REGULATORY IMPACT STATEMENT – IMMIGRATION ACT: THIRD PARTIES

Statement of the Public Policy Objective

To provide appropriate incentives for third parties to comply with their immigration obligations and to enable the Department of Labour (the Department) to share certain information nationally, and internationally.

Statement of Feasible Options

Reasonable steps to confirm entitlement to work or study

Policy Problem and Magnitude: Approximately 9,000 overstayers may be working in New Zealand and there are an unquantifiable number of non-citizens lawfully in New Zealand working without entitlement to do so. The number of non-citizens studying without entitlement is unknown but anecdotal evidence suggests that not all education providers comply with their obligations under the Immigration Act 1987 (the Act 1987).

Status Quo: For employers the statutory definition of a “reasonable excuse” for unlawfully employing a non-citizen includes holding a tax number declaration (IR330 form) and not knowing they are not entitled to work. For education providers there is no requirement to take proactive steps to check the entitlement of a non-citizen to study.

Alternative Option 1: Remove the provision that enables employers and education providers to have a reasonable excuse. This is not a preferred option because it would reduce the transparency and clarity in the legislation, possibly resulting in a reliance on the Courts to determine what a reasonable excuse is.

Alternative Option 2: A system of matching work entitlement to an Inland Revenue Department (IRD) tax code was proposed in stakeholder dialogues and in the public submissions. An IRD tax code is not linked in any way to work entitlement and is not responsive to a change in immigration status by non-citizens.

Preferred Option: Employers and education providers are required to take “reasonable steps” to confirm a non-citizen’s entitlement to work or study. For example, for employers:

• A recruitment agency could include a check box about entitlement to work on registration forms and request proof of that status from a prospective employee. They could hold that proof on file.
• In the fruit picking industry, where instances of unlawful work are relatively common, it may be reasonable to expect an employer to hold a copy of a non-citizen’s passport or visa details for the length of their employment to prove their entitlement to work.
• Where an employee presented a resume with details of continuous education and previous employment in New Zealand, an employer could check qualifications and references, and keep a record of this on file where entitlement could be proven.

Education providers will have access to enrolment entitlement details through the Ministry of Education’s ENROL database (an enrolment register). Providers are also already required to hold entitlement details for students by the Ministry of Education’s Code of Practice for Pastoral Care of International Students.

Net Benefit of the Proposal: In an increasingly global world, with increased competition for skills and education, there are benefits to all New Zealanders from the ability to employ non-citizens or to market the education sector overseas. Employers will be able to continue to fill vacant positions with appropriately skilled people who can pass on their skills and experience. The international education sector will be able to contribute to growing the New Zealand economy.

The proposal that places a clear obligation on employer and education providers to only engage with those non-citizens who are lawfully entitled to work or study acknowledges that with benefits, come obligations. Those obligations ensure that the integrity of the immigration system is upheld, allowing the government to continue to make choices about the temporary and permanent migrants it needs to benefit all.

The proposals will benefit the government making the obligations easier and more cost efficient to enforce, and thereby better ensuring that only those with lawful entitlement work and study in New Zealand.

Depending on how entitlement is determined, some New Zealand citizens may not be able to easily establish their entitlement to work. The sighting of a birth certificate, passport or citizenship papers would generally be adequate to establish a person was a citizen. Some citizens may not have this documentation and be required to get it at a cost of up to approximately $200. The likelihood of this occurring is relatively low given that most, if not all, citizens would have some form of acceptable identification already.

The onus would be on a non-citizen to prove their entitlement through providing evidence of an appropriate visa, or other documentation adequate for the purpose.

Enforcement of obligations for employers and education providers should benefit non-citizens as they may be less likely to be exploited. New Zealanders will also benefit as employers would be less able to undermine salaries and working conditions.

Disclosure of information to confirm entitlement

Policy Problem and Magnitude: Currently there is no legislative provision to enable the Department to disclose information about a non-citizen to confirm entitlement to work or determine eligibility for publicly funded services.

Status Quo: Where the Department seeks to disclose specific information, explicit consent must be given by a non-citizen.

Alternative Option 1: All arrival cards contain a waiver that allows the Department to disclose specific information. This option is not preferred as because as technologies develop there will be less reliance on paper-based systems where a non-citizen’s signed consent can be obtained.

Preferred Option: The Bill enables the Department to share work entitlement information and duration about identifiable, non-citizen prospective employees with potential employers (without the explicit consent of the prospective employee) and immigration status information with publicly funded service providers.

Net Benefit of the Proposal: Employers would benefit from a system whereby through providing some details of a prospective employee (such as a name and passport number) they could receive instant notification of entitlement to work.

Publicly funded service providers would benefit from being able to manage their funding appropriately. The ability for them to access immigration status information would enable them, for example, to determine a non-citizen’s entitlement to publicly funded health care where the non-citizen is unable or unwilling to provide this information, or to assess a non-citizen’s liability to repay the cost of services they may have accessed.

This would benefit the government who could be assured that publicly funded services were only provided to those with entitlement and public funds were spent appropriately. It may see a reduction, for example, in the elective medical procedures undertaken in the public health service by non-citizens without entitlement. The cost of these services is estimated at approximately $2.3 million per annum. Non-citizens would not be denied access to acute care, regardless of their entitlement.

Depending on how entitlement is determined, some New Zealand citizens may not be able to easily establish their entitlements. The sighting of a birth certificate, passport or citizenship papers would generally be adequate to establish a person was a citizen. Some citizens may not have this documentation and be required to get it at a cost of up to approximately $200. The likelihood of this occurring is relatively low given that most, if not all, citizens would have some form of acceptable identification already.

The proposed option would clarify with whom the Department can share what information and for what purpose. The Department would be able to develop appropriate, systematic mechanisms to disclose information reducing ad hoc and one off approaches, particularly by publicly funded service providers. [Withheld under the Official Information Act 1982]

Penalties for education providers

Status Quo, Policy Problem and Magnitude: The current $2,000 penalty for education providers who knowingly enrol or continue the enrolment of a non-citizen without entitlement to study has not been used. The cost of seeking conviction for such a minimal fine is not a viable option and provides little incentive for providers to comply with their obligations.

Anecdotal evidence has suggested that a number of education providers are acting dishonestly and either enrolling non-citizens with no entitlement to study, or enrolling non-citizens who do not comply with the conditions of their student permits. The majority of the sector believes this brings the export education sector into disrepute.

Alternative Option 1: A strict liability offence and an instant fine system for failure to comply with obligations are not preferred as they may place too high a burden on smaller education providers who may not be able to afford substantial penalties.

Preferred Option: The maximum penalty for the offence of enrolling a non-citizen without entitlement to study without a reasonable excuse is up to $30,000 on conviction. The offence of knowingly allowing or continuing to allow any non-citizen to undertake study when they are not entitled is retained and that the maximum penalty for the offence is up to $50,000 on conviction.

Net Benefit of the Proposal: The proposal will benefit the government by providing an appropriate incentive for education providers to fulfil their obligations under the 1987 Act. It will ensure the government’s ability to control the mix, distribution, and number of students and reduce the negative impacts on Crown revenue from those without entitlement accessing subsidised courses.

New penalties for non-compliance will not impact on education providers that comply and will ensure that those that do not are appropriately penalised. The obligations will support education providers to deliver good educational experiences to foreign students, enhancing the likelihood that they will stay in New Zealand as potential migrants.

Instant fines for carriers

Policy Problem and Magnitude: While relative compliance with obligations is more than 98 percent, the absolute number of prima facie breaches of obligations by carriers is high. In 2005/06, the Department issued 1,557 infringement notices to carriers who failed to meet obligations. About 200 of these breaches resulted in an undocumented non-citizen or a non-citizen who presented a security risk arriving at the border.

Status Quo: The current sanctions regime creates insufficient incentives for carriers to comply with obligations. Anecdotal comment suggests that carriers apply less vigilance to non-citizens travelling to New Zealand compared to places where instant fines are imposed.
Preferred Option: Introduce an instant fine system for carriers that fail to meet their obligations based on strict liability offences. It is proposed that for failure to check prescribed immigration documentation:

• where the security of the border is not compromised (for example, failure to check evidence of sufficient funds) there is a fine of $1,000 for a person in charge of a craft or for a carrier, and
• where the security of the border is compromised (for example, allowing a non-citizen to travel without a valid visa) there is a fine of $2,500 for a person in charge of a craft, or $5,000 for a carrier.

It is proposed that for failure to comply with other APP system and PNR data related obligations there is a fine of $2,500 for a person in charge of a craft or $5,000 for a carrier.

Net Benefit of the Proposal: The preferred option would provide for a proportionate, flexible, prompt, and internationally acceptable incentive to ensure that carriers bringing people to New Zealand comply with their obligations. It would provide incentives for carriers to ensure sufficient knowledge of New Zealand’s immigration-related requirements to ensure they did not bring inadmissible non-citizens to the country. This would, in turn, limit their liability for returning these non-citizens.

New penalties for non-compliance will not impact upon those carriers that comply and will ensure that those that do not are appropriately penalised.

The government would benefit through an ability to more appropriately enforce carrier obligations with a system that provided real incentives to comply and thereby better uphold its sovereign right to choose who travels to and enter New Zealand.

The proposal will benefit non-citizens as, if carriers have greater incentives to comply with obligations, less inadmissible non-citizens will need to be detained while their departure from New Zealand is facilitated.

data-matching provision with the agency responsible for the administration of the Social Security Act 1964

Policy Problem and Magnitude: The data match with the agency responsible for the administration of the Social Security Act 1964 (SS Act) does not enable information on non-citizens who have been deported from New Zealand, or information on protection claimants, to be disclosed to determine access and entitlement to social security support. A non-citizen who has been deported from New Zealand may potentially continue to receive payments into their New Zealand bank account.

Status Quo: The Chief Executive (CE) may supply information in relation to non-citizens who may be in New Zealand unlawfully or who are in New Zealand on a temporary permit.

Preferred Option: It is proposed that the Bill continue data-matching provisions with the agency responsible for the administration of the SS Act with amendments to enable the supply of information on the date of deportation and the outcome of a protection claim determination that may impact on a claimant’s entitlement to social security.

Net Benefit of the Proposal: Data matching with other government agencies enables the government to ensure fair allocation of public resources, supports the maintenance of law and the security of the border. It will ensure that non-citizens deported from New Zealand no longer receive benefits to which they are not entitled, and will ensure that protected persons, and failed protection claimants receive benefits in line with the SS Act.

Statement of Consultation Undertaken

Stakeholder Consultation: The key concern to the proposal to require employers to take a more proactive approach to checking entitlement to work expressed by some submitters related to compliance costs.

Responses to the removal of the IR330 form as reasonable excuse were mixed with approximately 55 percent of the 104 submitters supporting the proposal. Business and employers groups generally supported the use of the IR330 form as a reasonable excuse.

Most submitters were supportive of a more flexible and realistic sanctions regime for education providers who failed to comply with their obligations. Those that did not support the proposal for a more flexible sanctions regime noted practical issues such as the need to sometimes enrol a student before a visa has been issued.

The three airline representatives did not support the introduction of an infringement notice system for carriers who failed to comply with their obligations. Some concern was expressed by migrant and human rights groups that an infringement notice system could adversely impact on non-citizens seeking asylum.

Many of the 91 submitters expressed the view that data-matching and disclosing immigration status information is necessary to ensure that health, welfare and other publicly funded services are only provided to those who are eligible. Many of those who opposed the disclosure of immigration status information raised concerns about the right to privacy. The Human Rights Commission also expressed concern about the potential for non-citizen children to be disadvantaged if their parents avoided seeking medical treatment or enrolling them in education due to fear of a negative immigration outcome.

Government Departments/Agencies Consultation: The Privacy Commission raised some initial concerns around the disclosure of information proposals that were mitigated by the safeguards proposed to protect private, personal information.

Business Compliance Cost Statement

Employers

Estimated Compliance Costs

• Familiarisation with the new requirements to take reasonable steps to check a person’s entitlement to work (which could include training for human resource departments, the development of documentation check policies for new hires, general training for employers, or legal advice from lawyers to employers).
• Ongoing costs arising from the need to retain information demonstrating that reasonable steps were taken including printing or photocopying information and storing it on a file. These costs are likely to be negligible per employee but larger (but still very small) where information is required for a number of employees.

It is expected that the burden of compliance costs will fall on smaller employers because they are less likely to have formal policies regarding the checking of documentation before hire. Generally, however, as small employers are likely to be undertaking relatively few hires at a time, the overall cost is likely to be low.

Steps Taken To Minimise Compliance Costs

The use of the reasonable steps approach means that employers will be able to use a variety of mechanisms to determine a person’s entitlement, including those which they already do (e.g. sighting and photocopying a person’s passport). To further minimise compliance costs for business, an electronic verification facility could be developed.

As most employers retain information about individual staff members, the evidence of reasonable steps would most likely be retained with this information. As such, no steps to minimise these costs are proposed (also because this activity probably would have been carried out already).

The Department will provide guidance material to employers to assist them to understand the meaning of the new requirements. This material will be tailored to various business/employer audiences and sectors as required.

Education providers (private training establishments only)

Estimated Compliance Costs

• Familiarisation with the new requirements to take reasonable steps to check a person’s entitlement to study (which could include training for principals/those with responsibility for enrolling students).
• Costs arising from the need to hold information demonstrating that reasonable steps were taken including printing or photocopying information and storing it on a file. As providers are required to do this, it is not an additional compliance cost.

Steps Taken To Minimise Compliance Costs

• Use of the Ministry of Education’s ENROL management system which will have information about a person’s entitlement to study included in the enrolment page for the student.