April | 2013 | curtisantonynixon

MINISTRY OF SOCIAL DEVELOPMENT
Te Manaht Whakahiato Ora
Bowen State Building, Bowen Street, PO Box 1556, Wellington 6140 • Telephone: 0-4-9163300 • Facsimile: 0-4-918 0099.
18 September 2012
I: PRiVATE EVIDENCE I
Peseta Sam Lotu-liga
Chairperson
Social Services Committee
PARLIAMENT BUILDINGS
Dear Peseta Sam Lotu-liga
Petition 2011/14 of Curtis Anthony Nixon – written submission
The Hon Paula Bennett, Minister for Social Development, has asked us to respond to
the Committee on the petition from Curtis Nixon. The petition asks the House to “make
suitable amendment to the Social Security Act 1964 to give recognition and support to
beneficiary fathers of dependent children who are equal (50/50) co parents of those
children”.
Current Law and Practice
Entitlement of separated parents to benefits
Shared care occurs when a child’s parents are living apart and each parent cares for the
child some of the time. For benefit purposes, shared care (termed “shared custody” in
the Social Security Act 1964) is defined as when the parents of a dependent child are
living apart, they are both beneficiaries, and each has the primary responsibility for the
care of that child for at least 40 per cent of the time.1
Both the Social Security Appeal Authority (the Authority) and the Courts have ruled that
the application of the current legislation is clear and that only one parent, the principal
caregiver, can have a child taken into account in assessing their entitlement to, and rate
of, primary benefit.2 This means that one parent will be treated as a sole parent and be
able to receive the sole parent rate of benefit ($293.58 net per week) and any
entitlements associated with the child. The other parent will be regarded as single for
the purpose of determining entitlement to financial assistance under the Social Security
Act 1964, assuming this is Unemployment Benefit the rate will be $204.96 net per week.
They do not generally qualify for financial assistance for costs associated with the child.
1 Section 70B Social Security Act 1964 – attached as Appendix A. The term parent includes a
parent, guardian or a person acting as a parent.
2 W v Chief executive of the Ministry of Social Development [20091 NZFLR High Court 793,
Samuels v Chief Executive of the Ministry of Social Development High Court Auckland, 4
October 2005.
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Entitlement to, and rate of, supplementary benefits
Entitlement to supplementary benefits is usually linked to the parent who is the principal
caregiver and payments are generally not apportioned when people share care of their
children.
Both the Courts and the Authority are clear that Accommodation Supplement can accrue
only to the principal caregiver.3
However, recent Authority decisions in relation to
apportionment of Child Disability Allowance and Childcare Assistance have raised
questions about our interpretation of the legislation. We are currently looking at the
implications of these decisions for our policy and practice.
Appendix B expands on the above points and provides some hypothetical examples of
shared care.
Process for determining principal caregiver
When separated parents both apply for benefits, the Ministry of Social Development
(MSD) must determine which parent is the principal caregiver of the child. Consideration
is first given to the time the child is in the care of each parent and then to the following
factors set out in the legislation:4
•
how the responsibility for decisions about the daily activities of the child is shared
•
who is responsible for taking the child to and from school and supervising the child's
leisure activities
•
how decisions about the education or health care of the child are made
•
the financial arrangements for the child's material support
•
the expenses each parent meets in relation to the child.
If an assessment of the current care arrangements by the case manager does not
determine which parent has the greater care responsibility, MSD must try to ascertain
which parent was the principal caregiver immediately prior to the separation.
If this also fails to identify a principal caregiver, the decision defaults to the parents. The
parents must agree among themselves and neither can have the child taken into account
in their benefit until they do.
Rationale for the approach taken to shared care
The current provisions in relation to shared care were inserted into the Social Security
Act in 1991 . This was due to the concern that the growth in DFB numbers at the time
were to some ext.ent due to the fact that the payment of the benefit to both parents after
separation could be encouraging parents to separate.
3 In W v Chief Executive of the Ministry of Social Development, Ronald Young J observed that
supplements, such as accommodation assistance, were a form of benefit and, therefore can
only be paid to one person [W v Chief executive of the Ministry of Social Development [2009]
NZFLR He 793 at [32]].
4 Refer footnote (1 ) and (2).
2
It is an underlying premise of the benefit system that work is the best outcome for most
people on benefit, and that children from households where a parent is working usually
do better in terms of health and education.
This premise is reflected a number of ways:
•
the expectation that most people will make finding and retaining work a priority
•
the recognition of child care responsibilities in setting the work expectations for sole
parents and the spouse or partner of a beneficiary
•
the expectation that a couple with children will arrange the care of their child so at
least one partner is available for full-time work.
It is important not to undermine work incentives by treating two people as principal
caregivers.
When a couple with a dependent child separate it is reasonable to expect
them to arrange care between them so that one or both of them can work.
A further underlying premise of the current policy is that the State should only provide for
the cost of a child or children once.
Impacts of Mr Nixon's proposals
Equity and privacy issues
Mr Nixon's submission raises equity issues in relation to parents who share care but not
equally and who do not agree to share costs. It could be seen as unfair for people who
had alternative care arrangements (such as 60/40) to be treated differently. Mr Nixon's
concept of apportionment has the potential to result in significant changes to the benefit
system, as there would be pressure to extend this approach to care situations which are
not 50150 and where the parents are not in agreement.
Apportionment also raises potential privacy issues as the assistance one parent receives
will depend on the circumstances of the other parent.
Cost of exceptions
Mr Nixon suggests the splitting of the benefit should only be in cases where the split is
50/50 and the parents are in agreement over the splitting of the cost. Anecdotally we
understand that there are very few parents who would fit this arrangement, and if they
are in agreement it could be possible for them to manage their costs themselves rather
than expect MSD to do this for them.
Mr Nixon in his submission states that there would be no additional cost to the State as
the assistance available would simply be split between the two parents. In our view this
is not the case, there would be costs because:
•
implementation would require IT system changes
3
•
the likely complexity would make it difficult to have to analyse relationships and
apportion costs regardless of whether or not there was agreement between the
parties
•
it has the potential to encourage long-term benefit dependency.
This approach would also disadvantage the parent who currently has the child included
in their benefit by reducing the amount that they have to live on.
Other payments made by MSD
There are two other areas where the approach to apportioning benefits in situations of
shared care impact on payments by MSD:
•
Working for Families tax credits
•
Child Support obligations.
Working for Families Tax Credits
The family tax credit is a payment for each dependent child paid to the principal
caregiver irrespective of whether the person is working or is a beneficiary. It can be
shared and paid proportionately to each parent in shared care situations.
MSD generally pays the family tax credit for beneficiary families. However, the
administrative difficulties and complexity of the payment of the family tax credit to
beneficiary families in shared care situations, means that Inland Revenue deals with
such payments.
Child Support obligations
Under the Child Support Act 1991 shared care is defined as having care for a child at
least 40% of the nights in a year. Anyone who shares care for a child can apply for a
formula assessment of child support from the other parent. This means that a person
may both pay Child Support to their previous partner and receive Child Support from
them.
Numbers of shared care arrangements, parents and children
Information on families with children where parents receive a benefit and live apart is not
held by MSD as this is not required for usual business purposes.
Using the raw data we have available it would appear that, as at 30 June 2012, we had
53 ex-partners (of working age) identified as sharing care where one parent receives the
a sole parent rate and the other a single rate of benefit. Seventy four children were
involved in the shared care arrangements and 38 of those receiving the sale parent rate
were female.
4
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Treatment of shared care in other jurisdictions
New Zealand's approach to shared care appears consistent with that in Australia and the
UK.
In the UK and Australia, payments in relation to a child can only be made to one person.
For example, if two people in the UK apply for a Child Benefit, only one person can
receive it and they are expected to choose who that person will be. If they cannot agree
then the Child Benefit Office will make the decision based on their assessment of who
provides the greater level of care. The rate of main benefits in the UK does not take any
account of children, so both the sale parent and single rate of benefit are the same.
In Australia, the parenting payment is only paid to one parent. As the access to a
number of other supplementary payments is linked to the receipt of the parenting
payment this means that only one parent can receive the supplementary payments. like
New Zealand, the Australian Family Tax Credit can be paid to both parents provided they
have care for at least 35% of the time.
Response to Mr Nixon's proposal
The Ministry of Social Development does not recommend any change to the current
policy and practice as a consequence of the submission.
Welfare Reform
You specifically asked about whether the reforms to the welfare system that are currently
underway would address the issues raised by Mr Nixon. There are currently no plans to
amend existing legislation in relation to shared care.
Even if the circumstances of Mr
Nixon and his previous partner mean that they receive the same benefit under the new
categories, sale parents and single people will still receive a different rate of benefit.
Until such time as their daughter turns 14 Mr Nixon's ex-partner, as a sale parent, will
continue to have part-time work obligations. Mr Nixon's work obligations will depend on
the outcome of his work assessment. He could have full or part-time work obligations or
an exemption from those obligations, depending on the level of his illness or incapacity.
Thank you for the opportunity to respond to the Committee on the petition from Curtis
Nixon. If requested, we are available to appear before the Committee to speak to our
submission should the Committee decide to hold a hearing on the matter.
Yours sincerely
Cathy Scott
Associate Deputy Chief Executive
Social Policy and Knowledge
5
Appendix A
Section 70B: Entitlement to benefits in cases of shared custody
70B Entitlement to benefits in cases of shared custody
(1)
If the parents of a dependent child-
(a)
are living apart; and
(b)
are both beneficiaries; and
(c)
each has the primary responsibility for the care of that child for at least 40% of the
time-
only the parent whom the chief executive is satisfied has the greater responsibility for the
child shall be entitled to have that child taken into account by the chief executive in
assessing that parent's entitlement to a benefit and the rate of benefit payable at anyone
time.
(2)
In deciding which parent has the greater responsibility for the child, the chief executive
shall have regard primarily to the periods the child is in the care of each parent and then to
the following factors:
(a)
how the responsibility for decisions about the daily activities of the child is shared;
and
(b)
who is responsible for taking the child to and from school and supervising that
child's leisure activities; and
(c)
how decisions about the education or health care of the child are made; and
(d)
the financial arrangements for the child's material support; and
(e)
which parent pays for which expenses of the child.
(3)
If the chief executive is unable to ascertain that one parent has the greater responsibility for
the child than the other, only the parent whom the chief executive ascertains was the
principal caregiver in respect of the child immediately before the parents began living apart
shall be entitled to have that child taken into account by the chief executive in assessing
that parent's entitlement to a benefit and the rate of benefit payable.
(4)
If the chief executive is unable to ascertain which of the parents has the greater
responsibility for the child or which of them was the principal caregiver before the parents
began living apart, the parents shall agree between themselves as to which of them shall
be entitled to have that child taken into account by the chief executive in assessing
entitlement to a benefit and the rate of benefit payable; and until the parents reach
agreement the child shall not be taken into account in assessing the entitlement to a
benefit of, or the rate of benefit payable to, either parent.
6
Appendix 8
Effect of shared care policy
Entitlement to, and rate of, primary benefits
Both the Social Security Appeal Authority (the Authority) and the Courts have ruled that
the application of the current legislation is clear and that only one parent, the principal
caregiver, can have a child taken into account in assessing their entitlement to, and rate
of, primary benefit.s
For example, where both parents apply for a benefit, only one can receive Domestic
Purposes Benefit –
Sole Parent (DPB-SP). The other parent usually receives
Unemployment Benefit (US). DPB-SP is paid a higher rate to UB as it includes a
component for the child ($293.58 net per week, as opposed to $204.96 net per week).
In addition, DPS-SP has part-time work expectations (recognising caring responsibilities)
and a more generous abatement regime and income exemption than US, which has full-
time work expectations.
Entitlement to, and rate of, supplementary benefits
Entitlement to supplementary benefits is usually linked to the parent who is the principal
caregiver and payments are generally not apportioned when people share care of their
children.
Both the Courts and the Authority are clear that Accommodation Supplement can accrue
only to the principal caregiver.6
This means only one of the parents can receive a rate of Accommodation Supplement
that takes the child into account. The other parent (unless they have a new partner
and/or other children) can only receive a single rate of Accommodation Supplement
even though that parent has costs arising from maintaining a place for their child to stay
when in their care
However, recent Authority decisions in relation to apportionment of Child Disability
Allowance and Childcare Assistance have raised questions about our interpretation of
the legislation. We are currently looking at the implications of these decisions for our
policy and practice.
In one case the Authority ruled that Childcare Assistance could not be apportioned.
MSD practice is to pay Childcare Assistance directly to providers, on behalf of both
parents, providir.g both qualify and the care of the child is shared equally. In a second
5 W v Chief executive of the Ministry of Social Development [2009] NZFLR High Court 793,
Samuels v Chief Executive of the Ministry of Social Development Hig h Court Auckland, 4
October 2005.
6 In W v Chief Executive of the Ministry of Social Development, Ronalc;l Young J observed that
supplements, such as accommodation assistance, were a form of benefit and, therefore cnn
only be paid to one person [W v Chief executive of the Ministry of Social Development [2009]
NZFLR He 793 at [32]].
7
case the Authority ruled that Child Disability Allowance (CDA) could be apportioned,
provided the parents shared the care of the child equally, as CDA is a form of assistance
to which the child is entitled.7
.
Hypothetical scenarios where people share care
Assumptions:
Both parents are beneficiaries and share the care of their child 50/50
Both parents rent in Lower Hutt (Accommodation Supplement area) – 2 bedroom house rent
of $320 per week each
No additional income
The principal caregiver receives the Domestic Purposes Benefit – Sole Parent (DPB-SP).
The other parent receives Unemployment Benefit (UB).
1. Parents are single, 1 child only – difference between parents = $98.62 per week
Assistance type
principal caregiver DPB-SP
other parent
($)
single UB ($)
Benefit
293.58
204.96
Accommodation Supplement
75.00
65.00
TOTAL
368.58
269.96
2. Principal caregiver has a new partner, other parent single, neither have any other children –
for principal caregiver there is no effect in benefit rate. Accommodation Supplement is paid at
a higher rate because of the presence of the child, ($75 to $120)
Assistance type
principal caregiver half
other parent
share married rate ($)
single UB ($)
Benefit
170.80
204.96
Accommodation Supplement
60.00
65.00
TOTAL
230.80
269.96
3. Both parents have a new partner with existing child in each new relationship – no difference
from the shared child.
Assistance type
principal caregiver half
other parent
share married rate ($)
half share married rate ($)
Benefit
170.80
170.80
Accommodation Supplement
60.00
60.00
TOTAL
230.80
230.80
7 An appeal against a decision of the Benefits Review Committee NZSAA Christchurch SSA
117/02 (17 April 2003) and an appeal against a decision of the Benefits Review Committee
[2010) NZSAA 70 (22 September 2010).
8
Working for Families Tax Credits
The family tax credit is a payment for each dependent child paid to the principal
caregiver irrespective of whether the person is working or is a beneficiary. It can be
shared and paid proportionately to each parent in shared care situations.
For this purpose, shared care arises if the person has the child in his or her care for at
least one third of the year. MSD generally pays the family tax credit for beneficiary
families. However, the administrative difficulties and complexity of the payment of the
family tax credit to beneficiary families in shared care situations, means that Inland
Revenue deals with such payments.
The in-work tax credit is a work incentive paid to non-beneficiary families with dependent
children when the parents work the specified number of hours per week. Sale parents
must normally work for at least 20 hours a week to qualify for the in-work tax credit.
Couples with dependent children must normally work for a combined total of at least 30
hours a week to qualify. If separated, both parents can qualify in full for the in-work tax
credit in their own right if they work the required 20 hours (30 hours if re-partnered), are
not claiming a benefit, share care and each parent has the child in his or her care for at
least one third of the year.
Child Support obligations
Under the Child Support Act 1991 shared care is defined as having care for a child at
least 40% of the nights in a year. Anyone who shares care for a child can apply for a
formula assessment of child support from the other parent. This means that a person
may both pay Child Support to their previous partner and receive Child Support from
them.
People who are receiving a sale parent rate of benefit are legally obliged to apply for
Child Support.8 The other parent is required to pay Child Support which is paid to the
Crown to fully or partially cover the cost of the single parent rate of benefit.
8 Section 70A of the Social Security Act 1964.
9

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