Opinion sharply divided on proposed social insurance scheme

The announcement of the consultation for a social insurance scheme for all New Zealanders by the Labour-led government has raised many eyebrows.

Since everyone is likely to get affected by the scheme if it comes into play – business organisations to political parties – everyone has reacted sharply to it.

While a few believe it will be a good idea and will help employees, there are many who think otherwise.

Indian Weekender spoke to people from different sectors to find out what they think.

Louise Upston, National Party spokesperson for Social Development & Employment
Under Labour wages are not keeping pace with inflation and the proposed scheme will reduce take home wages even further. Now, in the midst of a cost-of-living crisis, is not the time to saddle hard working New Zealanders with more taxes.

Green Party Social Development & Employment spokesperson Ricardo Menéndez March
The proposed Income Insurance Scheme will benefit some, but will create a two-tier support system. An adequate welfare system, guaranteeing liveable incomes through individualised benefits, should protect all workers. I wish the Government showed the same level of urgency to fully implement the Welfare Expert Advisory Group recommendations as they do creating a new income support system that will not benefit everyone. This is a call to action to fight for a Guaranteed Minimum Income, individualising benefits, removing sanctions, and an urgent boost to income support. A strong welfare system means people do not feel forced to commit to a lower paid job just to make ends meet. The Greens are committed to fighting for liveable incomes for all, not just some

Karen Chhour, ACT Party Welfare spokesperson
Labour’s income insurance plan will hurt productivity and make welfare dependency even worse. Our welfare system is due for an overhaul. Labour is proposing an almost three percent tax increase on workers when Kiwis are already struggling with cost of living. Labour appears to be encouraging workers to take as long as they like to find work. Slowly but surely, Labour is transforming welfare in a way that will increase dependency – by making benefits more generous and removing obligations on welfare recipients. ACT welcomes a debate about employment insurance, but Labour’s plan will effectively punish work and subsidise unemployment. New Zealanders shouldn’t tolerate that.

Kerry Davies, National Secretary, Public Service Association
Creating sustainable solutions is achievable when government, unions and business are on the same page. We know that over the coming years some industries are going to wind down while others start up. A social insurance scheme will give workers security and space to retrain, upskill and transition into good quality, sustainable jobs. A social insurance scheme and a well-functioning welfare system go hand in hand. Putting in place a social insurance scheme doesn’t mean that welfare reform is unnecessary; we still believe that the government should act on the Welfare Expert Advisory Group’s recommendations.

Sunny Kaushal, Chairman, Dairies and Business Owners Group NZ
The latest announcement by the government to introduce a New Zealand Income Insurance Scheme, unfortunately appears to be another ill-conceived policy. Actually, it wipes out the incentive to re-enter the workforce, and adds another tax on workers and employers. Rather than a social insurance scheme it is a new form of tax, call it a ‘job tax’, this would put another burden on hardworking New Zealanders and Small Businesses. The small businesses across NZ have already been going through a hard time over the last two years, they are still crying out for help and struggling to survive. In such unprecedently difficult and trying times we were expecting the government to come up with a brilliant policy and announcement for a targeted support and relief to mobilise economy, not another tax to fund another ideologically driven spending.

Andrew Hoggard, President,  Federated Farmers
The nation is in the Red setting and on the cusp of an expected Omicron surge that will be a stressful period for many who will be impacted by this scheme. The government should recognise that people’s well-being, and good process, are more important than legislative timeframes to clear the books of anything contentious before an election year. Acute cost pressures are hammering businesses and high inflation is eroding individuals’ real wages. Another tax to absorb will just add to this pressure.
Unemployment is rock bottom and is forecast to stay low. People who do lose their jobs are unlikely to be out of work for long but if they can take a seven-month break between jobs that might change. There will also be administrative costs, including to make sure the scheme isn't rorted.