The government has opened or will be opening, some doors that will enable unions and other progressive movements to push for far more than is currently being offered.
The decision by the parties making up this government, Labour, NZ First and the Greens to adhere to a position of “fiscal responsibility” means that there will not be any new taxes imposed on the very wealthy for at least three years. The government is also committed to steadily paying off the existing government debt.
This means that the money available to the government to spend is not that much different to what would have been available to the previous National government. This means that very little can be done to fundamentally change the inequality and injustices that abound.
Actually, the government could simply seize the ACC investment fund which last time I looked was over $30 billion and it would have enough money to do almost whatever it wanted. This fund was built up by taxing working people through higher and higher ACC levies over the last few decades as a prelude to the eventual privatisation of the fund.
When ACC was established there was no fund needed to cover liabilities into the future. The system was deliberately established as a “pay as you go” system which meant this year’s liabilities were paid out of this year’s income. There was no need to change to the system we have unless you planned to sell ACC. That was the plan of the National party in the past. That plan no longer exists. The fund does not need to exist. The money should be returned to the people.
So when someone says “we can’t afford it” – that is actually a lie.
Similarly, there is no need to resume funding the Superannuation Fund. The idea that future government spending needs to be financed by a fund that is established by taxing people today is economically illiterate. Future government expenditure can be fully financed by the income that is taxed in the future assuming modest productivity growth over these years. If we are producing much more per person in the future then we can tax a bit more for expected expenditure. The only reason it was a potential “problem” was that Labour and National governments refused to tax the very wealthy in society to pay their fair share. All of the wealth created through economic growth and extra productivity was being captured by the one percent and hoarded here or overseas in forms that couldn’t be taxed.
If a government has spare Billion or so to spend each year then the whole society would benefit from the improved productivity associated with ending functional illiteracy for many adults or ending the traffic gridlock in Auckland.
So the announcement by Treasury that due to an accounting error on their part that the government targets for reducing child poverty will not be reached as soon as hoped should be seen as an opportunity to take more radical measures than already planned.
In particular, it is time to support the call by CPAG and others for all beneficiaries to be eligible for the $72.40 a week “in-work tax credit”. This change could start April 1and would cost only another $500 million a year – exactly what is planned on being paid to the Super Fund.
The exclusion of beneficiaries from accessing this benefit unless they worked at least 20 hours a week maintained an unjust distinction between the “deserving” and “undeserving” poor. If the beneficiary working 20 hours a week lost their job or their hours were cut they were doubly punished by the system by losing the “in-work” benefit.
It is good that the government is moving to remove the sanctions imposed on mothers who did not name the father of the child for whatever reason.
We could then move to end the punitive systems associated with WINZ investigations and prosecutions against women who have started a relationship with a man and not declared it.
The best solution is to individualise all benefits and not deny a benefit to someone if they are married or live with someone who is working if they are unemployed.
Thousands of families have been forced apart with a low-wage father living in a separate household while mum stays at a parents place with the kid to give access to a benefit. These are simply practical choices many people have to make.
That would also be a first step to a Universal Basic Income for those who support that idea.
The government is also making a small improvement in the real value of a beneficiary’s income for the first time in decades by paying a “winter allowance” from May to September of $140 a month. This can be spent on anything. So it is real increase in the main benefit (including for those on National Super) of $450 a year.
Finally, it is good that the government has re-established a near-universal child allowance available for babies born on or after July 1, 2018 except those on paid parental leave. This will apply to all children without means testing for one year then two more years for low and middle-income families.
We actually need to re-establish universal child allowances for all children. We used to have such a system in New Zealand for decades. After World war Two, when we were a much poorer society and families were larger, the value of the benefit was about $40 a child. You could also capitalise it’s value for 16 years to get a deposit for a home.
Combining a benefit for all those not working, and a universal child allowance for all children would eliminate most of the coercive and bullying character of the benefit system. The cost can be taken from the rich and super-rich through targetting income and wealth taxes.
It’s simple. And we can afford it.
It’s also been built up by denying treatment to legitimate claimants on the grounds that their problem is “age related” and not as a result of their accident.
Why not? Didn’t National plunder SOEs and demand high dividends to pay for their tax cuts and put the books back in black??
$30 billion could go a long way for free education, cut waiting lists in hospitals, house the homeless, and put rail back as effective transport.
Mike
Thanks so much for the article- really sound analsyis. the support of the CPAG suggestion;
In particular, it is time to support the call by CPAG and others for all beneficiaries to be eligible for the $72.40 a week “in-work tax credit”. This change could start April 1 and would cost only another $500 million a year – exactly what is planned on being paid to the Super Fund.
it is a nonsense to make the working age population pay taxes to feed into the NZSF It has been wicked to perpetrate the discrimination in WFF and keep the poorest in poverty. Will Labour grasp the mettle and do some transformative principled based policy improvements?
The ACC nest egg was once agian being prepared for theft by privatisation.
Kiwisaver is wide open for theft on a scale far exceeding the gross “management” fees being charged on “accounts”. The hard earned conributions are unprotected from masive losses if a crash is engineered. The gamblers are playing with our money.
Kirk’s scheme was sensible and based on soveriegn Kiwi management providing wealth and security for our Nation and individuals..
ACC should be direclty taxation based with separate regulation of the workplace welfare for wage earners.
John is right national were stacking the funds up with taxpayers funds by once again being prepared for theft by privatisation.
National equals a rort system.
“Actually, the government could simply seize the ACC investment fund which last time I looked was over $30 billion and it would have enough money to do almost whatever it wanted. This fund was built up by taxing working people through higher and higher ACC levies over the last few decades as a prelude to the eventual privatisation of the fund.”
BS, the ACC fund was NOT simply ‘built up by taxing working people” through ACC levies over decades.
The fund has grown largely through ‘smart’ investment of funds gathered and ‘saved’, on local and international financial markets. It is not so much the Kiwi workers who paid for it, it is many even worse off workers internationally, who forgo rights and pay and social services, by enabling investment funds such as ACC’s, who invest in many various vehicles, including shares of corporations, to grow ‘rich’.
This is where the so called ‘developed world’, to which NZ Inc still counts itself, do rip off mother nature, Planet Earth and workers and poor all over the planet, by exploiting them, to make niche profits for business. And it is mostly such businesses, in which ACC and other funds invest, less so directly, but through portfolio investments, including shares, assets like also property, insurance, various bonds and what else there is.
It is just playing Monopoly, and to be honest, if we had only the pay as you go system, the ACC funded ‘services’ in rehabilitation and also in paying ‘compo’ for those unable to work, then we would probably not have such a well funded corporation as the ‘raider one’ we have.
New Zealanders are deluded, to think their living standard of today is fully funded and affordable with the normal day to day economic activity here. Much is only ‘affordable’ due to credit, to borrowing from the future generation, and through exploiting resources and people, and especially by selling off real estate and other assets, e.g. in local businesses, including forestry, farming, horticulture, manufacturing and the list can go on.
Really I think that the fund has been built up over at least the last decade by telling anyone over 40 who has been injured that the injury is Degenerative and give you two fingers.
I know i have given up trying to get ACC as now I am 62 and there would be NO way in hell they will even look at any accident claim, because of my Age. And I have been getting that excuse for years. And how many others are in the same boat? Also that money they were wisely investing, belonged to people like me. They saved billions on that on word Degenerative
yes David my partner had a claim accepted in 2003 posterior ligament a football injury and then was told by the national government it was overturned as his injury was degenerative and to top it of he was under 40yrs old. So it hurt many not just our elderly. We went to John Miller who was so busy with ACC cases he got one of his junior lawyers to help us in court and we got my partner ACC entitlement reinstated. We didn’t want a benefit he works we just wanted help if the injury flares up and it did at his job he had problems walking and was sent home. Now what is the point of us paying an ACC levy when the national government crushed our rights using their own appointed specialist who writes out special report saying the injury is degenerative in order to deny us our rights.
All of what we desire that is good and noble for our people is possible. This from democrats.org.nz
“Democrats for Social Credit Party (DSC) monetary reform is based on the conviction that: whatever is socially and environmentally desirable, and physically attainable, is financially possible.
A range of tools has been identified and developed as Democrats for Social Credit Party policy that will be used to create and manage a monetary reform economy. These tools will create wealth for all New Zealanders, redistribute that wealth where necessary, direct investment funds toward the real economy of goods and services, discourage speculation and most importantly, significantly reduce the burden of compounding interest.
Core to DSC monetary policy is the sovereign Reserve Bank Monetary Authority (RBMA) that can provide and manage money as a public utility, for the economic, social and environmental benefit of New Zealand and its people. The RBMA will employ the tool of money creation, which may be lent into the economy interest-free or spent debt-free. It will be the responsibility of the RBMA to determine the proportion of each, according to the needs of the country each year. All monies provided by the RBMA may carry an administrative charge, to cover overheads.
Recognising that the current tax system is unwieldy and inherently unjust but that some form of revenue gathering may be desirable, a progressively introduced Financial Transactions Tax and a Foreign Transactions Surcharge are tools that will simplify revenue gathering and deter rampant speculation.” and so forth. This argument about money being the limiting factor is an illusion, albeit a very persistent one. kia ora
DSC education is not popular because they haven’t proven that they have implemented professional strategy and made money from doing so. And make no mistake, the learning curve for them is huge. Last time I looked DSC got 2 votes in Wellington.
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