Summary of Underpinning Analysis: Social Security (Cash Assets, Chargeable Income, and Income Exemptions – Lake Alice Payments Amounts)

and Residential Care and Disability Support Services (Exempt Assets and Income – Lake Alice Payment Amounts) Amendment Regulations 2026

Good law-making: 9(i)

The importance of consulting, to the extent that is reasonably practicable, the persons or representatives of the persons that the responsible agency considers will be directly and materially affected by the legislation.

Inconsistency identified: NO

Summary of agency analysis

The proposed regulations were developed in response to feedback from survivors of torture at the Lake Alice Child and Adolescent Unit (survivors) who received a redress payment in respect of the torture they experienced, however, there has been no formal consultation or stakeholder engagement with survivors. The proposed Social Security (Cash Assets, Chargeable Income, and Income Exemptions – Lake Alice Payment Amounts) and Residential Care and Disability Support Services (Exempt Assets and Income – Lake Alice Payment Amounts) Amendment Regulations 2026 (amendment regulations) is likely to positively impact this cohort. In respect of the survivor’s privacy, the Ministry of Social Development (MSD) does not have access to the details of survivors nor is able to identify the survivors within our systems. Therefore, it has not been reasonably practicable for MSD to engage with survivors, and these regulations should be assessed as consistent with this principle of responsible regulation under 9(i).

Good law-making: 9(j)

The importance of carefully evaluating:

• the issue concerned; and
• the effectiveness of any relevant existing legislation and common law; and
• whether the public interest requires that the issue be addressed; and
• any options (including non-legislative options) that are reasonably available for addressing the issue; and
• who is likely to benefit, and who is likely to suffer a detriment, from the legislation.

Inconsistency identified: NO

Summary of agency analysis

The current exemption regulations require a payment must be retained in monetary form (in cash or a bank account) for the exemption to apply. The proposed amendments to the Social Security Regulations 2018 and Residential Care Disability Support Services Regulations 2018, give effect to Government’s intention that a survivor’s torture redress payment and any assets or cash assets or income derived from their payment do not impact a survivor’s entitlement to welfare assistance.

At a minimum, amendments to the exemptions in Social Security Regulations 2018 and Residential Care Disability Support Services Regulations 2018 are required (see 9(m) for more). The current exemptions do not give effect to the Governments preferred approach and there is no other reasonable approach which will achieve this before the end of the parliamentary term. MSD carefully evaluated this issue and in response developed a range of options for Ministers to consider. The proposed amendments to the regulations reflect these decisions and will positively impact this cohort of survivors as they will be entitled to a greater amount of assistance than a comparable cohort who did not receive a redress payment. To ensure that no survivor is disadvantaged by receiving a payment of their backdated entitlement to assistance, MSD will also introduce new exemptions for these lump sum and ex-gratia payments with equivalent settings to the Lake Alice exemptions.

Therefore, these proposed regulations have been appropriately evaluated and should be assessed as consistent with this principle of responsible regulation under section 9(j) of the Regulatory Standards Act 2025.

Good law-making: 9(k)

The importance of the responsible agency identifying and developing effective arrangements for implementing the legislation.

Inconsistency identified: NO

Summary of agency analysis

MSD holds responsibility for the Social Security Regulations 2018. The Ministry of Health holds policy responsibility for the Residential Care Disability Support Regulations 2018 and Health New Zealand administers the Residential Care Subsidy, but MSD administers the financial means assessment for the Residential Care Subsidy to which the regulations relate. MSD has obtained approval from the Ministry of Health for the proposed changes to the exemptions and will be the agency responsible for implementing and administering them.

MSD expects to be able to implement these changes to exemptions from 7 December 2026. MSD will develop and implement operational processes and guidance that will enable staff to accurately administer the changes. MSD will work with CRO to find the most appropriate path for communicating these changes to survivors.

The Minister of Finance, Lead Coordination Minister for the Government’s Response to the Royal Commission’s Report into Historical Abuse in State Care and in the Care of Faith-based institutions and Minister for Social Development have jointly agreed under their delegation from Cabinet to fund this proposal from the tagged contingency for Implementing the Government's Response to the Royal Commission of Inquiry into Abuse in Care.

Health New Zealand have confirmed that this policy change would have a minor impact on the Aged Residential Care budget and can be funded from their demand driven expenditure appropriations.

Therefore, the proposed amendments to the regulations should be assessed as consistent with this principle of responsible regulation under section 9(k) of the Regulatory Standards Act 2025.

Good law-making: 9(l)

Legislation should be expected to produce benefits that exceed the costs of the legislation to the public or persons.

Inconsistency identified: NO

Summary of agency analysis

Implementation of the amendment regulations will increase expenditure in Vote Social Development by a total of $4.179 million in total over the forecast period under the assumption that 50% of survivors (approximately 72 survivors) will have their entitlement reviewed and receive a higher rate of assistance or apply for and be granted assistance to which they were not previously entitled. Assumptions have been used as we are unable to identify how many survivors already receive assistance from MSD (see 9(i) above) or how many survivors may approach MSD for assistance once settings have changed.

Whilst the impact will be minor, as it will only impact the survivors who received a redress payment, the changes to the exemptions in the proposed amendment regulations will benefit survivors by improving access to support and ensures that these survivors are not disadvantaged in the welfare system based on what they choose to do with their payment.

Health New Zealand have confirmed that the impact of this cohort on Age Residential Care budget would be minimal, with their most conservative estimates indicating that costs would be under $0.5m.

MSD has considered the costs and benefits and has concluded that the benefits of implementing the amendments to the regulations outweigh the estimated costs. Therefore, the proposed amendments the regulations should be assessed as consistent with this principle of responsible regulation under section 9(l) of the Regulatory Standards Act 2025.

Good law-making: 9(m)

Legislation should be the most effective, efficient, and proportionate response to the issue concerned that is available.

Inconsistency identified: NO

Summary of agency analysis

The settings for the exemptions in the welfare system are set out in the Social Security Regulations 2018 and the Residential Care Disability Support Services Regulations 2018 Amending these regulations was identified as the only effective and efficient response to give effect to the Governments preferred outcome. Therefore, these proposed regulations should be assessed to be consistent with this principle of responsible regulation under section 9(m) of the Regulatory Standards Act 2025.

Rule of Law: 9(a)(i)

The law should be clear and accessible.

Inconsistency identified: NO

Summary of agency analysis

MSD will work with Crown Response Office to the Abuse in Care Inquiry to communicate these changes with survivors, their advocates or legal counsel. The amendments to the Social Security Regulations 2018 and the Residential Care Disability Support Services Regulations 2018 will be available on the New Zealand Legislation website. Therefore, the proposed amendments should be assessed as consistent with this principle of responsible regulation under section 9(a)(ii) of the Regulatory Standards Act 2025.   

Rule of Law: 9(a)(ii)

The law should not adversely affect rights and liberties, or impose obligations, retrospectively.

Inconsistency identified: NO

Summary of agency analysis

The proposed amendments include retrospective application where the regulation making powers under the relevant acts will allow. Additionally, payments made to survivors of the amount of their backdated entitlement will also be exempted from being considered income, chargeable income, assets or cash assets under the welfare system. This will confer benefits to survivors who received a torture redress payment and therefore should be assessed to be consistent with this principle of responsible regulation under section 9(a)(ii) of the Regulatory Standards Act 2025

Rule of Law: 9(a)(iii)

Every person is equal before the law.

Inconsistency identified: NO

Summary of agency analysis

The proposed amendments do not propose any provision where the Crown is exempt from complying with legislation, limits the Crown’s legal accountability, or provides the crown or persons exercising government functions with immunity from civil or criminal liability. Therefore, the amendments to these regulations should be assessed as consistent with this principle of responsible regulation under section 9(a)(iii) of the Regulatory Standards Act 2025.

Rule of Law: 9(a)(iv)

There should be an independent impartial judiciary.

Inconsistency identified: NOT APPLICABLE

Summary of agency analysis

Rule of Law: 9(a)(v)

Issues of legal right and liability should be resolved by the application of law, rather than the exercise of administrative discretion.

Inconsistency identified: NO

Summary of agency analysis

There is no discretion in the application of the proposed regulations and decisions will be applied in accordance with the proposed regulations. Existing MSD processes of review, appeal and judicial process will continue to apply. Therefore, the amendments to these regulations should be assessed as consistent with this principle of responsible regulation under section 9(a)(v) of the Regulatory Standards Act 2025.

Liberties: 9(b)

Legislation should not unduly diminish a person’s liberty, personal security, freedom of choice or action, or rights to own, use, and dispose of property, except as is necessary to provide for, or protect, any such liberty, freedom, or right of another person.

Inconsistency identified: NO

Summary of agency analysis

The changes to the exemptions, as proposed in the Amendment Regulations will allow Lake Alice survivors to freely choose how they spend their Lake Alice torture redress payments without this being considered as income, assets or cash assets in perpetuity when MSD is assessing their entitlement to assistance administered by MSD. Noting that the general principle of the Social Security Act 2018 which intends for people to use their own resources first, where appropriate, before receiving welfare assistance. Therefore, the amendments to these regulations should be assessed as consistent with this principle of responsible regulation under section 9(b) of the Regulatory Standards Act 2025.

Taking of property: 9(c)

Legislation should not take or severely impair, or authorise the taking or severe impairment of, property without the consent of the owner unless-

• there is a good justification for the taking or severe impairment; and
• fair compensation for the taking or severe impairment is provided to the owner; and
• the compensation is provided, to the extent practicable, by or on behalf of the persons who obtain the benefit of the taking or severe impairment.

Inconsistency identified: NOT APPLICABLE

Summary of agency analysis

Taxes, fees and levies: 9(d)

The importance of maintaining consistency with section 22(a) of the Constitution Act 1996 (Parliamentary control of taxation).

Inconsistency identified: NOT APPLICABLE

Summary of agency analysis

Taxes, fees and levies: 9(e)

Legislation should impose, or authorise the imposition of, a fee for goods or services only if the amount of the fee bears a proper relation to the cost of providing the good or service to which it relates.

Inconsistency identified: NOT APPLICABLE

Summary of agency analysis

Taxes, fees and levies: 9(f)

Legislation should impose, or authorise the imposition of, a levy to fund an objective or a function only if the amount of the levy is reasonable in relation to both:

• the benefits that the class of payers is likely to derive, or the risks attributable to the class, in connection with the objective or function; and
• the costs of efficiently achieving the objective or providing the function.

Inconsistency identified: NOT APPLICABLE

Summary of agency analysis

Role of courts: 9(g)

Legislation should preserve the courts’ constitutional role of ascertaining the meaning of legislation.

Inconsistency identified: NOT APPLICABLE

Summary of agency analysis

Role of courts: 9(h)

Legislation should make rights and liberties, or obligations, dependent on administrative power only if the power is sufficiently defined and subject to appropriate review.

Inconsistency identified: NOT APPLICABLE

Summary of agency analysis