Community Services Card Policy

• Community Services Cards were announced in National's 1991 'Mother of All Budgets' and introduced on 1 February 1992

• Community Services Cards provide a subsidy for GP visits and pharmaceuticals for low to middle income earners.

• Beneficiaries are automatically entitled to a Community Services Card.

• New Zealand Superannuitants, students and working people can apply for the Cards, and their eligibility is determined in part by an income test.

• The are about 1.1 million Cards in circulation.

The issue

• Government increased the rates of NZS/VP, social security benefits, and student allowances on 1 April 2001 to take into account the 3.98% increase in the CPI.

• Because beneficiaries are automatically entitled to a Community Services Card, the CPI increase had no impact on their Card eligibility.

• Working people's eligibility for Community Services Cards was not affected by the CPI increases in benefits.

• However, as a direct result of the 1 April 2001 CPI increase in New Zealand Superannuation, an estimated 1270 Superannuitants were expected to lose their Cards. This is because the combination of their NZS, private income and CPI increase pushed them over the edge of the CSC income thresholds.

• Not only would this have negated the CPI cost of living adjustment for the Superannuitants affected, they could have actually be made financially worse off due to high health care needs.

What Government has NOT done

• Government has NOT made any change to Community Services Card thresholds

• Government has NOT made any policy decisions that would mean working people were treated differently to beneficiaries with respect to Community Services Card eligibility

What National Have Been Saying
Bob Simcock has claimed that CSC thresholds had traditionally always increased with benefit adjustments:

"It is not automatic - it's not one of those things that just happens by law - but I understand it has always occurred at the same time." The Dominion April 17 2001

FACT
National NEVER increased the CSC threshold in relation to benefit CPI increases.

The threshold was increased in 1996 and 1997 in relation to movement in the level of family support - not CPI. (Some rates also moved in 1994 when the scheme was expanded).

Our 2000 general increase was the first time it had moved along with benefit CPI changes.

In other words, year after year National saw Superannuitants lose their community services card entitlements as Super was CPI adjusted - for example it is estimated that some 1,503 superannuitants moved over the income threshold due to National's CPI adjustment in 1995. National did nothing to protect their CSC assess.

We didn't think that that was fair or right. In 2000 we moved to protect their interests AND increased the general threshold (the first increase since 1997).

This year we have again acted to protect Superannuitants access to the CSC. This is because we acknowledge that older New Zealanders face higher health costs and cannot chose to forego the CPI increase to their pensions.

Does this create a new inequity between those on a benefit and working families?
No.

Income tested beneficiaries have always received the CSC automatically. This was done to lower administrative costs and to ensure take-up (you will recall how unpopular the 'poor card' originally was).

So a few beneficiaries over the income threshold for CSC have always received the CSC.

For example as at 25 April 1997 3,348 beneficiaries over the threshold still got the card.

Of course these people were those facing great difficulty with high disability costs, high housing costs and special costs.

What this illustrates is that there always have been problems with the CSC system in that low income workers, Superannuitants, students, etc face a separate income test whereas beneficiaries do not.

The real problem is with the Community Services Card itself.

The threshold system is a simple cut out. Earn one dollar over the threshold and next time your card is due for renewal you will lose it.

Bottom line: The CSC is a very blunt tool fraught with inequities and difficulties.

1. Original rates. (full family support = group 1 card; abated family support = group 2 card)

2. Interim scheme made "permanent" and rates introduced relating to family size rather than family support formula in (1) above. No longer any group 2 cards.

3. & (4) Increases due to changes (increases) to rates of Family Support

5. This increase (Labour govt.) was the first time that increases were related to benefit/super adjustment.