A controversial proposed scheme slated to cost about $3.5b per year to insure New Zealanders against unemployment has been pushed back to 2025 according to Finance Minister Grant Robertson. Robertson has barely made mention of the proposed safety net in recent months, which many Kiwis oppose.
The proposal’s future is in doubt in light of the statements by Prime Minister Jacinda Ardern that Labour’s priorities would be reshuffled for 2023 in an effort to appeal to more fiscally conservative voters.
The Government didn’t campaign on the scheme. It was touted as an urgently needed measure to close gaps in the social safety net and provide workers time for retraining.
How it would work
Under the multi billion dollar scheme, a levy would be imposed on worker salaries of 1.39% per year. An equal levy would be imposed on the employer. Levies would be capped for workers earning more than $130,911 per year.
Should the worker become unemployed through redundancy, health conditions, or disability, he or she would be afforded 80% of his or her salary for up to seven months. The period could be extended to 12 months if the person enrolled in approved training and rehabilitation programs.
ACC would administer the scheme and assign the recipient a case worker. The employer would pay for the first month and ACC would cover the remainder.
A lot of opposition
Many argue the scheme is too expensive and will be exploited by people opting for benefits instead of re-entering the workforce. The University of Auckland and several major players in the hospitality and food industry have previously come out against the scheme. Organisations concerned with the welfare system including Child Poverty Action Group and the Salvation Army are also opposed.
National and ACT call the scheme an unworkable ‘job tax’. The Green Party said it “risks embedding a two-tier system” of rich and poor scheme recipients.
BusinessNZ initially helped with the planning, but have since said unless a tax cut is built in for businesses to offset costs, they are no longer supportive.
The Public Service Association and unions including E Tū are supportive of the scheme.