2 Feb 2022

Income insurance scheme not a job tax - Business NZ boss

From Checkpoint, 5:11 pm on 2 February 2022

The business advocacy group that helped design the income insurance scheme is kicking National Party criticism of it to the kerb.

Business New Zealand boss Kirk Hope reckons the scheme is needed to insulate industry and workers against future shocks.

Hope told Checkpoint that until now there has been no concrete proposal although different versions and costs have been debated.

It was important to put proposals on the table for the business community to consider.

"We know that there are significant skills mismatches in New Zealand and there are significant productivity issues.

"This is one mechanism for helping address those issues."

Hope said it was not a job tax. It was designed to protect workers because economic shocks that lead to income shocks have long-term effects on those directly affected, as well as their families, communities and local businesses where they buy their goods and services.

"So it was important for us to be part of a discussion that looked at why it might be important to address that and that's why we were involved."
National has called it "a gold plated unemployment benefit", hitting businesses with a new cost during the pandemic.

Hope suggested a different perspective. Loss of income hurts communities and other big economic shocks could be coming our way through changes in areas such as technology or climate change.

"We've seen that in our economic history and we know that it impacts communities across New Zealand."

He said the 80 percent of average salary figure to be paid for up to seven months was arrived at by looking at international examples and also considering what was affordable.

Australia and New Zealand are the only OECD countries who do not have such a scheme, he said.

Hope does not believe the payments should be targeted so that someone with a well-paid partner, for example, would be excluded.

The schemes that operate globally are run similar to New Zealand's ACC system - so a partner's income would not be considered, he said.

It would apply to those who lose their jobs but not to those whose hours may be cut substantially during a downturn.

Hope said that could be changed - depending on the feedback.

And if you want to have your say on the proposal, submissions close on 26 April and and all the details are on MBIE's website.

FSC keen to play a part

The Financial Services Council has welcomed the release of a discussion paper on the government's proposed income insurance scheme, calling it a significant step.

 FSC chief executive Richard Klipin said he wants to ensure the voice of members is heard as the government refines the policy.

 "With unemployment currently at a historical low and a large fiscal cost to the scheme, it's essential that the government takes the time to get this right and that industry feedback is taken onboard.

"It is also important to note that the scheme caps financial support at six months so if it is implemented the need for New Zealanders to still carefully manage and protect their own financial risk profile will remain."

He said consideration of an income insurance scheme will be a key part of considering the future of work in Aotearoa.