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Court wipes MSD loan policy

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The Ministry of Social Development could be forced to reverse hundreds of fraud actions against beneficiaries after the High Court found its policy is treating loans as income was unlawful.

The action was taken by a sole mother, referred to as Mrs F, who was hounded to repay more than $120,000 in benefit payments after the ministry found she has used bank and family loans to repair her house.

Her lawyer, Frances Joychild QC, says the decision will bring a collective sigh of relief to thousands of beneficiaries who have had to borrow to make ends meet.

Child Poverty Action Group economics spokesperson Susan St John says it is obvious to most people that loans are not income, but it has taken eight years of intensive effort including expensive court time to get this decision.

She says the wider family should be encouraged to help beneficiaries where appropriate, without penalty, and without fear of infringing petty rules.


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