To: The Chief Executive of the Ministry of Social Development.
Pursuant to sections 5 and 86(1BC) of the Social Security Act 1964, the Minister for Social Development gives the following direction.
D i r e c t i o n
1. Title-This direction is the Ministerial Direction on Debt Recovery.
2. Commencement-This direction comes into force on
7 July 2014.
3. Interpretation-(1) In this direction, unless the context otherwise requires-
Act means the Social Security Act 1964.
advance payment of benefit means an advance payment of a benefit under section 82(6) of the Act.
age, in relation to a debt, means the length of time since the debt became recoverable under section 86 of the Act.
allowance has the meaning in section 302 of the Education Act 1989.
debt-
(a) means a debt due to the Crown referred to in section 85A of the Act; and
(b) includes, where the social housing agency is the department, an amount that the social housing agency may recover as a debt due to the Crown under section 74(3), 94(2) or 127(2) of the Housing Restructuring and Tenancy Matters Act 1992 and that must, under section 128(a) of that Act, be treated as a debt due to the Crown under section 85A of the Act.
debtor means a person from whom a debt or part of a debt may be recovered, and in a case where a debt or part of a debt may be recovered from more than one person, means the person from whom that debt or part of that debt is sought to be recovered.
deduction notice means a deduction notice under section 86A of the Act.
dependant, in relation to a debtor, means-
(a) a dependent child of the debtor; and
(b) any other person who is wholly or primarily dependent on the debtor for financial support and who ordinarily resides with the debtor; and
(c) any other person who is under the care of the debtor as a consequence of that person's inability to live independently for reasons of disability, illness, or advanced age.
method of recovery, in relation to a debt, means a method referred to in section 86(1BB) of the Act and includes issue of a deduction notice.
student loan has the meaning in section 302 of the Education Act 1989.
(2) Terms otherwise defined in sections 3(1) and 86D of the Act have the same meanings in this direction.
4. Rate and method of recovery-(1) In determining the rate of recovery, or the method of recovery, or both, in respect of a debt under section 86(1BA)(a) of the Act, the chief executive must give consideration to the following matters:
(a) the amount of the debt;
(b) the ability of the debtor to meet his or her needs and the needs of his or her dependants;
(c) the circumstances of the debtor and his or her dependants;
(d) whether the rate or method of recovery would cause undue hardship to the debtor or any of his or her dependants;
(e) the effect that the rate and method of recovery will have on the ability of the debtor to:
(i) support himself or herself;
(ii) fulfil any other obligations that he or she has under the Act;
(f) the cost of recovery.
(2) Subclause (1) is subject to subclauses (3) and (4).
(3) In determining the rate of recovery, where the method of recovery set is the issue of a deduction notice, the chief executive must also give consideration to the matters in clause 6(6).
(4) In determining the rate of recovery, or the method of recovery, or both, in respect of a debt of the kind set out in section 85A(c) or (d) of the Act (debts in respect of any advance payment of benefit or recoverable assistance under any welfare programme), the chief executive must give consideration to the following matters:
(a) the matters set out in subclause (1) and, where applicable, subclause (3);
(b) in the case of a debtor who is a beneficiary, the extent to which priority should be given to recovery of the debt in order to maximise the debtor's access to further advance payments of benefit or recoverable assistance under any welfare programme where that access is based on the beneficiary's level of debt;
(c) the age of the debt.
5. Deferral of recovery-(1) This clause identifies the circumstances in which the chief executive may, under section 86(1BA)(b) of the Act, defer temporarily the recovery of a debt.
(2) The first circumstance is where, in the circumstances of the particular case, the chief executive is satisfied that recovery of the debt would:
(a) have an adverse effect on any one or more of-
(i) the ability of the debtor to meet his or her needs and the needs of any of his or her dependants; or
(ii) the ability of the debtor to support him or herself; or
(iii) the ability of the debtor to obtain or retain employment; or
(iv) the ability of the debtor to fulfil any obligations that he or she has under the Act; or
(b) result in undue hardship to the debtor or any of his or her dependants.
(3) When determining the period of time for which recovery of a debt should be temporarily deferred in the first circumstance, the chief executive should have regard to the matters set out in paragraphs (a) and (b) of subclause (2).
(4) The second circumstance is where the debtor has made an application for a review under section 10A of the Act or lodged an appeal under section 12J of the Act in respect of the debt that has not yet been decided. The chief executive should defer recovery of the debt in this circumstance until the review or appeal is disposed of by the benefits review committee or (as the case requires) the Appeal Authority.
(5) If, in respect of a debt of the kind set out in section 85A(c) or (d) of the Act (debts in respect of any advance payment of benefit or recoverable assistance under any welfare programme), either the first circumstance or the second circumstance applies, in deciding whether to defer recovery of the debt the chief executive should give consideration to the following matters:
(a) the relevant circumstance set out in subclause (2) or subclause (4);
(b) in the case of a debtor who is a beneficiary, the extent to which deferral of recovery would reduce
the debtor's access to further advance payments of benefit or recoverable assistance under any welfare programme where that access is based on the beneficiary's level of debt;
(c) the age of the debt.
6. Deduction notices-(1) This clause applies to the issue of a deduction notice to recover a debt.
(2) Where it is determined that the method of debt recovery is the issue of a deduction notice, the chief executive should send a written notice to the debtor, stating that the debt is to be recovered, specifying the amount of the debt, asking the debtor to contact the department so that arrangements for recovery can be made, and advising the debtor of his or her review and appeal rights in respect of the debt.
(3) If no response satisfactory to the chief executive is received within one week after the issue of the notice, the chief executive should send a further written notice asking the debtor to contact the department so that arrangements for recovery can be made.
(4) If no response satisfactory to the chief executive is received within two weeks of that second notice being sent, the chief executive should send a third written notice informing the debtor that he or she has 10 days to contact the department and make satisfactory arrangements for the repayment of the debt, and that if he or she does not do so then a deduction notice may be issued.
(5) A deduction notice for recovery of debt should be issued to a debtor's employer or any other person who is the provider of payments of income or weekly compensation to the person on a regular or intermittent basis in preference
to a bank, unless recovery of the debt from money due to the debtor by a bank is the only realistic option available in
the circumstances. Deductions from bank accounts will be lump sum deductions.
(6) For any deduction notice issued under section 86A of
the Act, the amount of the deduction must be based on the amount of the debt, and in determining the amount to be deducted, the chief executive must take into account the balance in the various bank accounts that the debtor has,
the known outgoings of that person (such as essential automatic payments, home mortgage repayments, etc), and the amount that the debtor could reasonably be assumed to require to live on.
(7) If a debtor approaches the department claiming that a deduction notice is causing undue hardship, the chief executive should review the issue of the deduction notice taking into account any alternative method of payment offered by the debtor.
(8) Nothing in subclauses (2)-(6) prevents the chief executive from carrying out his or her duty to consider each case on its own individual circumstances, and in special circumstances (for example, where a debtor is about to leave the country) to not follow subclauses (2)-(4).
(9) Subclauses (2)-(6) shall not apply if at any stage the debtor has given his or her written consent to a deduction notice being issued.
(10) The chief executive must not issue a deduction notice for recovery of a debt-
(a) if the debtor has made an application for a review under section 10A of the Act or lodged an
appeal under section 12J of the Act in respect of
the debt that has not yet been decided; or
(b) if recovery of the debt from the debtor has been temporarily deferred under section 86(1BA)(b) of the Act.
(11) In this clause-
debt has the meaning in clause 3(1) and includes-
(a) an amount for which a deduction notice may be issued under section 86A(1C) of the Act; and
(b) a debt due to the Crown in respect of an allowance or student loan that may be recovered by the issue of a deduction notice pursuant to section 307B(2)(c) of the Education Act 1989.
debtor means a person in respect of whose debt a deduction notice may be issued.
weekly compensation has the same meaning as in section 71A(3) of the Act.
7. Ministerial direction in relation to debt deduction notices consequentially revoked
Revoke the direction given by the Minister of Social Welfare on 12 July 1993 in relation to the issue of debt deduction notices under section 86A of the Act.
Dated at Wellington this 30th day of June 2014.
HON PAULA BENNETT, Minister for Social Development.
Explanatory Note
This note is not part of the direction but is intended to indicate its general effect.
This direction by the Minister of Social Development identifies relevant considerations for determining the rate and method of recovery of debts referred to in section 85A of the Social Security Act 1964. It also identifies relevant circumstances in which the department may defer temporarily the recovery of debts referred to in section 85A of the Social Security Act 1964.
It also identifies relevant considerations for determining the rate and method of recovery and whether to defer temporarily the recovery of debts of the kind set out in section 85A(c) or (d) of the Act (debts in respect of any advance payment of a benefit or recoverable assistance under any welfare programme).
Clause 6 replaces the Ministerial direction in relation to the issue of deduction notices and is to the same general effect. Clause 7 consequentially revokes that direction.
This direction comes into force on 7 July 2014.