CPAG in the Court of Appeal

As Kiwis we like to think of New Zealand as egalitarian, fair and a great place to raise a family.  However in comparison to many other developed countries, we have a highly discriminatory welfare and tax system when it comes to children. For example, in Australia, all low income children are treated the same – they receive the same levels of child-related family assistance no matter if their parents are in work or not.  This is not the case in New Zealand.

In a nutshell

Many low income families are left out of parts of Working for Families package that was supposed to reduce child poverty.  Their children do not enjoy the same tax-funded support to eat well, keep healthy, warm and dry, and to participate in school activities and sport as others.  Their parents often work in a casualised labour market and may be on a benefit. Meeting rigid work tests for the child payment (misleadingly) called the In Work Tax Credit is often not possible. The poorest families in New Zealand miss out on at least $60 a week, a lot of money that is rightfully theirs.   

Private charity alone cannot solve this problem and we will not see change in our disgraceful child poverty figures until we return to the principle long ago held dear by New Zealanders that all children have a fair go, that no child is left out.  Maori and Pasifika children have high poverty rates and make up one half of the 270,000 in poverty in New Zealand so they are affected disproportionately.

This case is complex and the Court of Appeal hearing represents the culmination of detailed and technical legal work over many years.  We argue that the Working for Families package went through no public consultation process - no green paper, no white paper, no select committee and it was passed into law in one day.  No account was taken of the 230,000 children who would miss out, despite New Zealand’s human rights obligations to protect all children.

We are seeking a declaration that the In Work Tax Credit is unjustified discrimination.  By doing so the principle of equal treatment of all children will be upheld.  Such a decision will begin the long journey back to affirming the basic values of all New Zealanders and provide a guide for needed policy changes.


The extended version: what, when, how and why

CPAG has compiled an easy to read guide to its long running Human Right's case against the Government.  This article provides a brief introduction to the background of the case and what has occurred over the time CPAG has been fighting against discrimination in family assistance.

Background - Family assistance policies in New Zealand

Since the Government first introduced discrimination against the children of beneficiaries into its family assistance policies in 1996, CPAG has been concerned with the impact of these policies on child poverty. CPAG argued that children, denied part of their family assistance based on the work status of their parents, were denied the support they needed to keep them out of poverty.  At that time the discriminatory policy in question was called the Child Tax Credit.

In 2004 in recognition of the growing problem of child poverty in New Zealand and concerns about benefit dependency, the Government announced a package of social assistance for families called ‘Working for Families’ (WFF).  One aspect of the WFF package was the In-Work Tax Credit (IWTC) which replaced the Child Tax Credit.  From this point on, the discriminatory policy in question was the IWTC that replaced the Child Tax Credit. The IWTC was designed to both alleviate child poverty and provide a work incentive. Legislation was enacted making eligibility for this payment dependent on being ‘off-benefit’ and working a required number of hours per week - 20 hours for a sole parent and 30 hours for a couple.  Before it came into force in 2006, this legislation was amended to make the IWTC payable to families higher up the income scale.   For example, a family with several children and a family income of over $100,000 may still receive the IWTC. 

CPAG agrees there should be a gap between work and beneficiary income but strongly disagrees with creating such a work incentive by denying children of beneficiaries a significant amount of financial support - at least $60 extra each week.  A very large majority of beneficiary parents can not obtain work, or are not able to meet the IWTC work requirements due to a lack of jobs, ill health, disability or child care responsibilities.  The Government’s own estimates when introducing the IWTC were that only a tiny number of beneficiaries around 2 percent would be able to leave the benefit and obtain it.  Yet the IWTC excluded the entire group of beneficiary parents and their children from additional family income which was and is desperately needed to pay for basic living costs such as food, rent and power. 

CPAG believes there were other much better ways to create an income gap which would leave plenty of Government funds for distribution to all parents on low to middle incomes. Instead the Government paid money to those higher up the income scale, keeping children in poverty.


Fighting to be heard

Discrimination first appeared in New Zealand's family income policies when the National government introduced the Child Tax Credit in 1996.  CPAG made a complaint to the Human Rights Commission but unfortunately, at that time the Government was not subject to the Human Rights Act 1993.  However in 2001, an amendment to the Act came into effect which made the Government, its agencies and anyone who performs a public function, accountable for any unlawful discrimination.  So in 2002, CPAG was able to formally challenge the Government under Part 1A of the Human Rights Act. 

The Crown tried to stop the case proceeding by challenging CPAG’s right to take it because it was not directly affected by the Child Tax Credit.   When the Tribunal rejected the Crown’s claim, the Crown appealed to the High Court and lost there as well.  

The decision created an important human rights law precedent because it affirms the right of non-government organisations to challenge policy on human rights grounds, on behalf of others, without the organisations themselves having to be personally and directly affected by any discrimination.  

When the Child Tax Credit was extended and renamed the In Work Tax Credit in 2006 under the Working for Families package, the case became about the In Work Tax Credit. 

Fighting against discrimination in family assistancein the Human Rights Review Tribunal

 So finally, in mid-2008 CPAG’s case was heard by the Human Rights Review Tribunal[i].  The Tribunal found that the IWTC is discriminatory because it is available to working but not beneficiary families and this disadvantages children in beneficiary families.

The test of discrimination includes proving that harm is caused and the Tribunal was satisfied it was.  The judge said that these children were “disadvantaged in a real and substantive way “. 

However, the Tribunal then found that the discrimination was justified in a ‘free and democratic society’ because the Government was trying to create a gap between working and beneficiary income in order to encourage people to work rather than be on benefits.   Therefore, the Tribunal refused to issue a Declaration of Inconsistency with Human Rights legislation.    Following this decision, CPAG filed an appeal in the High Court[ii]


Fighting against discrimination in family assistance in the High Court

In addition to CPAG appealing the Tribunal’s finding that the discrimination was justified, the Crown also appealed the Tribunal’s finding that the IWTC is discriminatory.  

In September 2011, the appeal was heard. CPAG argued that the legislative measure is inconsistent with the right to be free from employment status discrimination, guaranteed in the New Zealand Bill of Rights Act 1990. Even when due deference is given to the executive and legislative branch of the Government for its capacity and competence to determine legislation in the area of social and economic policy, this discrimination is still not able to be demonstrably justified, in a free and democratic society.

The High Court found that the IWTC does discriminate against some beneficiary families, but it is not unlawful as there is a legitimate objective to incentivise beneficiaries into work.  Nevertheless it said CPAG’s complaint that the government was not doing enough to alleviate child poverty could be justified statistically, and that the complaint was strengthened by the Government’s action in 2005 extending the IWTC upwards to the better off families. At that time there was further funding available that could have enabled a redesign of the Working for Families package to achieve the objective of alleviating child poverty.  The judgment also said that for a so-called developed country, New Zealand has a poor record on child poverty – a social ill with significant adverse social and economic consequences.

In November 2011 CPAG filed an application for leave to appeal to the Court of Appeal. It believes that some of the reasoning behind the judgment may seem sensible at first glance but is actually fallacious.   For example, when the court said that there is no discrimination against those beneficiaries who can’t work the hours required because not being able to work would make them ineligible anyway, it failed to appreciate that being a beneficiary and being unable to meet the required work hours is more or less the same thing.  CPAG also argues the court was wrong to find the discrimination justified. It says there were other equally effective ways of achieving the objectives that would not have discriminated against children and further, the benefit the government gained was disproportionate to the harm caused to children.

The case so far may not have produced the declaration of inconsistency with Human Rights legislation that was sought, but nevertheless there is a strong message from the High Court that the Government is not doing enough on child poverty.  In CPAG’s opinion, the court’s statements are damning and ones which the government needs to act upon. 


Fighting against discrimination in family assistance in the Court of Appeal

In May of this year CPAG sought a declaration from the Court of Appeal that the In Work Tax Credit, worth at least $60 a week for the support of children in low-income families, unjustifiably discriminates against families on benefits. Traditionally New Zealand has given a weekly family assistance social assistance payment to the caregiver based on the number and ages of the children. The ‘In Work Tax Credit’ marks a portion of this payment off and denies its benefits to some 230,000 of the lowest income children. This policy is a major contributor to the extent of child poverty that we are seeing across New Zealand. 

Our long journey into lengthy and complex Court hearings over many years has raised the profile of this issue and more people now understand that our incomes policies for children entrench poverty. In spite of a relentless political campaign that has resulted in beneficiaries being the most stigmatised group in New Zealand, a recent NZ Herald digipoll found over 50% of those surveyed supported the CPAG in seeking an extension of the In Work Tax Credit to all low income children. The kind of discrimination found in the Working for Families package is inimical to the Kiwi way of a fair go for all and, to the belief that New Zealand is a great place to bring up children.   

To make the argument tractable from a legal position, the grounds we had to argue on in Court were more limited than CPAG’s wider concerns. We see all kinds of unfairness with the design of the In Work Tax Credit, not just for those on benefits. Families have been denied access to the IWTC for a variety of reasons; due to redundancies and disasters such as the Christchurch earthquake; because they are students; or are over 65 receiving New Zealand Superannuation. However, the glaring anomaly is the exclusion of 230,000 children in benefit households from a tax-funded child tax credit paid to the caregiver, almost always the mother, to meet the needs of her children.   

We are pleased that the bizarre argument that the Crown used in the Human Right Tribunal (2008), the High Court (2011) and the Court of Appeal (2013) based on one very strange table (which can be found at the end of the Court of Appeal decision) has been dismissed.  The hours of argument and detailed submissions on the hypothetical comparisons in this table deflected the gaze away from 230,000 of our poorest children. 

Agreeing with CPAG, the Court of Appeal found that there is discrimination against all beneficiaries with children, not just the narrow group Crown Law  wanted to limit it to, and that as part of the test for discrimination, this different treatment causes material harm.  The value of this decision should not be underestimated. It might be regarded as a major win, clarifying the test in a helpful way for future discrimination cases. 

Nevertheless despite the clear finding of discrimination, the Court of Appeal  then went on to declare that the discrimination was justified because it was aimed at getting beneficiaries into work.  Calling a payment for children a 'work incentive' does not change its nature.  The harm of denying adequate income support by this discrimination is not trivial; it is inflicted on 230,000 of the poorest children in our society. Furthermore, the corresponding social gain of shifting beneficiaries off benefits has proved minimal or even zero in the recession. 

Parenting is challenging and expensive work, (note that it is actually work) even for the well-resourced, so it is hard to imagine a justification for departing from the principle of treating all children in low income families equally for all child-related tax-funded payments.  This is especially true when by so doing, child poverty and all its ills is perpetuated. It is great pity the Court did not protect children by finding such discrimination unjustified. 

Unlike some countries with upper and lower houses, New Zealand has few checks and balances on policy development. CPAG has used the human rights framework to draw attention to our obligations under the Human Rights Act, the Bill of Rights Act, and the various international treaties and conventions such as UNCROC.   Appropriate proper policy process was not followed when the Working for Families package was introduced and the discriminatory IWTC exemplifies the resultant flawed policy. 

What next?

After much thought and consultation, CPAG has decided not to pursue its long-running human rights case in the Supreme Court.  The courts are not ready or equipped to give a rational decision on justification, other than on the same grounds of narrow case reasoning without a real understanding either of how so many children are seriously harmed and their rights ignored, or of the economics of in work benefits and their proper design.

The case has raised awareness of serious harm to around 230,000 of the most disadvantaged children in New Zealand.  Unfortunately the damage continues and is tragic for the families and our society. It is shameful that policies that contravene treaties that New Zealand is signatory to, like United Nations Convention on the Rights of the Child (UNCROC) can be ignored by policymakers, with the courts not yet prepared to hold them to account. It is clear that the IWTC is a payment for children to alleviate poverty that is denied to the poorest children and this falls foul of our international and domestic human rights obligations.

The politicians will no longer be able to sidestep questions on the IWTC by saying that it is still before the courts and this issue will clearly be one for the 2014 election.


Frances Joychild, QC, replaced Cathy Rogers under funding from OHRP for the High Court hearing. Frances Joychild and Jenny Ryan are representing CPAG for the Court of Appeal hearing. CPAG wishes to thank each for their exemplary work on this important case. The OHRP has continued to fund Jenny's work.  CPAG and its supporters have raised money to pay for the services of Frances Joychild QC, but acknowledge gratefully  her additional pro bono contributions   


[i] The record of the Tribunal proceedings in 2008 amounts to nearly 10,000 pages. This includes 21 statements of evidence (totaling over 300 pages), which refer to more than 250 documents (totaling nearly 8,000 pages) and a transcript of over 1,000 pages, which was produced contemporaneously at the hearing.

[ii] Following the Tribunal’s decision, CPAG filed an appeal in the High Court. As the appeal was inadvertently filed several days late, CPAG needed to seek leave to appeal out of time. In 2009, the Court granted this application and the appeal was set down for hearing in 2010.  However, in mid-2010, the Crown sought to recall the Court’s decision allowing the appeal to proceed (on the basis of a later Court of Appeal decision). The hearing date had to be abandoned while this issue was considered by the Court. In late 2010, the Court rejected the Crown’s recall application, which meant that the appeal could proceed.