Few repay debts following legal aid
The screws are turning on people who receive legal aid funding for lawyers, as new figures show only a fraction of the millions handed out in the greater Manawatu region gets repaid.
Repayment rates are, however, on the rise and the Government is about to introduce interest charges to "incentivise repayment of the loan by those who can afford it".
Figures released by the Ministry of Justice under the Official Information Act show $20.7 million in legal aid has been paid to people appearing in the region's courts between 2008-9 and 2012-13.
Over the same period, $1.15m, or 5.56 per cent, has been repaid.
That rate is rising. In 2012-13, it was 7.57 per cent, compared with 4.67 per cent in 2008-9.
These figures cover all family, civil and criminal cases in the Feilding, Dannevirke, Levin, Marton and Palmerston North courts.
The legal aid system has been shaken up in the past few years since costs ballooned last decade.
However, they're on a downward slide now from $173m in 2009-10 to $152m in 2012-13.
And as at June 30, the legal aid debt sits at $127.7m.
"Legal aid has always been a loan and it is important for the future viability of the scheme that those who are able to repay their legal aid debt do so," ministry legal and operational services deputy secretary Nigel Fyfe said.
About 75 per cent of people who receive legal aid assistance for lawyers don't meet the thresholds for repayments. Each case is looked at on an individual basis.
Those assessed as being able to repay their debt, of which the average is $2000, can apply to have their costs wiped if their circumstances change or it would cause hardship.
Mr Fyfe said to give incentive for repayments, 8 per cent interest would be added to debts from next year.
"Those assessed as capable of repaying their legal aid loan have a six-month interest-free period to enable them to make proper affordable arrangements for debt repayment."
Human rights lawyer Michael Bott said if legal aid was to be treated as a loan, then people receiving it should be able to choose their lawyer.
Under a host of changes to the system, this is no longer possible.
Mr Bott compared the situation with a bank giving a loan for building work and then ordering the customer to use a certain builder.
Making people repay would further pressure people into pleading guilty. Meanwhile, those that can afford it would pay for the legal advice they required.
Mr Bott said he had one client who almost had to sell their family home to cover their legal aid debt.
According to the ministry, assets such as houses or cars can have securities placed over them, which means if they are sold, some of the money would go toward repaying legal aid debt.
Justice Minister Judith Collins said the Government inherited a legal aid system that was in trouble and changes had been made to stop costs climbing out of control.
"The Government's changes to legal aid are designed to make the system fairer for everyone: to ensure that those who need it most, now and in the future, are able to receive legal aid, and those who can afford to contribute to the cost of it, do so."
■ Visit manawatustandard.co.nz for a full breakdown of legal aid expenditure and debt recovery in the region.