Finance Minister Grant Robertson says the Government remains committed to implementing an income insurance scheme by mid-2025.
Meanwhile, Minister for Social Development and Employment Carmel Sepuloni says the scheme is “very high” on her priority list.
Their assurances come as Prime Minister Jacinda Ardern has instructed ministers to relook at their priorities for 2023.
The Government is coming up against the same cost and capacity pressures hamstringing the private sector, as it tries to complete a range of reforms and commitments before next year’s election.
Establishing a $3.5 billion a year income insurance scheme by the 2024/25 fiscal year is one of its more significant undertakings.
The aim of the scheme is to create a safety net to catch those who lose their jobs due to illness or redundancy before they fall into the regular welfare system (if they qualify).
The scheme would make it compulsory for all employees to pay premiums worth 1.39 per cent of their wages/salaries into the ACC-run insurance scheme. Their contributions would be matched by their employers.
If someone lost their job, the scheme would pay out 80 per cent of their previous income for up to six months.
Levies would be capped for employees (and their employers) who earn more than $130,911 a year. Payouts would be limited accordingly. Terms and conditions would apply.
When quizzed about the future of the proposal in a post-Cabinet press conference on Monday, Ardern wouldn’t be drawn on whether it was on the chopping block.
She said people shouldn’t read anything into her response, clarifying she wasn’t going to play the “rule in/rule out” game when it came to which initiatives were staying and which were going.
Similarly, Robertson deflected questions from National Finance spokesperson Nicola Willis in the House on Tuesday about whether either income insurance or the TVNZ/RNZ merger would be canned.
But when the Herald earlier on Tuesday asked Robertson about the future of income insurance, he said his intention was still to have it up and running by the 2024/25 fiscal year.
Asked when the Government would put a refined policy proposal on the table, he said, “Cabinet is just working through the final details of that, and then we’ll be talking to our social partners…
“It’s taken a little bit longer than we’d hoped, but early next year [is when the Government will have an update].”
The “social partners” Robertson was referring to were the Council of Trade Unions (CTU) and BusinessNZ, which worked with the Government to design an initial proposal released for public consultation between February and April this year.
However, speaking to the Herald, neither lobby group was clear on what their involvement would be next year.
CTU chief economist Craig Renney assumed the CTU would have “very little” to do with refining the design of the scheme.
Rather, he suspected the CTU would be a regular “consultee” alongside other interest groups.
BusinessNZ chief executive Kirk Hope hoped the Government would engage the organisation before publicly releasing a refined policy proposal.
BusinessNZ opposes a fundamental part of the proposed scheme – the fact it would cover those who lose their jobs due to illness, not just redundancy.
The organisation would also like to see costs introduced by the scheme offset by tax cuts.
Hope concluded, there was a “fair amount of water to go under the bridge”.
Renney was adamant an income insurance scheme was needed now more than ever.
He feared many of the thousands of people expected to lose their jobs as the Reserve Bank orchestrates a recession to curb inflation wouldn’t qualify for welfare. The Government factors in what one’s partner earns when assessing eligibility for Jobseeker Support.
Coming back to Sepuloni, she said, “I think it’s a very important scheme and offering for New Zealanders and would provide a level of protection that currently is not in place. Certainly, after going through a pandemic, you can see why that might be necessary...
“We’re not stopping the mahi [work].”