The claytons consultation on the $4.5 billion tax increase

Jenee Tibshraeny writes:

The Government is being accused of making a mockery of democracy in the way it’s working on creating an income insurance scheme.

The Government last week passed legislation under urgency, allowing the Accident Compensation Corporation (ACC) to work towards operationalising such a scheme, should it be established under subsequent legislation.

Finance Minister Grant Robertson allocated $4 million via the Budget towards ACC doing this work, and set aside a further $56.5m in “contingency” funding for 2023-2026.

Yep they did this under urgency.

The Government did so ahead of the Ministry of Business Innovation and Employment (MBIE) analysing and publishing submissions made as a part of a consultation process that took place between early February and late April.

The consultation raised the question of whether the scheme was even required, and whether it should be administered by ACC.

MBIE said a formal decision on whether the Government will proceed with it will be made in June or early July.

So they are consulting on if such a scheme is needed, while also passing laws and funding under urgency to implement such a scheme!

The director of Victoria University of Wellington’s Institute of Governance and Policy Studies, Simon Chapple, said the poor process was “mind-boggling”.

He fears the Government is jumping the gun, working on the assumption the public wants and needs an income insurance scheme, without having properly campaigned or consulted on it.

The proposed scheme would see a claimant paid up to 80 per cent of their income for up to seven months, in the event of a job loss due to redundancy or sickness.

If they were unemployed after this time, they’d go into the regular welfare system.

The scheme is estimated to cost $3.5 billion a year and would be compulsory. It would be funded by employees contributing 1.39 per cent of their wages/salaries to the scheme (up to a certain level). This contribution would be matched by their employer.

The cost is now projected to be $4.5 billion a year and polling has in fact shown a majority do not want to pay an extra tax so people can get $400 a day for being unemployed.

Chapple noted Labour didn’t campaign on introducing income insurance ahead of the 2020 election. It wasn’t even included in its full election manifesto. Rather, Labour (in a tax policy document linked to its manifesto) committed to “investigating” such a policy.

And now using urgency for it. The way to stop it will be in the ballot box in 2023.