Cabinet agreed on AI benefit reforms a year ago, waited until Budget to pass under urgency

The Green Party is questioning why the Government rushed consequential reforms of the benefit system into law without a select committee during a few days of Budget urgency when Cabinet agreed to reform the law more than a year ago.

The Greens want to know why the Government legislated the changes under urgency last week despite having a year to introduce them after they were first announced in Budget 2025 last May.

The Government has admitted that passing the bill through all stages under urgency will allow it to meet its forecast savings target from the scheme, which are meant to be $225.8 million over four years, beginning this year. A full parliamentary process could have delayed this by about six months.

Savings from the reforms, which authorise the Ministry of Social Development to make broad use of automated decision-making (ADM), including artificial intelligence, were agreed by Cabinet on April 14 last year and savings from the changes were booked in the 2025 Budget.

That is despite the fact the changes were not fully legislated until last week. That Budget bid included two separate legislative reforms, one of which was completed earlier this year.

Documents released as part of the 2025 Budget show Social Development Minister Louise Upston discussed the savings with other ministers as early as December 2024.

Budget 2025 documents show that savings from the law changes are meant to begin in the current fiscal year, which ends at the end of the month. The law is meant to save about $280,000 in that time. These savings relate to the first reforms, which passed earlier this year. The bill passed last week has a commencement date of July 1, 2026, meaning the savings will only accrue in the next fiscal year.

When asked why it took so long to introduce the bill, despite the Government having booked savings from it, Upston’s office told the Herald the law was “an operationally complex piece of work, and we have taken the time to get it right”.

“The Social Security (Modernisation) Amendment Bill is a long overdue improvement to MSD’s efficiency and administration of the welfare system. MSD [Ministry of Social Development] has been working on ADM for a number of years – including assessing what processes are suitable for ADM, introducing and reviewing the ADM Standard, bringing other safeguards into legislation, and refining the ADM-containing processes that are currently in use,” Upston said.

Upston said passing the bill through all stages under urgency “will enable the policy to meet the forecast savings from Budget 2025, with a commencement date of July 1”.

The Government maintains ADM is not “generative AI”, but papers published with the bill says the law change will authorise some forms of AI to be used.

The Green Party’s social development spokesman, Ricardo Menéndez March, told the Herald it was “irresponsible” for the Government to introduce and pass such a consequential bill without standard parliamentary scrutiny, including a select committee.

“Giving carte blanche powers to MSD to use automated decision-making for any power and any decision could have huge consequences for people needing income support.

“It simply not good enough for the Government to not have adequate public communications about their strategic intentions with ADM,” March said.

March noted that the bill actually curtailed some automated decision-making for hardship assistance that he supported because it streamlined the process for getting assistance.

He noted that moves in other countries to automate parts of a social welfare system have often run into considerable difficulty.

Australia’s Robodebt scheme, used to calculate benefit overpayments and debt recovery, resulted in a damning Royal Commission report.

The Robodebt scheme was an unlawful automated welfare debt recovery programme used in Australia between 2015 and 2019. It incorrectly calculated overpayments and forced the federal government to repay A$721m ($872.3m) in unlawful debts to 470,000 people.

In 2021, the Dutch Cabinet collectively resigned in the aftermath of a childcare benefits scandal, which involved a computer system that wrongfully accused families of defrauding the welfare system.