Govt unveils legal aid changes, $138m saving over four years

The government has announced a raft of changes to legal aid it says will come into force next year and save taxpayers $138 million over four year.

The proposals are in four parts and deal with legal aid eligibility, purchasing approaches, revenue collection, and court-ordered Lawyer for the Child services, Justice Minister Simon Power said today.

Adjusting legal aid eligibility
This will apply particularly to family and civil cases. Eligibility for domestic violence and personal protection matters will not be affected. Proposals include:
• Tightening the merits test for family cases so the 2006 criterion to take into account the interests of other parties to proceedings is replaced with a narrower test which focuses on the prospects of success of the case.
• Introducing the means thresholds that already apply for family and civil legal aid cases ($22,000 per year for a single adult and $50,934 for an adult with two dependants) to less serious criminal cases, most of which cost less than $650.00. At present there is no set threshold for such cases. People above the means threshold will still be able to apply for legal aid but will have to prove their case is likely to be an expensive one, or that they are genuinely unable to pay for their lawyer. Those no longer eligible for legal aid will still have access to the services of a duty solicitor.
• Adjusting the special circumstances test for family and civil cases when an applicant is above the means and merits thresholds to focus solely on expensive cases.
• Discontinuing the automatic inflation adjustment of eligibility thresholds, to allow adjustments to be made in line with other Budget priorities.
These are expected to save $48 million over four years.

A new purchase approach
Expanding the Public Defence Service to take on up to 50 per cent of criminal legal aid cases in Auckland, Hamilton, and Wellington (currently 33 per cent) over time, and expanding to Tauranga, Hastings, Dunedin, and Christchurch (when circumstances allow).
Introducing fixed fees for cases that have more standard cost structures, including criminal summary cases, most family cases, and some civil cases.
Establishing high-cost case management for the most expensive cases which would involve agreeing on a price for services in advance.
These are expected to save $73 million over four years.

Improving revenue
• Introducing compulsory repayment orders.
• Charging interest on debts.
• Re-introducing a user charge of $100 (GST inclusive) for family and civil cases (but excluded domestic violence, mental health, and criminal cases). A $30 user charge was introduced in 1969 (equivalent to $440 in 2010 dollars) and increased to $50 in 1999 ($75 in 2010 dollars). However, it was repealed by the 2006 Legal Services Amendment Act.
These are expected to save $19 million over four years.

Better management of court-ordered Lawyer for the Child services
This will be achieved by:
• Extending the quality assurance framework that will be established under the recently passed Legal Services Act to Lawyer for the Child and youth advocates.
• Requiring parties to contribute to the cost of Lawyer for the Child to encourage the early settlement of cases (excluding cases of abuse and violence).
• Reviewing the criteria so a lawyer for the child is appointed in only more appropriate cases. The current presumption is that the court appoints a lawyer for the child unless it would serve no useful purpose.

“We cannot continue to ignore the substantial cost pressures the system is facing, particularly at a time when New Zealand is being forced to borrow an average of $300 million a week,” Mr Power said.

He sad legal aid expenditure has grown substantially in the past decade, and in the past three years has increased by 55 per cent, from $111 million in 2006/07 to $172 million in 2009/10.

“That growth is forecast to result in a $402 million gap between forecast and baseline legal aid expenditure over five years.

“Two-thirds of the cost increase stems from the previous government’s decision in 2006 to extend eligibility for legal aid, and in 2008 to increase lawyer remuneration.

“To be blunt, these changes were completely unaffordable and unsustainable then and they are even more so now.” 

At a forum in February, Mr Power said changes were needed to meet an expected $402 million funding gap over the next five years.

He has been driving legal aid reforms following Dame Margaret Bazley's report on the legal aid system, which identified system-wide failings and called for urgent action to rebuild trust and confidence in it.

Last week, Parliament passed the Legal Services Bill, which will fundamentally reform the system.