Carmel Sepuloni and Grant Robertson are both open to changing the thresholds for community service cardholders, which currently penalise people trying to save for their retirement
Low-income earners relying on the community services card for benefits like cheaper doctor visits lose their eligibility if they receive interest on any savings they might be putting away for their retirement.
It’s something the Social Development Minister Carmel Sepuloni says is worth looking at to ensure the card is still “fit for purpose”, and that New Zealanders encouraged to save for their future can do so.
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Finance Minister Grant Robertson told Newsroom he would be happy to look at any material around changes to thresholds brought to him by ministers.
While Sepuloni is responsible for the ministry administering the cards it’s Health Minister Ayesha Verrall who is responsible for the eligibility criteria.
Sepuloni told Newsroom the eligibility should be looked at if there’s a possibility it may have become outdated, much like the IT system the Ministry of Social Development (MSD) uses for administering benefits like superannuation and the winter energy payment.
That system has been in place since 1991 and Sepuloni says it’s undergoing a “business transformation” as of last year but couldn’t say when it might be modernised.
Robertson told Newsroom the changes are underway, but those investments have to be “weighed against other priorities”.
Both ACC and Inland Revenue have already undergone changes at an expense of almost $700 million and $1.5 billion, respectively.
MSD’s archaic IT system makes it too complicated to administer targeted benefits because it doesn’t hold information about individuals' incomes.
That’s why the means-tested cost-of-living payment delivered by the Government last year was done through IRD, albeit with some hiccups where some people who didn’t meet the criteria for the payment ended up receiving it.
“I think in terms of complexity and management, we treat it the same as we treat super, which we don’t means-test and we should keep the winter energy payment the same way." - Christopher Luxon
Both Labour and National have ruled out means-testing superannuation or the winter energy payment, which kicked in again this week for beneficiaries, including pensioners.
Robertson told Newsroom the cost-of-living payment is different to the winter energy payment because it was “specifically targeted to try and get some of the middle-income people who had missed out on other support”.
When the winter energy payment was introduced, Robertson says it was designed to be received by those who also got superannuation.
“Governments make those sorts of decisions all the time,” he said.
Opposition leader Christopher Luxon agrees and doesn’t want the winter energy payment to be means-tested in the same way he doesn’t support that happening for superannuation.
As a result, the people who can afford to pay their power bills continue to receive $20.46 per week.
Luxon says “there’s a number of cases” where that argument can be made.
“I think in terms of complexity and management, we treat it the same as we treat super, which we don’t means-test and we should keep the winter energy payment the same way."
Sepuloni says you must weigh up the pros and cons of targeting versus a universal approach.
“A pro of universal is that it takes away the stigma to accessing a payment like the winter energy payment. It means all people accessing it don’t have to go through the rigmarole of trying to prove they’re eligible for it.”
Ultimately, Sepuloni says it comes down to universal systems being “simple and easy to administer and there’s a range of reasons why it’s a good way to go”.
