Phil Goff: Legal Services Bill, First Reading

Justice Minister Phil Goff's first reading speech to Parliament last night on the Legal Services Amendment Bill (No 2)

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Madam Speaker, I move that the Legal Services Amendment Bill (No. 2) be now read a first time.

It is my intention to move that the Bill be referred to the Justice and Electoral Committee for consideration, and that the committee have the authority to meet at any time while the House is sitting (except during oral questions), and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 191 and 194(1)(b) and (c).

The Legal Services Amendment Bill (No. 2) aims to ensure better access to legal representation and therefore to justice. It updates the criteria for eligibility for legal aid and introduces a new repayments and debt management regime. More people will qualify for legal aid. The costs of additional grants will be partly offset by requiring a higher proportion of legal aid recipients to repay some, or all, of their grant.

Reform of the legal aid scheme is overdue. The Legal Services Act 2000 sets out the framework for the existing legal aid scheme. It outlines the criteria for determining who is eligible for legal aid and provides for the administration of the scheme by the Legal Services Agency.

Eligibility for legal aid depends on a number of factors, such as an applicant's financial circumstances. The present eligibility criteria are not inflation-proofed and have not been revised since 1987. The income limits are no longer realistic and have resulted in many lower income working people being ineligible for legal aid even though they cannot afford legal representation.

This government is committed to ensuring that inability to pay is not a barrier to justice. We are also committed to ensuring that public funding is used responsibly. The reforms introduced by the Legal Services Amendment Bill (No. 2) effectively balance these objectives.

I turn now to address the key features of the Bill. Financial eligibility thresholds will be updated. This measure will increase the pool of those who are eligible for legal aid from 765,000 to 1.2 million. Funding in Budget 2005 will enable an estimated additional 25,000 grants of aid to be made each year. The Bill also builds in inflation proofing by linking the thresholds for financial eligibility to movements in the quarterly consumer price index.

A new, simplified gross income test is established. Benefits are included in the definition of "income" to correct an anomaly whereby some beneficiaries have been granted aid when those on equivalent working incomes are not eligible.

The definition of "disposable capital" makes provision for those assets that are not readily disposable, and excludes assets such as the car and an allowance of equity in the home. Regulations made after the Bill is passed will also enable better assessment of assets held by trusts and assets that are disposed of immediately before aid is sought.

The Bill makes two minor changes to the eligible proceedings criteria. It clarifies that people outside New Zealand cannot be granted legal aid for immigration related proceedings when people in New Zealand would be ineligible; and that legal aid is not available for Commissions of Inquiry.

The Bill retains merits tests to ensure that aid is only provided where there are good grounds for a case to proceed. There will be a new merits test for certain Family Court and Youth Court proceedings where the existing "prospects of success test" is difficult to apply, particularly in relation to vulnerable people such as children. The applicant will still have to show reasonable grounds for taking or defending the proceedings.

The Bill also clarifies the criminal legal aid merits test to ensure that those facing criminal charges have representation when it is necessary due to the seriousness of the offence or the complexity of the proceedings.

It is fair and reasonable to require those who can afford to pay to contribute to the cost of their legal aid. The current repayments scheme is complex and does not enable applicants to determine the costs that they may face. In addition, civil and criminal legal aid are treated differently meaning that very few recipients of criminal legal aid are required to make repayments.

The Bill addresses these problems by introducing a new repayments regime that corrects the anomaly between criminal and civil aid recipients and is transparent, easy to understand, and administratively simple.

Under the Bill, approximately 22,000 legal aid recipients will be required to repay their legal aid grant, either partially or in full. This is an increase of 14,000 in the number of recipients required to make payments under the current regime.

The same calculation of repayments will apply to criminal and civil legal aid increasing the proportion of criminal aid recipients required to make repayments. Applicants will know the maximum repayment that they may face from the outset and, with the assistance of their lawyers, will be able to obtain an estimate of the likely total cost.

The amount of repayment will be determined by regulations. Aid recipients who are successful in their proceedings and receive funds in settlement will repay the cost of the grant of legal aid. Those who do not receive funds as a result of their proceedings will repay the lesser of the amount of repayment set by regulations or the cost of the grant of aid. The new repayment requirements are not intended to be onerous and there will still be a group of low-income legal aid recipients (approximately 74 per cent) not required to make repayments. By addressing the requirements for repayment of the legal aid grant in some cases, the Bill ensures that increased access to legal aid is affordable.

The Bill will empower the Agency to better manage and recover debt.

The Agency will have powers to:
· Adjust payment arrangements as people's financial circumstances change;
· Require repayments from the time that aid is granted;
· Request financial information from debtors, and seek verification of that information;
· Charge interest on debt if there is a default in payments;
· Register a caveat against property to secure debt; and
· Write-off debt in cases of serious hardship.

There will also be changes to the offence provisions for failure to provide information and for knowingly providing false and misleading information. These changes confirm and support the obligations of the aided person.

The Bill's changes contribute to the goal of ensuring that public funding of legal aid is responsible.

Access to justice is a fundamental principle. The Legal Services Amendment Bill (No. 2) will help us to achieve this objective by ensuring that people are not denied legal representation through the inability to pay and will ensure that public funding of legal aid is used responsibly.

I commend this Bill to the House.

ENDS

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