It will probably come as a surprise if someone whose daily job is to defend unions opposes the proposed social insurance scheme. But I do and here’s why.
This government waited five years to fix the massively inadequate welfare system and made no progress.
Adopting an expensive social insurance system instead of carrying out this reform will set back progressive change by a generation.
Workers who lose their jobs need help while waiting for a new job. Current benefits are woefully inadequate and should first be increased, made an individual right and made more accessible.
The current system already has a poor deserving and undeserving element. For two decades, unemployment benefits have been halved as a percentage of the average wage – from 40% to 20%.
It was also made very difficult for people to access it, so many simply gave up.
This has led to massive impoverishment and an increase in homelessness as housing costs have risen.
This needs to be corrected immediately so it is not postponed as recipients are forced into ever greater indebtedness with WINZ, then prosecuted and further punished for not making repayments.
Now the government wants to merge an ugly ACC system based on an insurance model that seems to spend most of its time trying to avoid liability for the long-term consequences of accidents by reclassifying them as degenerative diseases.
Why should VAC be trusted to give people their rights when they lose their jobs. How many times will young workers be told it’s “their fault” if they lost their job and don’t qualify?
Why can’t we have a wealth tax to fund an adequate system of unemployment benefits and health services rather than relying on a flat tax of 1.4% on workers’ wages (plus 1.4 % companies).
Should we at least evaluate the alternatives consisting of fixing the current provisions as a matter of urgency? What might they look like?
First, social benefits could be made much more accessible to the sick and disabled and raised to 33% of net average earnings to look more like NZ Super. They would be paid without reference to the income of the partners but taxed according to a progressive scale. All unemployed workers would be actively managed on a case-by-case basis for retraining and redirected to emerging skilled and unskilled 21st century jobs. In the event of a national crisis, displaced workers could benefit from temporary access to additional tailored assistance, as is currently the case. Single parent benefits raise particular issues and need careful reform, beyond the space for discussion here.
Second, all severely disabled people, regardless of cause, could have access to the level of rehabilitation and medical treatment that the state currently offers only to accident victims.
Child tax credits should be paid in full to all low-income families. As incomes rise above $48,000, for example, they should be reduced at a modest rate (much less than the new 27% abatement). Proper annual indexation with a salary link like the NZS is the least we can do for our children. Family debt to government agencies could be forgiven and much student loan debt forgiven.
NZS should be paid as an untaxed basic income to all at age 65 and recipients should be subject to a separate progressive tax scale to claw back high earnings. The revenue could help fund the seriously ill and disabled who currently do not benefit from ACC, and fund the 21st century adjustments needed to make New Zealand’s welfare state again to be proud of.