre-benefit Activities) Regulations 2012, amendments consequential on new sections 11E to 11H inserted by clause 9.

Consequential amendments: sole parent support

Clauses 64 to 79 and Schedule 1 make to the principal Act amendments consequential on new sections 20A to 20H (on sole parent support) replacing—

  • sections 21, 21A (as inserted on 15 October 2012 by section 35 of the Social Security (Youth Support and Work Focus) Amendment Act 2012), and 24 (on widows' benefits); and

  • sections 27A to 27D and 27H(1) and (2) (on domestic purposes benefits for solo parents and for women alone).

Clause 80 and Schedule 3 make similar consequential amendments to other enactments.

Consequential amendments: supported living payment

Clauses 81 to 90 make to the principal Act amendments consequential on new sections 40A to 40K (on the supported living payment) which are the following sections as renumbered and amended or, as the case may be, replacements for the following sections:

  • sections 27G and 27H(1B) (on domestic purposes benefits for care at home of the sick or infirm):

  • sections 39F, 40, 42, 42A, 43, 44, and 44A (on invalids' benefits).

Clause 91 and Schedule 4 make similar consequential amendments to other enactments.

Consequential amendments: repeal of section 60HA

Clause 92 makes, to the principal Act and to regulations made under it, amendments consequential on the repeal of section 60HA by clause 23.

Consequential amendments: sickness benefit abolished

Clauses 93 to 107 make to the principal Act amendments consequential on the repeal of provisions relating to the sickness benefit.

Clause 108 and Schedule 5 make similar consequential amendments to other enactments.

Consequential amendments: social obligations of certain beneficiaries with dependent children

Clause 109 inserts a new section 132AC(5) to make it clear that childcare assistance regulations under section 132AC that define the term approved early childhood education programme (for the purposes of all or specified provisions of those regulations) also define that term for the purposes of new section 60RA(3) (on social obligations of certain beneficiaries with dependent children, and inserted by clause 25) and section 170(2)(c) (on youth support payments: obligations).

Clause 110 amends section 170(2)(c) as a consequence of new section 60RA(3)(a)(i) inserted by clause 25. The amendment relates to the term approved early childhood education programme. It ensures that term is to be defined for the purposes of those 2 sections (as well as for the purposes of those regulations) in regulations made under section 132AC (regulations relating to childcare assistance).

Consequential amendments: expiry and re-grant of specified benefits

Clauses 111 and 112 make consequential amendments to sections 117(4) and 119(3A) in light of sections 99AA and 99AB, on expiry and re-grant of the unemployment benefit, being re-enacted in a new location as new sections 80BE and 80BF (which apply not just to jobseeker support, but also to other specified benefits) inserted by clause 36.

Consequential amendments: jobseeker support

Clauses 113 to 122 make to the principal Act amendments consequential on new sections 88B to 88M (on jobseeker support) replacing sections 89 to 99 (on unemployment benefit).

Clause 123 and Schedule 6 make similar consequential amendments to other enactments.

Consequential amendments: sanctions

Clauses 124 to 128 make to the principal Act amendments consequential on the replacement of sections 115 and 116A with new sections 116B and 116C under clause 44.

Consequential amendments: reorganising headings and relocating section 53A

Clauses 129 and 130 (and Parts 2 and 3 of Schedule 2) amend the principal Act, and other specified enactments, to reflect the amendments made by clause 56 (and Part 1 of Schedule 2) to make clearer the principal Act's structure mainly without changing its effects.

Transitional and savings provisions

Clause 131 inserts a new section 3C. New section 3C indicates that new Schedule 32 (inserted by clause 132 and Schedule 7) contains application, transitional, and savings provisions that affect the principal Act’s other provisions as from time to time amended, repealed, or repealed and replaced.

New Schedule 32 contains the following application, transitional, and savings provisions.

Clause 1, which re-enacts section 99A (repealed by clause 40), relates to the Social Security Amendment Act 2001 and to the transfer from the community wage to the unemployment benefit on 1 July 2001.

Clauses 2 to 14 relate to the following matters:

  • transfers under this Bill from existing benefits to new benefits, and related regulations:

  • the relocation of section 53A:

  • a temporary exemption from full-time student ineligiblity for certain transferees to jobseeker support:

  • absences overseas:

  • failures and sanctions:

  • transitional regulations.

Clause 2 relates to the transfer from domestic purposes benefits for solo parents under section 27B, and widows' benefits under section 21, to sole parent support or jobseeker support on 15 July 2013. Clause 2 does not transfer to the new benefits an overseas-resident existing benefit applicant, or existing benefit recipient, to whom clause 3(1) or (3) applies.

Clause 3 is a savings provision relating to reciprocity agreement applicants for, or recipients of, certain DPBs for solo parents or widows' benefits. It preserves those people's entitlements to those benefits as if they had not been abolished, but subject to specified conditions.

Clause 4 contains transitional and savings provisions relating to the transfer on 15 July 2013

  • from invalids' benefits under section 40 to the supported living payment under new section 40B on the grounds of sickness, injury, disability, or total blindness; and

  • from domestic purposes benefits under section 27G (including those continued by the savings provision that is section 30(2) of the Social Security (Youth Support and Work Focus) Amendment Act 2012) to the supported living payment under new section 40D on the grounds of caring for a patient requiring care.

Clause 5 relates to the Social Security (Supported Living Payments Benefit) Regulations 1998.

Clause 6 relates to the transfer from the unemployment benefit to jobseeker support on 15 July 2013.

Clause 7 relates to the transfer from the sickness benefit to jobseeker support on the grounds of sickness, injury, or disability on 15 July 2013.

Clause 8 relates to the Social Security (Jobseeker Support—Medical Examinations) Regulations 2010.

Clause 9 relates to the transfer from domestic purposes benefits (DPBs) for women alone under section 27C to jobseeker support on 15 July 2013.

Clause 10 relates to clause 56 and Part 1 of Schedule 2 re-enacting section 53A as new section 10B.

Clause 11 applies to a person who on 15 July 2013 transfers to jobseeker support from a domestic purposes benefit under section 27B or 27C, a widow's benefit under section 21, or a sickness benefit under section 54 or 54A. Clause 8 excepts the person from the jobseeker support ineligibility ground in new section 88D(a), which relates to being a full-time student. It also deems the person to have been exempted under section 105, subject to the exception in clause 8(4), from all his or her work test obligations or, as the case may be, work preparation obligations under section 60Q. The exception from new section 88D(a), and the deemed exemption under section 105, end either on 15 July 2015, or earlier if the chief executive is satisfied that the person has failed to pass an amount of work equivalent to more than half of a full-time course.

Clause 12 applies to a beneficiary's absence overseas, but only if that absence involves travel from New Zealand that—

  • occurs on or after 15 July 2013; but

  • was booked before 15 July 2013.

clause 12 empowers the chief executive, for the purpose of avoiding any net adverse effects on the beneficiary of section 77 (as amended on 15 July 2013), and in the chief executive's discretion, to determine the beneficiary's entitlements in respect of the absence under section 77 (as in force immediately before 15 July 2013).

Clause 13 is a savings provision that ensures that a person's failure before 15 July 2013 under specified provisions, and any related sanction under section 117 before 15 July 2013, both continue to count for determining the number of failures of the person, and every appropriate related sanction under section 117, after 14 July 2013.

Clause 14 is a power to make temporary additional or overriding transitional regulations. Any regulations made under it, and the clause itself, will end on 15 July 2016. It follows closely similar powers in the Criminal Procedure Act 2011 and Search and Surveillance Act 2012. It is exceptional, but considered justified. That is because the Bill implements complex reforms and, if inconsistencies or errors arise that cause immediate difficulties, their correction will be unable to await enactment of an urgent amending Act.