Compulsory income insurance submissions

Hey all, just a reminder that submissions are currently open on quite a major policy change – the introduction of large scale fully funded income insurance in New Zealand. So if you have thoughts or feelings on the issue, make sure to get a submission in before Tuesday.

In the lead up Simon Chapple has posted a good article on the issue, and I’ve posted up my own article as well. This is a major policy proposal that is being pushed through under de facto urgency without a proper policy design process – and with lots of unintended consequences. As a result, even though we both agree with looking at improving support and transitions for individuals facing hardship – in fact this is an issue we have both focused on in the past – this ain’t it son.

For those who do not want to trudge through text, the thoughts can be boiled down as follows:

Unemployment is a hard life shock, and there is benefit in both sharing the cost of that shock between us and helping people transition back into work. But this suggestion:

  • Goes a lot further than just helping those at risk genuine hardship from this lifeshock – and is much much larger than schemes overseas. [Those that say NZ is just “catching up” with this are just directly lying]
  • In its current design it will be regressive across most of the wage income distribution – with single individuals and sole parent beneficiaries disproportionately contributing.
  • Will cost more than suggested.
  • WIll be subject to abuse by those who are able to organise sham redundancies and sham jobs.
  • Is likely to give bad employers more power over their staff.
  • It creates an “alternative” to the unemployment benefit that will reduce support for the most vulnerable.

It is worthwhile to look in this space, but slow things down and work through the policy design issues – and actually look into some alternatives to achieve the policy goes.

ACC took nearly a decade to get set up and legislated, with it mentioned as an election proposal. The 1938 social security act was designed with feedback from experts, debate on alternatives (which is why we didn’t end up with income contingent payments then), and decades of prior system design – and then it was taken to an election before it was implemented.

I’ve heard on the grapevine they’ve already started hiring staff to implement the income insurance scheme as they want it legislated and underway before the election – implying this consultation is non-genuine, and we also don’t get to vote about it. If this is true then Ministers are putting their own determination to look progressive ahead of ensuring that good policy is put in place – which is very disappointing.

To be frank, this is absolutely scandalous – and even if the policy proposal was well designed (which it is not) this would be terrible. Hopefully what I’ve heard is untrue, but if this comes to pass then we should all be very disappointed in this process – and the unavoidable harm that will come from the poor implementation that will follow.

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