Government moves to clarify ACC payments’ impact on welfare eligibility

“This Bill is about ensuring the welfare system operates as intended — targeted, fair, and consistent for everyone receiving support,” Louise Upston said.

The Government is introducing new legislation to strengthen fairness and consistency in the welfare system by clarifying how Accident Compensation Corporation (ACC) payments are treated when calculating benefit entitlements.

Social Development and Employment Minister Louise Upston today announced the Social Security (Accident Compensation and Calculation of Weekly Income) Amendment Bill, which aims to confirm the longstanding policy approach used by the Ministry of Social Development (MSD) when assessing income support.

“This Bill is about ensuring the welfare system operates as intended — targeted, fair, and consistent for everyone receiving support,” Louise Upston said.

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Closing legal uncertainty and protecting fairness

The legislation responds to recent court interpretations that have created uncertainty in how backdated ACC payments affect welfare assistance.

Under the Government’s targeted welfare model, income support is designed to reduce as a person’s other income increases.

“The welfare system is built on a simple principle: the more income you receive, the less assistance you should require from the state,” Minister Upston said.

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Two key groups affected by ACC and welfare overlap

Minister Upston highlighted that there are two main cohorts of people receiving ACC compensation within the welfare system:

• People receiving ACC and welfare assistance at the same time, and

• People receiving welfare assistance while waiting for ACC entitlement decisions, who may later receive backdated lump sum payments.

Court interpretations have resulted in the second group being treated more generously than the first.

“This means some clients can effectively receive two forms of income support for the same period of need,” Upston said.

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Preventing inequities in access to beneficiary-only support

One consequence of the current legal interpretation is that some individuals receiving lump sum ACC payments may remain eligible for additional beneficiary-only support, such as the Winter Energy Payment, even when their backdated ACC compensation would otherwise reduce their benefit entitlement to zero.

“This creates inequities between different cohorts of people receiving ACC payments,” Minister Upston said.

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Key changes in the Amendment Bill

The Bill will:

• Confirm MSD’s longstanding approach to charging income, including income from ACC

• Authorise MSD to retrospectively treat a person as a non-beneficiary when a backdated ACC payment reduces benefit entitlement to zero for the relevant period

• Reinforce the targeted welfare principle, ensuring assistance is focused on those who need it most

• Provide legal certainty and prevent interpretations that go beyond the policy intent

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Ensuring the welfare system remains targeted and sustainable

Minister Upston said the Government has a responsibility to ensure public support systems remain equitable and financially sustainable.

“The Government has a duty to fix this situation and clarify the law so it aligns with the longstanding intent of policy,” she said.

“This Bill ensures people in similar circumstances are treated fairly, and that welfare assistance remains targeted to those who genuinely require it.”

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Next steps

The Social Security (Accident Compensation and Calculation of Weekly Income) Amendment Bill will now proceed through the parliamentary process, where it will be subject to scrutiny and public submissions.