wealth tax

Why I oppose social insurance

[ad_1]

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 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).

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.

[ad_2]

Source link