Loans to feed kids are income and disqualify benefit, says MSD

Written By: notices and features - Date published: 7:30 am, October 26th, 2017 - 86 comments
Categories: Abuse of power, benefits, class war, welfare - Tags: #FIXWINZ, Catriona MacLennan, msd, WINZ

Cross-posted with permission, this post is by Barrister and journalist Catriona MacLennan.
_________________________________________________________________

Beneficiaries who borrow money to feed their children should have their benefits cut but those who borrow to buy shares should be entitled to benefit support, according to the Ministry of Social Development.

The Auckland High Court will hear the closing day of argument in a test case about benefit entitlement on 27 October.

MSD argues that loans taken out by beneficiaries to survive comprise “income,” and accordingly disqualify them from benefit support.

The hearing started in July but could not be completed then, so will wind up this Friday.

The case involves Ms X,* a woman with two children who was on a Domestic Purposes Benefit between 2005 and 2010 and at times received other support such as the Accommodation Supplement, Special Benefit, Temporary Additional Support and a Special Needs Grant.

In 2010, Ms X’s abusive former partner made a complaint to the Ministry of Social Development about her, alleging that she had received financial support from her mother and had bought and sold houses while on a benefit.

The Ministry began an investigation into Ms X’s circumstances and entitlement to the benefit.

Her former partner later admitted that his complaint had been malicious and unfounded, but that did not stop the Ministry’s action against Ms X.

The Ministry concluded that, as Ms X had borrowed money and spent it on basic necessities for herself and her children, she had not been entitled to a benefit and was accordingly required to repay $120,398.38.

This was despite the fact that Ms X was specifically told by her Work and Income case managers that she did not have to declare loans, irrespective of whether the loans were from banks, credit cards or family members.

As benefits in Aotearoa are deliberately set at levels which are too low to live on, Ms X borrowed from her bank, her mother and her credit card to stay afloat.

She lived outside Auckland at the time and owned a property, which she was trying to hang on to so that her children would have a home. She borrowed to buy paint for the property and to fix a leak to prevent sewage from running through the floor.

The benefit review form did not ask Ms X to list loans – in contrast to the United Kingdom form which has a question about this.

Ms X also provided detailed information to MSD showing that the loans had been repaid.

MSD’s argument is that the loans, even though they have been repaid, were “income” and accordingly disqualified her from benefit support.

The case has already been to the Benefits Review Committee and the Social Security Appeal Authority. Ms X has spent hundreds of hours providing details of her situation and explaining her finances – at the same time as caring for her children, studying for a degree and trying to start a business to support her family.

The amount she is alleged to owe has been adjusted several times, so that the figure has ranged between $109,852.91 and $127,275.05.

The Social Security Appeal Authority ruled that two bank loans should not have been treated as income, but held that other loans were income and that Ms X should be required to repay $109,852.91.

The Authority also said that the forms used by Work and Income were clearly inadequate to notify beneficiaries of the information MSD alleged they needed to provide.

The Ministry of Social Development appealed to the High Court against the Authority’s decision that bank loans were not to be treated as income. Ms X also appealed, arguing that money she borrowed from her mother and others was not income.

Section 3 of the Social Security Act 1964 defines “income.” The definition is more than one-and-a-half pages long. Section 3(b) states that income includes

“..whether capital or not and as calculated before the deduction (where applicable) of income tax, any periodical payments made, and the value of any credits or services provided periodically, from any source for income-related purposes and used by the person for income-related purposes;”

Section 3 defines “income-related purpose” as meaning the purpose of –

“(a) replacing lost or diminished income; or

(b) maintaining the person or a member of his or her family; or

(c) purchasing goods or services for the person or a member of his or her family, being goods or services of a kind that are commonly paid for from income; or

(d) enabling the person to make payments that he or she is liable to make and that are commonly made from income.”

When the case was in the High Court in July, the judge asked the Crown lawyer whether there was any loan that would not be counted as income and he replied that, if credit was used to buy shares, it might not be counted.

That response illustrates the level of unreality of MSD’s approach.

It is arguing that borrowing for the most basic necessities should disqualify people from benefits, but loans for the luxury of share-buying should not.

Does the Ministry seriously believe that beneficiaries are share buyers ?

The answer can be set alongside the response of a different Crown lawyer to a judge’s question in an earlier case I acted in.

MSD was trying to recover approximately $120,000 from a chronically-ill beneficiary in her 50s who will never be able to work again. The Ministry has pursued her for years and spent a large amount on the case, even though it is plain the woman has no money and her health will never allow her to work again.
The judge asked the Crown lawyer whether it was worth continuing to pursue the beneficiary.

The lawyer responded that it was, as the beneficiary might win Lotto and would then be able to repay the money.

Neither Crown lawyer’s reply relates in any way to the reality of the lives beneficiaries actually lead.

The absurdity of MSD’s argument in Ms X’s case can be clearly illustrated by applying it to someone in work.

If loans really are income, then employees with mortgages and other debt would be required to pay tax on their loans.

Or, is it one rule for beneficiaries, and another for the rest of Aotearoa ?

*Ms X has name suppression.

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The story of the second beneficiary referred to in the post can be seen here (PDF).

86 comments on “Loans to feed kids are income and disqualify benefit, says MSD ”

Comments are now closed

Dean Reynolods 1

26 October 2017 at 8:21 am

FFS, the sooner the new Government sorts out MSD, the better!
- Catriona MacLennan 1.1
  
  26 October 2017 at 8:34 am
  
  Completely agree. Massive change urgently needed.
  - Jane England 1.1.1
    
    31 October 2017 at 10:45 am
    
    My heart breaks over this. The poor woman. All the hours of stress and anxiety while mothering. Bad enough having a vengeful abusive ex husband (I know that one) but trying to provide the basics on the benefit is impossible. We all know this. Do we prevent our kids from going on school trips? Do we fail to buy the school jersey? Do we forget about holidays? Do we fail to ever buy an ice-cream or block of chocolate. It is a nightmare. So many men owe tens of thousands in child support and just what is happening to them? Some, like my ex, have earned a huge income. I’m owed over $30,000 but cannot afford court costs or the risk that this man will be clever enough to bury more of his income and have his debts reduced. Time and again it is the mothers and grandmothers in court, the woman who are left to struggle to provide are punished over and again.
- marty mars 1.2
  
  26 October 2017 at 8:46 am
  
  + 1 yes this utter madness must be stopped immediately. The new Government have to make helping the most vulnerable a priority and I believe they will. Thank the Gods the gnats are gone – they would have given the MSD and their lawyers a bonus imo.
Kate 2

26 October 2017 at 8:36 am

This kind of “Alice Through the Looking Glass” thinking has cost beneficiaries their lives and sanity as well as costing MSD and the Crown a ridiculous amount of money that cannot be described as well-spent in pursuing these Catch-22 “breaches”. Is a food parcel income then, or a donation to the children from Kids Can? It seems it might be under the rules as interpreted by the Crown lawyers. Nice work if you can get it, and apparently many lawyers can.
- Patricia Bremner 2.1
  
  26 October 2017 at 11:05 am
  
  If these “lawyers” are being paid by us at an hourly rate that would make any benefit income look minute, how does that improve the human condition?
  
  New Zealand is in grave danger of losing its way if such becomes case law.
  
  Monty Python stuff!! With no humour.
Chris 3

26 October 2017 at 9:10 am

Unfortunately it’s one rule for beneficiaries and another for the rest of Aotearoa. Has been for a long time now.

Anyway, I thought this issue had been sorted out when Work and Income tried to say the living component of the student loan was income.

http://www.nzlii.org/nz/cases/NZHC/1997/18.pdf
lprent 4

26 October 2017 at 9:23 am

FFS.

This is completely and utterly ridiculous. Why don’t we just plan on sacking all of the MSD staff and start again – with a computer program.
- Stunned Mullet 4.1
  
  26 October 2017 at 9:43 am
  
  Person progamming the computer will likely be a moron from the same group that manufactured this clusterwhatsit.
- Draco T Bastard 4.2
  
  26 October 2017 at 9:54 am
  
  +1
- DoublePlusGood 4.3
  
  26 October 2017 at 10:17 am
  
  Well, certainly the upper three tiers of management in their entirety.
- Takere 4.4
  
  31 October 2017 at 11:11 am
  
  Absolutely agree!
  7000 MSD/WINZ to reapply for their roles. Also, a ‘decent’ union active onsite & in the employment agreement.
  And also, get them off their arses and out into the communities they provide support too! Reduce the number of bullssit external service providers too. Thats just the start.
vto 5

26 October 2017 at 9:33 am

If the loan counts as positive income on drawdown of the loan

Then the loan counts as negative income on repayment of the loan

Net income change is therefore nil and the benefit is unaffected.

ffs
- Chris 5.1
  
  26 October 2017 at 9:42 am
  
  That’s what the High Court said in 1997. The very nature of a loan means that it cannot be income. Work and Income appealed unsuccessfully to the High Court back then on the exact same issue. Now it’s having another crack.
  
  This sort of behaviour from Work and Income and Crown Law has been going on for decades. If Ardern et al are serious about fixing the social security system they could start by telling MSD as well as Crown Law to pull their heads in.
  - Stunned Mullet 5.1.1
    
    26 October 2017 at 9:46 am
    
    NZ bureaucracy has always had a good proportion of Sir Humphrey Applebys and non thinking drones regardless of the flavour of government, can’t see that that changing anytime soon.
    - weka 5.1.1.1
      
      26 October 2017 at 10:03 am
      
      Maybe but there’s a glaring commonality between 1997 and the first 9 months of 2017.
  - Sabine 5.1.2
    
    26 October 2017 at 10:29 am
    
    The hall mark of the right – every time they will have a chance re-litigate the same issue until they have an outcome that favors them and their enterprise. I look at the US as the TRAP-laws in regards to Abortion rights. If you can’t outright ban a service they – Republicans – will try to restrict it as much as possible with the aim of rendering service providers as non compliant and thus shut the provider. Theoretical. you still have the right, you just have no where to claim it.
    So i am not surprised to see National again try this via the courts. After all the Tax payer pays the piper and the poor schmuck who will be saddled with tens of thousands of dollars matters not – collateral damage.
    Essentially if loans were to be counted as income – you could a. tax them and b. force anyone who needs temporary assistance to get a loan. Voila, then numbers of beneficiaries drop, and the ‘market provided’ and with the class of forever indebted created you have a steady stream of cheap labour. The end of the state providing cheap assistance to people in need – go git yer loan.
- Richard Christie 5.2
  
  26 October 2017 at 9:48 am
  
  @vto
  exactly
- Matthew Whitehead 5.3
  
  26 October 2017 at 1:24 pm
  
  Depends if there’s ever an intention to repay the loan, of course. Bank loans definitely shouldn’t count as income ever, but they’re arguing essentially that personal loans are income because they may never be repaid.
  
  It’s a little ridiculous when in reality the burden should be on MSD to prove it’s paying people enough to live.
  - weka 5.3.1
    
    26 October 2017 at 1:38 pm
    
    Do you mean loans from family? Had Ms X been properly advised by WINZ (aka WINZ doing their job) she should have been told under what conditions she had to declare loans, that if she wasn’t paying the loans back then the loan *might be counted as income, and that if she was paying the loan back and it was for essential things then she could include that loan repayment in her claim for Special Benefit or Temporary Additional Support as a cost (i.e. WINZ would help with the repayments. Probably not for living expenses, but for things like a new washing machine).
    
    The great thing about borrowing from family is that the interest is usually low or zero, certainly cheaper than borrowing from banks etc. WINZ should be encouraging people to borrow from family not penalising them for it, because once you start getting hardship assistance it’s a requirement to lessen any unnecessary financial burden i.e. WINZ are working against their own policy here. But seeing as how they’re working in their own interests (i.e. to pay out less entitlements to NZ citizens), there is a clear conflict that has been created by National between policy and direction. And beneficiaries are the ones paying for that.
    
    There are so many things wrong with this case it’s hard to know where to begin. Clusterfuck of epic proportions is where I’ve gotten to.
    
    *I say might, because I’m guessing that WINZ have discretion in this.
    - Matthew Whitehead 5.3.1.1
      
      26 October 2017 at 1:45 pm
      
      Yes, sorry, loans from family or friends that come with no interest and may realistically not have an expectation of repayment. I forgot for a moment that technically any loan you take for yourself is a “personal loan,” and was thinking in an entirely different context, lol.
      
      WINZ probably do not have discretion in what counts as income- that’s down to the law and legal precedent. What they do have discretion over is WINZ policy, and whether to continue legal action. The Minister can instruct them to drop the case if she so chooses, if she determines it is no longer within the interest of the NZ public to pursue it. In some ways, we’re lucky it’s been postponed long enough that there’s a very small window for Carmel Sepuloni to act.
      - weka 5.3.1.1.1
        
        26 October 2017 at 1:53 pm
        
        We probably don’t have enough information to go on, but I’m reasonably sure that WINZ historically hasn’t routinely counted loans as income. I’m not aware of an recent legislation that would force WINZ to do so, so it’s policy, which means its discretionary (there could also be a Ministerial Directive).
        
        So there will be many beneficiaries in NZ who have taken out loans, told WINZ, and it not been counted against their benefit. Possibly what’s at issue here is what she spent the money on (e.g. general living expenses).
        
        That the court is now differentiating between family loans and bank loans also suggests that up until now there has been discretion. I think MSD are using this to establish precedent but that that precedent doesn’t already exist.
      - One Anonymous Bloke 5.3.1.1.2
        
        26 October 2017 at 3:48 pm
        
        If the money will never be repaid, most families would consider it a gift.
        
        What’s the legal status of gifts in this context?
        
        Dropping the case will not stop the sadists having another go the moment the National Party manages to enable them again.
        
        The best way for the government to defend New Zealand citizens against them is to entrench the BoRA, and make breaches of human rights by public servants subject to the Crimes Act, whether or not they’re following National Party orders.
        
        weka 5.3.1.1.2.1
        
        26 October 2017 at 4:18 pm
        
        Gifts are income, when WINZ want them to be.
        
        One Anonymous Bloke …
        
        26 October 2017 at 4:51 pm
        
        Indeed. Looks like they need a therapeutic dose of “obeying the law or facing the consequences”, like the rest of us.
    - Chris 5.3.1.2
      
      26 October 2017 at 4:38 pm
      
      Whether something’s income or not comes down to the definition. There’s no discretion around what is income and what isn’t. The definition is wider than other definitions, for example under tax legislation, and it can in some instances capture capital payments, but it doesn’t go so far as capturing loans. The High Court made that clear in its 1997 decision about whether the living component of the student loan was income. Those payments on the face of it did meet the definition, but the High Court said that the very basis of a loan means that it cannot be income. Without knowing anything more than what’s been said in the post I’m going to boldly say that MSD’s attempt at the High Court tomorrow will fail abysmally for precisely this reason.
      - One Anonymous Bloke 5.3.1.2.1
        
        26 October 2017 at 4:58 pm
        
        Bloody well hope so. When do we get to sue the perpetrators for wasting the court’s time? Personal responsibility means not Paula Bennett, that’s f’sure.
        
        Chris 5.3.1.2.1.1
        
        26 October 2017 at 7:34 pm
        
        One of the changes Labour introduced in the 2007 amendment Act was the ability to make regulations that could override the s 3 definition of income. Highly unconstitutional at best. Income is central to benefit entitlement. Giving the government the power to unilaterally override the principal Act regarding something so fundamental as that is quite despicable. I don’t think the power’s been used yet, but Labour wanted that power and now the government of the day has it. Pretty surprising the nats didn’t use it when it had the chance. Ironically, if the case tomorrow at the High Court ends up in favour of beneficiaries the government could overturn it by regulation. This government thankfully wouldn’t, you’d hope, but the power’s certainly there when it shouldn’t be. That was Clark’s Labour for you.
        
        One Anonymous Bloke …
        
        26 October 2017 at 7:38 pm
        
        I’m guessing (wishful thinking?) that Lab5’s intention was to capture tax evasion, as opposed to enabling human rights violations.
        
        weka …
        
        26 October 2017 at 7:47 pm
        
        It’s handy when you have a core value that being on a benefit is wrong. That way you don’t have to protect the rights of people on benefits quite as much as others.
        
        One Anonymous Bloke …
        
        26 October 2017 at 7:49 pm
        
        🙁
        
        Oh well, I guess I may have to kick them a little bit.
        
        Chris …
        
        26 October 2017 at 7:52 pm
        
        I can’t see how widening the definition of income under the SSA with the objective of curbing entitlement to social security benefits could be for the purpose of capturing tax evasion. Tax legislation remains unchanged. The 2007 amendment Act contained a raft of changes that were plainly attacks on the poor. The regulation making power was just one of those attacks. Against that, I suppose you could say that the regulation making power could potentially have been used to loosen the definition of income, but the overall context of those changes was pretty clearly aimed at doing the poor over. The real point, though, is that government shouldn’t have that power in the first place.
        
        weka …
        
        26 October 2017 at 7:48 pm
        
        Is that amendment something that can be easily repealed? Or does it tie into other things?
        
        Chris …
        
        26 October 2017 at 8:06 pm
        
        It’d just have to go through the usual legislative process – that and a whole bunch of other stuff previous Labour and National governments have introduced to screw the poor. Getting rid of sections 1A and 1B and reintroducing the long title to the 1938 Act that those sections in effect ousted would be a start, but realistically the whole Act needs an overhaul. Good to see the current government announce getting rid of sanctions, including the punitive attack on sole parents not naming the other parent. There’s a social security rewrite Bill currently before the House, but you can imagine what that does. The new mob needs to clear out all the officials who’ve invested themselves into that work and bring in groups like the Auckland Action Against Poverty to tell them about all the nasty things that need to be dealt to. There’s a whole stack of things that need fixing and current officials are the same ones who’ve been around for years and who’ve written that despicable rewrite Bill so talking to them would be a waste of time. The government needs to make sure it gets its advice from the right people. Current officials ain’t them.
Richard Christie 6

26 October 2017 at 9:43 am

Loans are not permanent income. It’s f*ing ludicrous to consider them so. They’re temporary liabilities.

Payments, when income, are the property of the recipient able to be disposed of as they seem fit or are obliged to by separate agreements (debts etc).

Repaid loans are retired liabilities. It is insane to treat the beneficiary in a manner identical to that where they permanently pocket the loan.
Sabine 7

26 October 2017 at 10:17 am

WINZ is creating an awful lot of people with debt instead of providing them with the social services and benefits needed to lift themselves up. Has WINZ become a Profit Center under the care of the National Party?
- Chris 7.1
  
  26 October 2017 at 10:25 am
  
  Was the same between 1999 and 2008. In some respects worse.
  - Sabine 7.1.1
    
    26 October 2017 at 10:30 am
    
    care to elaborate?
    - Chris 7.1.1.1
      
      26 October 2017 at 10:53 am
      
      Abolished the special benefit in 2004, combined with this: http://www.cpag.org.nz/assets/Wgtn%20People%27s%20Centre.pdf followed by the devastation caused by the Social Security Amendment Act 2007. There’s more if you care to look into it. Few do.
      - weka 7.1.1.1.1
        
        26 October 2017 at 1:21 pm
        
        Would you be interested in writing a Guest Post on some of the history Chris?
        
        Chris 7.1.1.1.1.1
        
        26 October 2017 at 4:22 pm
        
        Have thought about it at times, out of anger more than anything. Usually when something happens, like Labour voting with the nats for even more anti-beneficiary “reform”.
        
        greywarshark …
        
        26 October 2017 at 8:16 pm
        
        Chris
        Having thought about it again, can you now write one while there is the 100 days to go through and so keep it in the minds of those in a position to make a positive difference? Even just getting started on one aspect with an anecdote then a second and third similar. There must be a lot to say about the shallow attitudes towards helping citizens to come to a reasonable sort of equality in this part of the 21st century.
      - beatie 7.1.1.1.2
        
        26 October 2017 at 6:59 pm
        
        Don’t forget that it was Labour (in 2007) who appointed the dreadful Dr David Bratt, a Wellington GP, as Chief Medical Adviser to Winz. Dr Bratt believes in work as the cure for illness (arbeit macht frei?) and coined the term ”worklessness”
        
        https://accforum.org/forums/index.php?/topic/12615-dr-david-bratt/
        
        https://nzsocialjusticeblog2013.wordpress.com/category/winz-designated-
        doctors/
        
        Winz were intent on introducing the British welfare model, the one so cruelly portrayed in ”I, Daniel Blake”.
        
        I don’t hold much hope for the proposed ”overhaul of welfare”
        
        Meanwhile the long-term sick and disabled are expected to survive, year in and year out on $230 per week.
JustMe 8

26 October 2017 at 10:19 am

I used to work for WINZ and this matter in regards to Ms X is the most ridiculous thing I have ever read.
Shame on you WINZ, MSD or whatever you want to call yourselves now.
Surely WINZ should come across as more caring for NZers. Why should WINZ attack and witch-hunt a simple little NZer just because she is like so many others here in NZ i.e a beneficiary?
When I was working for WINZ I came across a former Team Leader of WINZ who used multiple names to get more than $1million in benefits. He was repaying that debt by about $10.00 a week.
The pathetic reasoning of the MSD lawyer shows him or her to be grossly out of touch with reality. The hypothetical ‘she may win lotto….’ shows to me this lawyer hasn’t yet evolved yet into an intelligent person. Perhaps he/she never will. The Gravy Boat of being paid per year by MSD on a probably much better wage/income than Ms X was expected to pay back to WINZ is too much of a draw-card for such a self-serving person as the MSD lawyer.
Will he or she next crop up as a potential National Party MP in the next election? Lets hope not. Best thing for THAT one is to send them to North Korea.
My brother has a saying that we have a better chance of getting a kiss from the Pope than us winning lotto.
But then for an overpaid lawyer like the one working for MSD I guess every pay day is Lotto day for them.
- Patricia Bremner 8.1
  
  26 October 2017 at 6:05 pm
  
  That is sooooo right in every way 1000%
savenz 9

26 October 2017 at 10:28 am

The Natz are malicious, dishonest, sore losers who will spend any amount of money to harass someone, and they have moulded the public service in their image in the 9 years and enriched private legal practises with their obsessions. Funny enough, they can’t actually get it right legally themselves aka their copywriter fraud and damages to Eminin.

A lot of work to be done in this area by the new government. Oh, and don’t expect any of the public complaints authority to be working either, crammed full of Natz crony troughers.

BIG clear out, needed in public service.
- Patricia Bremner 9.1
  
  26 October 2017 at 6:08 pm
  
  Jacinda better use that broom they think she’s got!!
Sabine 10

26 October 2017 at 10:31 am

So if that person will be saddles with the debts can she declare bankruptcy?
- UncookedSelachimorpha 10.1
  
  26 October 2017 at 10:48 am
  
  Not sure – but there are moves in the USA to make all sorts of debt (particularly the types that poor people accumulate, e.g. education debt) excluded from discharge on bankcruptcy. I expect the Natz would love to take us down that path.
  - James Thrace 10.1.1
    
    26 October 2017 at 2:24 pm
    
    Debts owed to government agencies are not discharged upon filing for bankruptcy. National changed this at the same time they imposed criminal sanctions on student loan defaulters.
    It was changed in response to evidence that there were student loan defaulters, living overseas, filing for bankruptcy in NZ to avoid student loan defaults.
    
    Filing for bankruptcy in NZ avoided any ramifications to those defaulters if they were living in say, the UK. If they were living in Australia, bankruptcy here has impacts there given the close relationship with dun and Bradstreet, baycorp etc, who have offices in both countries.
    - UncookedSelachimorpha 10.1.1.1
      
      26 October 2017 at 3:29 pm
      
      Thanks for that good info.
Et Tu Brute 11

26 October 2017 at 10:45 am

Only makes sense if the repayment of the loan is taken off income.

Also need to look at predatory lending and what terms money is lent to people in such a position.
- greywarshark 11.1
  
  26 October 2017 at 8:35 pm
  
  I’m interested in how contra preferentem might have a place here. Poor people are unlikely to understand all the ins and outs of financial matters. Say you were told the interest was 1% a day for a temporary loan. It wouldn’t sound much and if you were stuck you would probably not think too much about the sums.
  
  There is a power and knowledge imbalance.
  
  The contra proferentem rule – the rule of interpretation that says the words of written documents are interpreted more forcibly against the party putting forward the document – is long-standing in contract law and insurance law.
  http://www.parkerandassociates.co.nz/blog/role-of-contra-proferentem-when-interpreting-contracts
UncookedSelachimorpha 12

26 October 2017 at 10:45 am

I downloaded the full report at the pdf link at the bottom of the post – impressively thorough and insightful work by Catriona MacLennan, everyone should read it.

It is also very uncomfortable and distressing reading – we can do much, much, much better than this in NZ.
Et Tu Brute 13

26 October 2017 at 11:01 am

There is one red flag here: the loan was from the mother. And of course, in hindsight it is okay, because Ms X paid it back in full. That should have ended any investigation. One potential loophole with such loans is a person can declare nil income, gain a ‘benefit’ for themselves or their children (such as student allowance) and have money lent to them via family or trust with the unstated intention of not paying it back. After their kids finish university, or the need ends, the loan is either not repaid or is written off. MSD never gets to hear about it. Again, obviously this is not the case here, but any policy work around ‘loans as income’ probably was designed for this instance and then misused in this case. Such schemes have historically been used, as another example, to mask political donations.
Ad 14

26 October 2017 at 11:11 am

Makes me sick reading it.
Bill 15

26 October 2017 at 11:32 am

@ Catriona

I’m assuming the supposed income (the sum total of the loans) has got no bearing at all on that repayment figure ranging between $109,852.91 and $127,275.05.

That is, I’m assuming the figure is simply a case of WINZ calculating and recalculating the supposed sum total of benefit received during a period of supposedly “fraudulent” applications.

Can you clarify or confirm that please? Cheers.
- weka 15.1
  
  26 October 2017 at 12:24 pm
  
  yeah, I’m struggling to see what they’ve done too. Are you thinking they’re wanting her to pay back all the benefits not just the bits she was allegedly not entitled to?
  
  Base DPB is currently $376/wk. $120,000 divided by 5 years, then 52 weeks = $461.
  - James Thrace 15.1.1
    
    26 October 2017 at 2:26 pm
    
    Winz will seek repayment of the entire benefit amount provided. Not just the alleged overpayment. Extremely punitive and no doubt led to the suicide of Wendy Shoebridge.
    - Bill 15.1.1.1
      
      26 October 2017 at 4:01 pm
      
      Winz will seek repayment of the entire benefit amount provided. Not just the alleged overpayment.
      
      That’s what I’ve maintained before now on cases where alleged fraud stacks up to six figure sums. Some people have kind of refused to accept that’s the scenario and since Catriona seems to be familiar with this case, I thought she might see my comment and be able to put the question to bed.
      
      As it is, some people are going to assume the woman in question borrowed somewhere in the region of $109 000 – $127 000.
      - Patricia Bremner 15.1.1.1.1
        
        26 October 2017 at 6:20 pm
        
        I notice one of the agreements for the new government listed removing and/or altering punitive penalties for beneficiaries. (Greens Labour)
        
        I’m operating on extremely expensive broadband ’till next week. Perhaps some kind soul could look that up for us.
        
        This case could come under punitive penalties?
        
        Seems similar to when IRD were causing suicides at one time.
        
        Punitive tax came back with the Nats. Much higher penalties for getting it wrong.
        
        weka 15.1.1.1.1.1
        
        26 October 2017 at 7:51 pm
        
        While the Greens have been given the go to make some changes at WINZ, I haven’t seen any detail yet about which things they will look at. I really hope the Greens start listening to beneficiaries directly on this. It’s almost like we need a truth and reconciliation process. I see some good things that the Greens can do, but I think we are going to be disappointed somewhat too (probably because of Labour and possibly NZF).
        
        If you look at Chris’ comments in this thread you will se example of what Labour govts have done. In essence Ardern’s Labour needs to break from Clark’s Labour on welfare, and I haven’t seen that happen yet, although there have been smaller shifts.
        
        Patricia Bremner …
        
        27 October 2017 at 4:08 pm
        
        Jacinda’s statement as a government of “Empathy” Is a beginning.
        
        weka …
        
        27 October 2017 at 4:25 pm
        
        Yes, and I definitely think there will be improvements. But because of their history, on welfare they have to earn the trust again.
    - weka 15.1.1.2
      
      26 October 2017 at 4:21 pm
      
      WINZ will sometimes seek repayment of the whole benefit. It’s unclear under what conditions eg those deemed fraud? It’s also unclear what authority they have to do that.
Macro 16

26 October 2017 at 11:58 am

Unfortunately this is now a typical, and far from an unusual response, from a government bureaucracy with such a toxic culture. Regretfully this all stems from a New Zealand society that is now so engrossed in materialism and self that such uncaring and disregard for the more vulnerable in our communities is the main widespread attitude. I’m not saying this is applies to all, but when 44% of the voting public can vote for a party that fosters these attitudes one can see that the culture of self over society is common.
On tuesday evening I had the opportunity to watch a very powerful film recently released by 8 amazing wahine directors. “Waru” is a film in 8 parts set around the tangi of a tamariki killed whilst in care.
One of the short episodes covered the situation of a solo mum, Mihi, who struggles to cope with little food in the house, a young baby, no petrol in the car, unable to pay school fees or money for field trips, and no money. This is the case for 100’s of thousands of NZers, including 200,000+ children, living in poverty.
If you have not seen this movie I strongly recommend it. Especially if you are of a right wing persuasion, because this film is real. Single shot. Immediate and direct.
A pre release review of the film is here:
silvertuatara 17

26 October 2017 at 12:19 pm

Well if National were collectively under paying persons on benefits by $200 Million annually http://www.newshub.co.nz/home/election/2017/09/winz-creating-two-classes-of-kiwis-labour.html, they certainly have had the financial resource to be able to game the system to the detriment of persons trying to make ends meet.

What a shadow the National government placed over social security support between 2008 and 2017. I am so glad that the new coalition is setting about addressing these issues positively, and hopefully for the betterment of all those whom find themselves in the position that they require assistance.
Al 18

26 October 2017 at 12:49 pm

Some of the lawyers comments are beyond belief in their stupidity and ignorance of the people aspect of these cases … e.g. buying shares okay but not buying neccessities and the killer – but she might win lotta then could pay the loan back – WTF? All I can say is that MSD are damned lucky there are no laws that allow for sueing here.
- weka 18.1
  
  26 October 2017 at 1:17 pm
  
  I’m still trying to figure out how the shares thing would work.
  
  Beneficiary borrows money to buy shares. Has to pay back the loan money plus interest, and they have to declare the shares to WINZ as both an asset and any income derived from the shares. If they borrow enough money and make enough money from the shares then their benefit will be abated like all other income. If the shares are high enough then once the loan is paid back the shares become an asset that means you can’t have many of the supplementary benefits. It’s a daft idea from people who have no idea how WINZ entitlements work.
  - James Thrace 18.1.1
    
    26 October 2017 at 2:27 pm
    
    Not to mention that borrowing money to purchase shares, as long as the shares produce some form of taxable income, means that the interest paid on money borrowed to buy shares is tax deductible from your PAYE at year’s end.
Delia 19

26 October 2017 at 1:02 pm

Shares are different, rich people profit of them.
Delia 20

26 October 2017 at 1:04 pm

I might add I hope her stupid ex partner is happy.
Matthew Whitehead 21

26 October 2017 at 1:30 pm

I would like to note that Catriona, as well as Russel Brown, have both been pressuring the new Minister Carmel Sepuloni on social media to take action on this case, (check out @CatMacLennanNZ if you want to retweet her) and there is a chance for them to instruct their lawyers ahead of Friday to drop this action, if they act quickly, or even to instruct the Ministry to forgive the debt afterwards if they don’t.

I don’t care what avenue she takes, but I really hope the new Minister does instruct her department to take mitigating action in this case either today or within the next few days, and to urgently review all future cases for consistency with forthcoming changes to benefit policies. It might not be the most important of her new duties in terms of scale of impact, but it is urgent, and it would be an important symbol of how the new government will change MSD’s culture.
- weka 21.1
  
  26 October 2017 at 1:46 pm
  
  Yes on the symbology and urgency.
  
  I’m also worried about the implications for other beneficiaries if MSD win this. Does this then mean that no beneficiary can borrow money except through high interest paying businesses like banks? (or they can but can expect to be penalised for it).
  
  “or even to instruct the Ministry to forgive the debt afterwards if they don’t.”
  
  This is the thing that’s fucking me off. They don’t have to be doing what they are doing, which begs the question of why they are doing it. And that takes us to see fairly horrendous implications about just how bad MSD is now. I really hope that the new government takes this on board fully but I’m concerned because of Labour’s own history and there is still no clear indication from Labour that they will treat beneficiaries the same as other NZ citizens.
  
  Yes, the Greens will be allowed to sort out WINZ to an extent, but this goes much deeper than that and it’s going to need Labour to make a stand that I haven’t yet seen them make.
  - One Anonymous Bloke 21.1.1
    
    26 October 2017 at 3:52 pm
    
    it’s going to need Labour to make a stand that I haven’t yet seen them make.
    
    Yep. I hope the Greens use their leverage to fix this before our government ends up defending itself at the Hague. The National Party should already be there.
weka 22

26 October 2017 at 2:27 pm

Here’s the relevant bit of the Act if anyone wants to look at it,

http://www.legislation.govt.nz/act/public/1964/0136/332.0/DLM359124.html
Richard Christie 23

26 October 2017 at 7:57 pm

What would they say if you sold one of your kidneys to pay an unexpected bill?
- Incognito 23.1
  
  26 October 2017 at 10:15 pm
  
  They would say that it is pretty illegal to do so.
Korero Pono 24

27 October 2017 at 6:04 am

Classing loans as income beggars belief. If MSD apply their own logic (or lack thereof) then every time they loan beneficiaries money to pay for unexpected costs, shouldn’t that also be treated as income? I wonder how often beneficiaries seeking help are still being told to ask their friends and family for help first – are they wanting to set beneficiaries up for a fall when they do that? The great tragedy in all this (besides the stress and hardship endured by any beneficiary affected by this farce), are the costs and lengths that MSD will go, to litigate and punish people. Their approach shows just how far removed they have become from human reality and the sooner MSD is overhauled and reined in the better. Culling staff from the top down to eradicate the mean spirited culture that has been allowed to develop over the years would be a good place to start. Maybe even psychological testing of staff, their advisers and legal team to weed out sociopaths and the like would also not go amiss. Perhaps they could also do with a community advisory board that is made up of beneficiary advocates and beneficiaries.
- Richard Christie 24.1
  
  27 October 2017 at 12:05 pm
  
  It’s a fucking war alright. MSD really are out to exterminate their “clients”.
- weka 24.2
  
  27 October 2017 at 4:29 pm
  
  “Classing loans as income beggars belief. If MSD apply their own logic (or lack thereof) then every time they loan beneficiaries money to pay for unexpected costs, shouldn’t that also be treated as income? I wonder how often beneficiaries seeking help are still being told to ask their friends and family for help first – are they wanting to set beneficiaries up for a fall when they do that?”
  
  I think this is why I found the post so hard to read. It’s the no way out potential of it that makes me think there is something truly wrong with some of the people running the MSD and WINZ. I’ve know good people working at WINZ too, so I’m still struggling to see how they can coexist.
  
  I’ve started thinking we need something like a truth and reconciliation process.
Matthew 25

27 October 2017 at 3:46 pm

an income is something you don’t pay back. a loan is a loan of money you didn’t earn and have to repay. big diference. msd is cruel and pathetic. way to ruin your reputation. oh hang on. you only have one for causing harm. way to improve your rep
Brian Tregaskin 26

27 October 2017 at 9:01 pm

A restructure of MSD is urgently needed.
This is a govt dept with a toxic culture that needs to be restructured out from the top down.
Thinkerr 27

27 October 2017 at 10:16 pm

Simple.

Following from the last point, suggesting that if the MSD argument is true, then mortgages of employees should be taxed, why not:

Request the mortgage and other loans details of the head of SSC and the senior management team of MSD and their families, and tell them how much they will need to be liable for in tax if they win their case and their argument.

Ditto the lawyer for the prosecution.

Then watch the problem go away in a hurry.
JeffB 28

28 October 2017 at 5:51 pm

I just couldn’t believe what I was hearing when this story came out. Any loan is not income, they have to pay it back FFS! And to go after the most vulnerable in this way is disgusting.