Social unemployment insurance: CPAG independent comment available

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The Government proposal for social unemployment insurance (SUI) aka 2-tier welfare is imminent. If implemented, it would be the biggest change to New Zealand’s welfare system since the introduction of ACC in 1974, and has been designed behind closed doors.
Child Poverty Action Group welfare experts can provide independent comment on the proposed SUI scheme.
We are concerned that:
1. SUI is being prioritised instead of welfare reform, and will do far less to reduce child poverty.
o Thus far, it seems parents who leave work to look after children, for example after leaving abusive relationships, will be excluded from SUI
o SUI is time-limited: after a short period, it will exclude parents with chronic disabilities
o It is unclear how will SUI include people in (multiple) part-time jobs, self-employment, casual and precarious work, if at all.
o SUI is unnecessary; it is possible to reduce unemployment-related financial distress via adequate welfare which would also better address many other issues (such as child poverty).
o The Welfare Expert Advisory Group explicitly rejected SUI in its 2019 report, stating: “we do not recommend changing our social welfare system to a social insurance model”
2. It is unclear that the SUI (and its development) will uphold te Tiriti o Waitangi
o For such a big change – potentially involving investment funds – has there been co-design with te Tiriti partners, and iwi & hāpū involvement in the proposal from the beginning?
o The SUI forerunner – the Covid-19 Income Relief Payment – produced discriminatory outcomes: Pākehā applicants were more likely to receive it than Māori or Pacific applicants. How has the policy process changed to ensure this does not happen again?
3. SUI will add to poverty traps (high clawbacks & levies) for families on low- and moderate- paid-work incomes
o A new SUI levy of 1%-2% will be subtracted from every additional dollar earned. This comes on top of a recently-announced increase in the clawback for Working For Families tax credits (from 25% to 27% abatement) from April 2022 which is set to reduce entitlements for 89,000 families. Some families may only receive 5 to 7 cents (or less) of every additional dollar earned, after they pay PAYE income tax, ACC levy, SUI levy and have clawbacks for Working For Families and Accommodation Supplement and compulsory student loan repayment.
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3 COMMENTS

  1. The Welfare Expert Advisory group made(if I remember correctly) 110 recommedations to the government. They were all methods of reducing poverty and inequality particularly amongst the poorest sections of our society.
    As I recall the government adopted one recommendation, that solo mothers are no longer forced to name the father of their child.
    Now comes this attack by stealth on our most vulnerable people.
    Why does the government not simply make it a crime to be poor and have done with it?
    I always understood why National and ACT hated impoverished people(they are not going to vote National or ACT) but I cannot understand why Labour actually hates its most loyal supporters and the people who need it most.

  2. The SUI has only one purpose and that is to save the middle classes ass.
    Screw anyone else.
    Just the 2nd objection above re people with long term disabilities says it all.
    It is just more neoliberal bullshit.
    They would be better off creating a medicare levy and changing acc into a proper medicare agency.
    That would do more good for middle class NZ than this social insurance welfare ever will.

    The Pharmac preliminary review report is due to be released in the coming days .
    That is going to be a shocker for many people who read this blog site.

  3. it’s not just a 2 tier system but like the covid benefits it’s specifically designed to extend extra help to the middle classes who become unemployed…now their neo-lib policies are starting to cut into their support base..and we can’t have ‘good decent latte drinking folk’ having to get by on a basic NZ benefit can we, so don’t improve benefits create a new system specifically designed to help ‘chaps and chapettes like us’

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