Catriona MacLennan: Benefit debt punishment out of all proportion to 'crime'

A DPB Domestic Purposes Benefit beneficiary from Haumoana, who sometimes gets down to just $8 to live on after paying all her bills. Photo / Duncan Brown

Why are we burdening some of the poorest mothers in the country with lifetime debts while writing off the tax debts of some of our richest citizens?

Inland Revenue has wiped $5 billion in tax debt since 2008. This includes money owed by property developers who continue to live ostentatious lifestyles, despite failing to pay money owed to the Government, as well as 720,000 companies with unpaid taxes. On top of that, more than one million New Zealanders have had their tax debts written off in the past six years. In the past year alone, the Government has cancelled $930 million in tax debt owed by individuals.

That can be contrasted with the punitive way in which mothers who owe benefit debt are pursued for the rest of their lives - even if it is plain that they will never be able to repay the sum.

People who are in a "relationship in the nature of marriage" are not entitled to sole parent support (previously called the DPB). However, there is no clear legal formula which can be applied in all cases to determine whether or not someone should be receiving sole parent support. This is because relationships may develop over time; a new partner might contribute only limited financial support to the family; or domestic violence might mean the woman is actually seeking to escape from the relationship.

The Court of Appeal in Ruka v Department of Social Welfare in 1997 held that Work and Income had acted incorrectly in denying a benefit to a battered woman. That case was followed in 2001 by the Joychild report, which reported "strong evidence" that the department had applied the law wrongly and recommended that 15,600 cases be reviewed.

Despite this, the Government since then has continued to adopt an extremely punitive approach to mothers on benefits. Many mothers serve jail terms, separating them from their children and doing incalculable harm to already-vulnerable children, and then emerge from prison still owing tens or hundreds of thousands of dollars.

Our system gives these women double punishment. Usually a jail term would be considered enough, but the department seeks to grind the full sum out of the mother for the rest of her life. Judges who sentence women to prison for so-called benefit fraud often do not take into account the full additional weight of the debt burden the woman will carry for the rest of her life when deciding to jail her as well.

Under the Sentencing and Summary Proceedings Acts, the financial capacity of the offender to pay fines and reparation is taken into account. Generally, offenders will not be sentenced to repay an amount that could not realistically be paid within five years. However, the department at sentencing will generally tell the court that reparation is not sought, meaning that debt recovery is its sole prerogative and there will be no oversight by the courts.

The Social Security Act actually contains a discretion for the department not to seek recovery of the debt but, in practice, this is rarely used.

And, making the situation even worse, the Government last year toughened the section, imposing a duty on the chief executive to recover debts. So we now have a situation where children of single mothers go without shoes as the family repays minuscule amounts, while high-flying property developers continue living in luxury homes and travelling overseas despite owing millions.

Work and Income should seek to recover no more than a sum which can realistically be paid within five years without adversely affecting the children. And let's stop jailing single mothers on the basis of an unclear legal test. The people we are punishing most are the children.

Catriona MacLennan is a barrister and one author of the Child Poverty Action Group's December 2014 report, "The Complexities of 'Relationship' the the Welfare System and the Consequences for Children".

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