Social Security (Indexation) Amendment Bill
Member's Bill
Explanatory Note
This bill amends the Social Security Act 1964 to change the measure by which the rate of benefit payments, and asset thresholds are adjusted for inflation each year.
The Social Security Act 1964 requires the Government, by Order in Council to increase the rate of benefit payment, in line with with consumer price index (CPI). The current index used is the consumers price index-all groups.
Since this automatic increases of benefit payments were introduced, Statistics New Zealand has created new indexes that calculate the consequences of inflation on different households. The consumers price index-all groups does not accurately reflect the consequences of inflation on beneficiary households, whose expenses have tended to be more greatly affected by inflation.
Given the new tools that Statistics New Zealand has created, this bill amends the sections of the Social Security Act 1964 that provide for the indexation of the rate of benefit payments, and asset thresholds applicable to benefits to better reflect the impact that inflation has on beneficiary households.
Social Security (Indexation) Amendment Bill
The Parliament of New Zealand enacts as follows:
1. Title
This Act is the Social Security (Indexation) Amendment Act 2017.
2. Commencement
This Act comes into force on the day after the date on which it received the Royal Assent.
3. Principal Act
This Act amends the Social Security Act 1964.
4. Section 61HA replaced (Annual CPI adjustment of rates of certain benefits)
Replace section 61HA with:
61HA Annual HLPI adjustment of rates of certain benefits
(1) In this section, HLPI means the Household Living-costs Price Index-beneficiaries group published by Statistics New Zealand.
(2) The rates of benefits set out in Schedules 3, 3A, 4, 6, 9, 16, and 26 (other than any rate of incentive payment), and in clause 1 of Schedule 22 must be adjusted, by Order in Council, as at 1 April each year so that in each case the new rate is the rate at that date adjusted by any percentage movement upwards in the HLPI between the HLPI for the quarter ended with 31 December 1 year before the immediately preceding 31 December and the CPI for the quarter ended with the immediately preceding 31 December.
(3) The adjustments (by any percentage movement upwards in the HLPI) required under subsection (2) as at 1 April in any year from 2017 to 2021 (inclusive) must, despite subsections (1) and (2), be calculated using index numbers for those quarters of the Household Living-costs Price Index-beneficiaries group excluding cigarettes and other tobacco products published by Statistics New Zealand.
(4) An adjustment under subsection (2) must not reduce the weekly amounts of benefits payable under those schedules.
(5) Every Order in Council made under subsection (2) comes into force or is considered to come into force on 1 April of the calendar year in which it is made, and applies to benefits payable on and after that date.
(6) Section 61H(2) and (5) applies to every Order in Council made under subsection (2) as if that order were made under that section.
5. Sections 155 amended (Regulations relating to this Part)
Replace sections 155(2) and 155(2A) with
(2) The applicable asset thresholds set out in Part 1 of Schedule 27 must be increased on 1 July 2017, and on every following 1 July, and the income-from-assets exemption (as defined in Part 3 of Schedule 27) must be increased on 1 July 2017, and on every following 1 July, by an amount that reflects the movement Household Living-costs Price Index-beneficiaries group (published by Statistics New Zealand) for the year ending on the previous 31 March.
(2A) The adjustments (by any percentage movement in the Household Living-costs Price Index-beneficiaries group) required under subsection (2) as at 1 July in any year from 2017 to 2021 (inclusive) insofar as they are required for the income-from-assets exemption (but not insofar as they are required for the applicable asset thresholds) must, despite that subsection, be calculated using, for those quarters, the Household Living-costs Price Index-beneficiaries group excluding cigarettes and other tobacco products published by Statistics New Zealand.
