Why I oppose social insurance


It will probably be a surprise that someone whose day job is as a union advocate will oppose the proposed social insurance scheme. But I do and here’s why.

This government has waited five years to fix the massively inadequate welfare system and has made no progress.
Adopting an expensive social insurance system instead of making that reform, will put off progressive change for a generation.
Workers who become unemployed need support while waiting for a new job. The current benefits are woefully inadequate and should be increased first, made an individual entitlement, and made more accessible.
The current system already has a deserving and undeserving poor element to it. For two decades the unemployment benefit was halved in value as a percentage of the average wage – from 40% to 20%.
It was also made very difficult for people to access so many just gave up.
This has led to massive impoverishment and a surge in homelessness as housing costs have surged.
That needs fixing immediately not being put off again and again whilst beneficiaries are forced into greater and greater indebtedness with WINZ and then prosecuted and punished further for failing to make repayments.
The current government simply gives more and more money to hotels for the homeless and charities rather than the simple thing of increasing benefits and individualising entitlements. (See: Urgent action needed to raise and individualise benefits – first step to a basic income for all)
The proposed system also keeps the worst aspects of the insurance model for ACC rather than going back to the pay-as-you-go system that existed before the National government prepared ACC for privatisation. That system should then be extended to those suffering serious illness as was the original intention for ACC. See my earlier critique of this process here.
Now the government wants to merge an awful ACC system based on an insurance model which seems to spend most of its time trying to avoid any responsibility for the long-term consequences of accidents by reclassifying them as degenerative diseases.
Why should ACC be trusted to give people their entitlements when they lose work. How often will young workers be told that it was “their fault” they lost their job and didn’t qualify?
Why can’t we have a wealth tax to fund a proper system of unemployment benefits and health services rather than rely on a flat tax of 1.4% on workers’ wages (plus 1.4% from companies).
Susan St John from the Child Poverty Action group has an alternative that makes more sense to me.
Should the alternatives of fixing the current arrangements with urgency be at least evaluated? What could these look like?
First, welfare benefits could be made much more accessible for the sick and disabled and lifted to 33 percent of the net average wage to be more like NZ Super. They would be paid without reference to a partners’ earnings but taxed under a progressive tax scale. All unemployed people would be actively case-managed to retrain and redirected to emerging 21st Century skilled and unskilled jobs. In the case of national crises, displaced workers could be given temporary access to additional tailored assistance as at present. Sole parents’ benefits raise particular issues and need careful reform, beyond the space here to discuss.
Second, all seriously disabled without regard to cause could be given access to the level of rehabilitation and medical treatment currently state provides only to accident victims.
The tax credits for children should be paid in full to all low-income families. As income increases above say $48,000 they should be reduced at a modest rate (much less than the new 27 percent abatement). Proper annual indexing with a wage link like NZS is the least we can do for our children. Family debt to government agencies could be forgiven, and much of the student loan debt written off.
NZS should be paid as a basic non-taxed income to all at 65 and recipients put on a separate progressive tax scale to claw back from high-income earners. The revenue could help fund the seriously ill and disabled who currently miss out on ACC, and to fund the 21st Century tweaks needed to make New Zealand’s welfare state once again one to be proud of.


  1. We need to transform NZ Superannuation into a universal basic income by paying the equivalent of the single-living-alone allowance as a nontaxable UBI to everyone 18 and over. We need to restore universal child benefits, varying according to age, to everyone under 18. These two benefits can be the foundations of a complete restructuring of the social welfare system; a restructuring that must include the mass building of state houses for lifetime, income-related rent by all who want them; the imposition of rigorous warrants of fitness on private rental housing and on the owners and managers of it; free, comprehensive, accessible, timely and effective health care, including dental, aural, and optical; and truly free and secular state education for all children.
    To pay for all this the taxation regime must be transformed to tax wealth, and the gains in wealth, no less than worked for income; taxation must focus especially on taxing all land, and restore gift and inheritance taxes to frustrate the generational continuation of the gulf between rich and poor.

    • Interesting ideas – how would you propose that the flight of capital away from NZ in such an environment be managed?

      • The simple answer Yeti, is to just do what the banks do to create their astronomic profits – just create notional tradable capital on a computer!

      • A .01% Financial Transaction tax as the Greens campaigned on back in 2011 on all money leaving the country would fix that. That was estimated at around $65 million in tax revenue a week from memory.

      • A .01% Financial Transaction tax as the Greens campaigned on back in 2011 on all money leaving the country would fix that. That was estimated at around $65 million in tax revenue a week from memory.

      • they’d stay and continue coining it…

        if you legislate for decent homes we’ll sell up….didn’t happen
        if labour are elected I leave, never happened
        bright line test, all rentals will disappear didn’t happen

        ETC ETC ETC….


  2. Agree that adding another scheme is not going to solve NZ’s problems. Especially since the proposed social insurance scheme in many ways it helps the companies that are behaving badly by making people redundant or companies that hurt their employees. This is now pushing the costs onto this scheme paid for by better employers and employees. In NZ the opposite needs to happen, we need to try to stop the rise of poorly run business pattens spreading and try and get them out of business not taking over the better businesses by paying less for staff and less taxes.

    I am also worried that the various schemes like working for families are now being used to prop up poor employers who can but won’t pay more to staff. AKA many of the supermarket owners are now on the rich list while their employees are still poorly paid and don’t share in the success of the business. They then pay to essentially ‘own’ NZ media and this creates a very divided country of people who can’t afford food anymore but the supermarkets escape regulation from the commerce commission and are lorded as heroes by the media.

    There is a major and growing problem where it has become too difficult to work for many in NZ (poor pay, poor conditions, bad management, poor recruitment and retention practises (almost non existent in many cases) and now we have a Ponzi country where the money being made is coming into the country and not easily made in NZ apart from to support the ponzi new applicants, but long term doesn’t work. Smart people who are honest now need to leave NZ to get normal working conditions.

    Examples are in spite of bringing in many truck drivers from overseas, the truck industry keep complaining there are no truck drivers. Well thousands of truck and bus drivers have been bought in, where are they? What happened to the previous ones and why don’t the trucking industry support new recruits from NZ into the industry – they have been complaining for years now and plenty of time for them to get off their arses as bosses and train some people into the industry). Instead they seem to be repelling their workers out of the industry.

    This then creates an issue with sustainability, aka NZ should be using trains that take more loads across the country and only have one driver so save money on labour – but instead, apparently trains are considered more expensive and industry are abandoning the trains and using more trucks and buses for both domestic and commercial purposes. In the age of Cabon, NZ is a huge failure.

    • it’s the ‘pay em shit’ NZ business philosophy touted by 3rd rate management stuck in the 80s..you can’t pay peanuts and expect loyalty….it doesn’t work like that.

  3. The only social insurance we should be thinking about is ;
    1 fixing access to unfunded medicines
    2 fixing access to health care
    3 fixing access to welfare by individualisation of benefits.

    With Health insurance companies now finding it profitable to run policies funding unfunded meds the situation is worse now than it has ever been.

  4. Mike,

    I agree. Like the government helped big business before workers, small business after Warehouse and other Big Boxes stole, under COVID-19 which is Health Issue, not an economic issue. Now to stop useless National Leader Lex Luther from getting any middle class votes, they do this. Same as announcing public transport in Tamaki Makaurua. They know what they are doing, but are votes more important than real democacy? Socialist this country is and always will be, nut since JohnKey Teflon everything has been about popularism. Jacinda is guilty of the same. She is a marvellous person to lead the country in a time of Worldwide issues, but she is using the same PR team as Donkey himself. And neither her nor his son is in jail yet. Instead announcing another business for the Chinese. Good work the John who sold the world. But socialism is alive in your generation and in mine, and we will always fight the good fight, as you did with my parents, and we do with Cuba; together, the people, will always be the revolution

  5. I wouldn’t worry about it happening.
    Labour have failed in their delivery of pretty much everything else (light rail, kiwi whatever, etc). There’s no way this will get implemented before they are kicked out on their arses.
    If this was Helen Clark, you would have reason to worry as her Government actually delivered stuff. Whether you agreed with what she delivered is another thing, but at least she generally delivered.

  6. Where is your comments MILLSY As I said even the unions are against this government ts crazy two tier system of treating the out of work .

  7. There’s only one thing that will save NZ’s cash problems and eliminate the need for this stupid scheme: we need to drill for oil and explore minerals and sell those commodities to the international market. We’ll be swimming in cash. Ask Norway. We need to stop dreaming of three or four tourists saving NZ.

    • cabbage, IF we used the ‘norwegian model’ regarding oil royalties but you and your nat mates would flog the rights to multinationals for bobbins…all you want is another resource to flog off…well the family jewels are all gone.


    Anyone who opposes this scheme is an ENEMY OF HUMANITY and NO LONGER DESERVES TO EXIST.

  9. WHAT we call income support and how it’s structured is immaterial if the govt of the day set it at poverty levels….

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