MSD Is Treating Loans as Income in the Courts

Borrowed money should not count as income that can reduce benefit entitlements, says Child Poverty Action Group (CPAG).

In a case being heard in the High Court, the Ministry of Social Development (MSD) is arguing that a sole mother who took out loans to pay for her home repairs and to support her children - because she could not otherwise afford to on the benefit - should have to repay more than $120,000 in so-called ‘over payments’.

This Friday, October 27 is the last day of the hearing. Ms X. has name suppression and is represented by Frances Joychild QC.  

No form Ms X. ever filled out for her benefit asked her to list loans as a form of income. The cost of the nearly eight years of reviews and appeal is huge, both financially and in terms of her health.

“It has created libraries of decisions, exhibits, letters, submissions and court time. To say nothing of the costs of Ms X’s time or her lawyers,” says Associate Professor Susan John, CPAG economics and welfare spokesperson.

“It is very worrying that mothers are treated this way and that MSD takes such a narrow view of the law,” says Associate Professor Susan St John, CPAG economics and welfare spokesperson.

New Zealand currently has a punitive welfare system that reduces support for sole parents who repartner, and applies sanctions to those who do not name a father on benefit applications. In finding loans as declarable income, it further reduces the ability of low-income families to support their children, resulting in deeper and longer term poverty and more unfair prosecutions.

CPAG hopes that under a new Minister for Social Development, there will be an end in sight for the systemic mistreatment of sole parents.