Child Poverty Action Group Inc. (Cpag) v The Attorney-General

• Jurisdiction: New Zealand
• Judge: Ellen France J
• Judgment Date: 30 August 2013
• Neutral Citation: [2013] NZCA 402
• Docket Number: CA457/2012
• Court: Court of Appeal
• Date: 30 August 2013

BETWEEN

Child Poverty Action Group Incorporated (CPAG)

Appellant

and

The Attorney-General

Respondent

[2013] NZCA 402

Court:

Ellen France, Randerson and Stevens JJ

CA457/2012

IN THE COURT OF APPEAL OF NEW ZEALAND

Appeal against the upholding of the Human Rights Review Tribunal's decision that while the in-work tax credit under the Working for Families Tax Package constituted discrimination on the basis of employment status in terms s19 New Zealand Bill of Rights Act 1990 (“NZBORA”) (freedom from discrimination), it was justified under s5 NZBORA (justified limitation) — criteria excluded persons who received an income-tested benefit and single people who did not work at least 20 hours a week or couples who did not work at least 30 hours a week — appellant maintained the in-work tax credit constituted discrimination on the basis of employment status under s21(1)(k) Human Rights Act 1993 (prohibited grounds of discrimination) — whether the HC correctly stated and applied the test for a breach of s19 NZBORA and s5 NZBORA.

Counsel:

F M Joychild QC and J M Ryan for Appellant

C R Gwyn, J Foster and C I J Fleming for Respondent

R M Hesketh and S A Bell for the Human Rights Commission as Intervener

• A The Court answers the questions of law on which leave to appeal was granted as follows:

  • (i) First question: Did the High Court correctly state and apply the test for a breach of s 19 of the New Zealand Bill of Rights Act 1990? Answer: No. All beneficiaries were the subject of prima facie discrimination because of the off-benefit rule.

  • (ii) Second question: Did the High Court correctly state and apply the test for s 5 of the New Zealand Bill of Rights Act 1990? Answer: Yes. The off-benefit rule is a justified limit on the right to freedom from discrimination on the ground of employment status.

• B The appeal is accordingly dismissed.

• C No order as to costs.

JUDGMENT OF THE COURT

REASONS OF THE COURT

(Given by Ellen France J)

Table of Contents

	Para NO
Introduction	[1]
The context of the claim	[8]
The genesis of the Working for Families package	[13]
The Working for Families package	[19]
Family support	[24]
The in-work tax credit and its predecessor, the child tax credit	[26]
The other tax credits	[30]
The abatement regime	[33]
Other aspects of the package	[35]
The relevant statutory provisions	[36]
Is the in-work tax credit discriminatory?	[43]
Differential treatment as between groups in comparable situations?	[44]
Our assessment	[47]
A material disadvantage?	[67]
Discussion	[72]
Is the in-work tax credit a justified limit?	[76]
The approach to s 5	[79]
New Zealand	[80]
United Kingdom	[83]
Canada	[85]
Conclusions	[91]
Minimal impairment	[94]
The decisions below	[95]
The competing contentions	[99]
The relevant principles	[102]
Application of the principles to this case	[104]
A proportional response?	[130]
Submissions	[133]
Analysis	[136]
Result	[154]

Introduction

1 In 2004, the then Labour Government introduced a package of reforms for social assistance known as the Working for Families package. One component of that package is the in-work tax credit. The in-work tax credit supplements the income of those in work by up to $60 a week for families with three or fewer children. 1 The tax credit is available to any family that meets its statutory criteria for eligibility. These criteria exclude persons who are receiving an income-tested benefit. 2 This exclusion is called the “off-benefit” rule. Persons who do not meet the “full-time earner requirement” (working at least 20 hours a week for a single person and at least 30 hours for a couple) are also excluded. 3

2 The appellant, the Child Poverty Action Group Inc (CPAG), maintains that the in-work tax credit constitutes discrimination on the basis of employment status. In terms of s 21(1)(k) of the Human Rights Act 1993, it is unlawful to discriminate against persons on the basis of their employment status which includes the fact that the person is in receipt of a social security benefit. CPAG made a complaint about the in-work tax credit and was granted legal representation by the Office of Human Rights Proceedings to pursue its case in the Human Rights Review Tribunal.

3 The Tribunal concluded that the eligibility rules for the in-work tax credit were prima facie discriminatory on the grounds of employment status. However, the Tribunal also found that this was a justified limit under s 5 of the New Zealand Bill of Rights Act 1990 (the Bill of Rights). 4 Section 5 of the Bill of Rights provides that rights may be limited only to the extent reasonably necessary in a free and democratic society.

4 CPAG appealed unsuccessfully against the Tribunal decision to the High Court. 5 The High Court found that the off-benefit rule was prima facie discriminatory but only in respect of the small (1,267) group of persons who, while on a benefit, would meet the full-time earner criterion for eligibility for the in-work tax credit. The High Court concluded that the off-benefit rule was however a justified limit on the right in terms of s 5 of the Bill of Rights.

5 After the High Court declined to grant leave to appeal, 6 this Court gave leave to appeal on two questions of law, namely, whether the High Court correctly stated and applied the test for a breach of s 19 and for s 5 of the Bill of Rights. 7 The Court said that the question about s 19 was to include the issues raised by the respondent, the Attorney-General, by way of cross-appeal, that is, whether the High Court erred in applying s 19 in holding that:

• (i) those who are ineligible for the in-work tax credit on the basis of only s MD 8(a) of the Income Tax Act [2007] are the subject of prima facie discrimination; and

• (ii) those who are ineligible for the in-work tax credit on the basis of both s MD 8(a) and s MD 9 of the Income Tax Act [2007] are not the subject of prima facie discrimination.

6 We note that the Human Rights Commission gave notice of its intention to appear and be heard on this appeal as it is entitled to do under s 92H of the Human Rights Act.

7 Before answering the questions of law, we first discuss the context of the appellant's claim, the features of the Working for Families package, and the relevant statutory provisions.

The context of the claim

8 CPAG is an incorporated society formed in 1994 to advocate for a “better informed social policy to support New Zealand children” particularly those living in poverty. 8 CPAG undertakes research, publishes information and is a lobbyist for policy change. Its management committee includes Dr Susan St John, an Associate Professor in the Economics Department at Auckland University andProfessor Innes Asher, Head of Paediatrics at Auckland University School of Medicine both of whom gave evidence before the Tribunal as did CPAG's director, Janfrie Wakim.

9 The present complaint is one of a number of claims pursued by CPAG since 2002 challenging forms of State assistance to families with children that are unavailable to families whose parents are in receipt of benefits on the basis of discrimination.

10 As the submissions for the respondent record, State social assistance in New Zealand is provided in a number of ways. The evidence was that tax credits, like the in-work tax credit in issue, have become an increasingly common means both here and overseas of providing social assistance. 9 The in-work tax credit and other tax credits are delivered under the Income Tax Act 2007. The other principal forms of income support are provided via the Ministry of Social Development under the Social Security Act 1964 and under the New Zealand Superannuation and Retirement Income Act 2001.

11 Income support is seen as comprising three tiers. The first, or main, tier includes the domestic purposes and unemployment benefits. These benefits are intended to provide for basic living costs and are subject to income tax. 10 The domestic purposes benefit is the most significant in this case because the majority of children in single parent families reliant on a benefit are in households receiving the domestic purposes benefit. By contrast, relatively small numbers of couples in receipt of the unemployment benefit have children. 11 Second tier assistance is directed towards persons in particular situations and/or for specific ongoing costs such as accommodation, disability, and child care. Third tier benefits are income- and asset-tested and provided generally to assist in times of hardship. The temporary additional support benefit introduced in place of the special benefit as part of the Working for Families package is in this category.

12 We turn then to the development and features of the Working for Families package.

The genesis of the Working for Families package

13 The Tribunal's decision contains a helpful summary of the history of the events leading up to the package which we draw upon in the material that follows. 12

14 The starting point for these purposes is 1996. By that time the universal family benefit had been replaced by family support. There are four aspects to note of the position as at that time. First, family support was paid in the form of a per child/per week tax credit based on joint parental income. Importantly, it was available to all low income families regardless of the work status of the adult(s). Secondly, for the benefits in issue here, the domestic purposes benefit and the unemployment benefit, there was a child component, that is, these benefits were paid at a higher rate for adults raising children. The third point that we highlight in terms of the position as at 1996 is that there was a family tax credit...