The New Zealand government has moved to pass legislation that will reverse a court decision protecting welfare beneficiaries from a specific category of debt recovery — passing the bill's first reading under urgency and, according to the NZ Herald, moving with a speed that suggests genuine alarm in Treasury about the financial implications of the court's ruling.
The case turns on supplementary welfare payments — accommodation supplements, winter energy payments, disability allowances — paid to people who cannot work because they are injured and waiting for ACC to process their claim. The waits can be months. During that time, injured New Zealanders draw on supplementary welfare to pay rent and survive. When ACC eventually processes the claim and issues backdated compensation for the waiting period, the Ministry of Social Development has been moving to recover those welfare payments from the lump sum.
A High Court judge ruled that MSD had no legal authority to do this. The court found the practice unlawful. The government's response was to introduce the Social Security (Accident Compensation and Calculation of Weekly Income) Amendment Bill within days, pass it under urgency, and signal a select committee process of one week before the remaining readings.
The constitutional dimension here is the one that deserves the most attention: this is Parliament legislating retroactively to validate conduct that a court found to be unlawful. That is not, technically, unconstitutional — New Zealand has parliamentary sovereignty, and Parliament can change the law. But doing it at speed, under urgency, to reverse a court ruling that benefited vulnerable beneficiaries, is a pattern with a name. The Greens and Te Pati Maori voted against. Labour, ACT, and NZ First voted with the government.
Labour's support for the bill deserves examination. The party's rationale, articulated on the floor of Parliament, was that allowing people to receive both ACC backdated compensation and supplementary welfare simultaneously would undermine public confidence in the system. There is a certain internal logic to that position. There is also the reality that the people affected are not sophisticated benefit maximisers gaming dual entitlements — they are injured people who waited months for ACC, used welfare to survive during that wait, and are now having the survival money taken back out of their compensation.
Te Pati Maori's Oriini Kaipara identified the demographic reality: Maori are overrepresented in ACC claim statistics, and Maori face longer average waiting times in ACC processing. The group most disadvantaged by the debt recovery practice, and most protected by the court ruling, is disproportionately Maori. The group now seeing that protection removed by retrospective legislation is disproportionately Maori. That is the policy reality, and it is not incidental.
The select committee process begins within one week. Advocacy groups representing beneficiaries, disability groups, and welfare rights organisations will have limited time to engage meaningfully with the legislation before it returns for its remaining readings.
The financial scale of debts at issue has not been publicly quantified by the government. Treasury's alarm — evident from the speed of the legislative response — suggests the number is significant. Beneficiaries and their advocates have not been told how much money is at stake, how many people are affected, or what the government's projections for recoveries are.
Mate, let us be precise about what Parliament has just done. The High Court found MSD was acting unlawfully when it took money from injured people's ACC compensation. Parliament has now made that practice lawful, retroactively. The people it affects — injured, low-income, disproportionately Maori — have one week to make their case to a select committee before the law is finalised.
