Income Insurance Scheme (Enabling Development) Bill

on behalf of the Minister of Finance: I move, That the Income Insurance Scheme (Enabling Development) Bill be now read a third time.

The Income Insurance Scheme (Enabling Development) Bill is a short, relatively simple, and straightforward bill. That is because it does not put in place a social and income insurance scheme or indicate that the Government’s decisions on a scheme have been made. What it does do is ensure that we are in a position to set up the scheme, if that decision is made, by authorising ACC to engage in work to develop the scheme and setting out key requirements that must be followed when doing that work. The bill’s small size and simplicity should not make us lose sight of what a big step it represents on New Zealand’s journey towards a fairer and more productive labour market, one that supports employers to find the workers they need and supports workers to find the employer and the job that best suits their needs.

A series of independent reports all point to the need for better support for people who lose their jobs. These include reports by the Public Advisory Group on Redundancy and Restructuring, the Organization for Economic Development and Co-operation, the New Zealand Productivity Commission, and, one that I know very well, the report of the Welfare Expert Advisory Group.

Officials estimate more than 100,000 people lose their jobs every year due to redundancy, lay-offs, or health conditions. This number can be even higher during economic shock, and the significant steps this Government took to prevent widespread job losses over the COVID-19 outbreak are a stark reminder of this. We know people often struggle to find suitable re-employment after a redundancy and end up accepting lower-pay jobs that don’t match their skill set. This can have lifetime impacts on the wellbeing of them and their whānau. This is an issue that disproportionately impacts our most vulnerable New Zealanders. Loss of work is more likely to affect low-income workers and these workers are more likely to lose more than one job in their lifetime. Low-income households are far less likely to have significant savings and therefore are in a much worse position to manage difficult economic times compared to higher-income households. This is also true for our Māori and Pacific communities. Māori and Pacific people are more likely to be made redundant or leave work because of a health condition or disability. And young Māori are a significant proportion of those economically displaced.

We all know this is a gap in the support New Zealanders need to get through hard times and land on their feet. In fact, we are only one of a small number of comparable countries that does not have some kind of income insurance scheme in place. On the other side of the House, they think doing something to bridge this gap is too hard or too expensive or should be left to private insurers. But this Government is not content to do nothing and leave New Zealanders exposed to the risks of job loss and economic shocks, while wage scarring costs our economy more than $15 billion per year. That is why we have consulted on a proposal for an income insurance scheme that would support workers who lose their jobs through no fault of their own.

By also covering health conditions and disabilities through the proposed scheme, we could go some way toward addressing the disparities between the support people receive under ACC and the support available in the health and welfare systems. Fifty years after it was set up, ACC remains a world-leading income insurance scheme, providing a safety net for New Zealanders who have suffered an injury by accident. However, practically everyone knows someone whose ability to work has been affected by an illness that cannot be covered by ACC. This can leave families and whānau without an income when they are already dealing with the stress of a loved one falling ill. An income insurance scheme that covered health conditions and disabilities would help to support New Zealanders through these difficult times.

I’ll never forget a woman who I met quite early on in my political career in West Auckland, the mother of very young children, who was an early childhood teacher who developed stomach cancer and had to continue working at that time because of the fact that her household could not afford for her not to. I think all of us would agree that when someone falls seriously ill, they deserve to be able to take time out, to actually take care of their health and recover. Unfortunately, in that case, that woman passed away and she is a reminder for me why it is important that we include health conditions and disabilities when considering this scheme.

I want to thank those who have helped not just with the development of this bill but with the proposal for a new social insurance scheme and who have supported the national conversation on the benefits, costs, and risks that come with establishing such a scheme. The proposal for a scheme came from a partnership between Government, Business New Zealand, and the New Zealand Council of Trade Unions, known as the Future of Work Tripartite Forum. The discussion document setting out the proposal was developed by a working group comprising officials from a range of agencies and representatives from Business New Zealand and the New Zealand Council of Trade Unions. Having strong social dialogue can strengthen worker and employer voices on important labour market issues. Policy developed on a tripartite basis is more likely to represent and balance the interests of employers and workers and to endure. So I want to thank Business New Zealand and the New Zealand Council of Trade Unions for partnering with the Government and taking this journey with us.

Many of the issues we’ve worked on are not as simple as this bill, and, of course, we do not always agree on every issue, but having the hard conversations and continuing to journey together on this path is what will help us deliver for all those we represent, be they citizens, workers, businesses, or employers. The Tiriti provisions in the bill are being developed through engagement with Māori and I’d like to particularly thank the co-chairs of Pou Tangata, of the national Iwi Chairs Forum, and others involved. I also want to thank all of the officials across Government agencies and their responsible Ministers who continue to contribute to this kaupapa. This is a once-in-a-generation opportunity for New Zealand to add to our social safety net and their hard work and collaboration is essential to us progressing this. Running through all the contributors to the income insurance mahi, it’s clear that an incredible amount of time and effort has gone into bringing all the stakeholders together and driving the work forward. I want to particularly acknowledge the Hon Grant Robertson for his leadership and vision in this space and his ability to corral us all with regards to this kaupapa.

As we move towards the next stage in our consideration of the proposed income insurance scheme, I’d like to thank the many New Zealanders who took the time and effort to submit on the proposal or engage in the consultation. Whether they were workers, employers, or others such as representatives of the New Zealand insurance sector, the submissions and other information supplied have given us a great platform to make future decisions on a social insurance model for New Zealand. It is important that we build on that platform further by ensuring ACC can add their decades-long experience in delivering social insurance. This bill achieves that. I commend this bill to the House.

The question is that the motion be agreed to.

Look, this bill is one that brings in, or lays the path for, the development of a new tax—a jobs tax—that this country can’t afford. I’d invite people who are listening in to this debate to cast their mind back to the 2020 election. Did they ever hear the Government talking about bringing in a new tax? A jobs tax? An income insurance scheme? Was it ever talked about? No. In fact, what they said is that they would bring no more taxes through. So that was the promise in 2020—no more new taxes, apart from the higher income tax rate they’d already brought through for top income earners.

💬 Hon Dr David Clark: It’s not like the increase in GST—we keep to our word.

Oh, and the Minister’s response is to revert to a past issue. Take responsibility for your own Government’s decisions.

Anyway, so did you hear it in the 2020 election? No, you didn’t. Did you hear much about it in the Budget? No. We had Grant Robertson deliver a long and tedious speech yesterday, and did he refer to the jobs tax? No. He talked about giving some New Zealanders 350 bucks as a one-off payment to help with the cost of living crisis. But he didn’t mention the fact that, oh, by the way, those same New Zealanders on the average wage who won’t get a single thing from the cost of living crisis payment will also have to shell out about a thousand dollars a year, year in, year out, every year for the new jobs tax, and there’s more on the way. So it’s interesting, isn’t it? It’s interesting—

💬 Hon Poto Williams: Prove it.

Prove what? This is the Government’s bill; they brought it in. They’re laying the path for a new jobs tax, which they never talked about in the election and they didn’t talk about in the Budget. They don’t because they know that this is the Budget taking New Zealanders backwards, and this won’t help New Zealand families deal with the cost of living crisis that they’re dealing with today. And on that basis, without further ado, we oppose it.

Thank you, Madam Speaker. I commend this bill to the House.

Thank you, Madam Speaker. People listening to this debate know that they can’t trust Labour on tax. This is a Government that is being particularly sneaky in trying to use the cover of urgency, the cover of the Budget debate, to bring into New Zealand a regime that will tax hard-working New Zealanders even more than they are already taxed. The Minister spent a long time talking about what would happen if, when, maybe, might be, they could be going to introduce this tax and very little time talking about this particular piece of enabling legislation that enables the Government to instruct and set up ACC to develop the framework that would allow for the tax to be put in place.

National opposes the concept of the tax that the Labour Government is proposing. We oppose this piece of bridge-building initiative that will lead to the tax further imposed on hard-working New Zealanders. We oppose this legislation.

I commend this bill to the House.

Thank you, Madam Speaker. I’m going to break the mood and actually have a proper speech on this. Though I do, listening to some of the National Party members, just have to reflect. I wonder if they have a competition sometimes for the best arrangement of talking points, because it’s all I hear, and I just wonder how that is, to have to give those talking points again and again.

Anyway, to the Income Insurance Scheme (Enabling Development) Bill, which the Green Party is abstaining on. I know some people are struggling with that as a concept, but it is because, actually, we as a caucus have not made a decision on the substantive piece of legislation, so we do not want to support legislation that will speed through something we don’t agree with. But, again, if it, through consultation, turns into something that is going to contribute really well to our society, then we don’t want to get in the way of slowing that down either. So we are taking the middle role of abstaining so as not to be in the position of doing either of those two things.

We recognise very much that this is a technical bill to enable ACC to be able to do work to provide Government with the best advice around an income insurance scheme and implementation of that so that the Government can make a decision on it probably in June or July, and, if the Government decides to go ahead to enable them to implement it, to get that in place by 2025.

So I would just again state that for the Greens we share the Government’s recognition of the social problems that we have around the impact of sudden job loss, either through redundancy or sickness or disability, and the lack of good supports to help people get back into—when it’s time to return to the workforce, to make sure that they’re able to return to good jobs, not just the first job. Because we know that that has a really profound impact on people’s lifelong learning potential when they’re forced back into the workforce just to be able to pay the bills rather than being able to choose the right job in terms of their career progression and enabling people to retrain.

The proposal as it went out for consultation, though, the Greens have quite a few concerns about, though, recognising that this was—and it’s quite a beautiful thing to see unions and business and Government negotiating and trying to solve, come up with, solutions to a problem. But for us, the fact that the Welfare Expert Advisory Group (WEAG) had considered these issues and had not recommended an income insurance system—that for us is a bit of a flag and a concern as a starting point.

But also the proposed scheme, it just sits uncomfortably, hearing National talking points around tax, covert taxes, and how that’s a bad thing. We have a concern at the level of the levy and that it is, as proposed, to be universal. For really low-wage income workers, we’re worried about what that will mean for them being able to keep food on the table, particularly at a time where people are really struggling, and that migrant workers will be paying that levy but will not be entitled to the insurance at the other end. That for us is really problematic. At the moment, we’re having some quite robust debates around our receptiveness to migrants in our communities. It is, I think—where the policy landed, at least, as it went out for consultation—for us another really worrying signal. Particularly also for migrants, low-income workers, and those in the gig economy in particular, where the settings are, it looks like there won’t be a guarantee for some of them, and particularly our artists, whose work can often be quite sporadic—to ensure their access to the scheme while they’ll be required to pay into it.

Then the other points that I’ve mentioned earlier—around the fact that the biggest impact, as I understand it—the cause of wage scarring for women is leaving the workforce to do caring work, and that that is not being covered by this legislation. We know there is a massive difference between what this scheme will provide and paid parental leave. Our paid parental leave—I’ve just got to take a moment to just rail against the fact that at the moment I think it’s a maximum, a cap, of $621 a week, which isn’t even the minimum wage. While we all recognise the importance of the first thousand days in supporting our whānau, actually, our paid parental leave isn’t even enabling people to receive a minimum wage for that essential caring work that will pay off for all of us into eternity. So that is a bit of a problem for us at the moment.

Also, around the lack of clarity—the Greens had a policy we went to the election with to extend ACC for sickness and disability. This goes a little bit of a way, you could say, towards doing that, because it enables—and the Minister’s story in terms of bringing into the House those of cancer survivors who have been struggling in terms of our Work and Income system and still having been job tested while going through cancer treatment and not being able to work; just the inhumanity of that system. This could be seen as progress, but it also could be seen as adding more complexity, where we leave people who have long-term disability or illness in our income support system, where we haven’t seen an increase to the child disability allowance or the disability allowance, I think, in many, many, many years, and the call has been from WEAG for that to be increased fourfold to basically meet the same level of support it initially offered—so we’re forcing people with long-term disability into that. Or the really generous system of ACC—so it creates and embeds discrimination based on whether your disability is a result of accident or illness or birth, and creates more complexity, which worries us. But we’re really interested in hearing people’s feedback on that, because I get that it could be seen as an improvement on the status quo but is more complexity.

I do just want to flag that some of the Labour Party members, in their speeches there was some language that worried me, in talking in support of this, around people who have been unable to work “through no fault of their own” as opposed to people receiving income support, which would suggest a sense of maybe that is their own fault and maybe we should be punishing them—is the kind of the background ideas that kind of sit behind that language. That is the deserving and undeserving poor, and that is Victorian, and that is absolutely not consistent with the work of WEAG to get us to a society where we all have a place to be able to thrive and all of our work—whether it is paid or whether it is domestic labour, caring work—is properly valued so that our societies and our community has a chance to flourish.

So, for the Greens, our initial proposals around addressing those problems we identified upfront would be a guaranteed minimum income, compulsory redundancy of four weeks, to implement the WEAG report, to have free education, and to have paid parental leave extended and increased to be able to enable people at that early time to be able to do that work and have enough not to be completely stressed the entire time. We can pay for all of this by a wealth tax, which is not just about spending; it’s actually about redistributing, to all of our collective benefit. So that’s where we’re at with this at the moment. Thank you.

Members, the time has come for me to leave the Chair for the lunch break. The House will resume at 2 p.m.

Sitting suspended from 1.03 p.m. to 2 p.m.

On this beautiful Friday afternoon, I’d like to oppose the Income Insurance Scheme (Enabling Development) Bill. I know it’s only a framework bill. I understand that. However, this is the setting-up bill for what we’re all saying is the “if” bill but “probably will be” bill. There is $2.2 million to set up the framework, privacy, sharing—I know there are a few concerns there that will have to be rattled out, but, again, we’re just concerned about the fast way these measures are getting put through. Yes, you may have consulted with Business New Zealand and trade unions, but that’s not necessarily all the businesses and all the workers out there.

There is a point here that I’d like to raise from Retail New Zealand. They’ve just said to us they do not support imposing another cost on businesses and their employees without a corresponding offset in tax. So I’m just putting this out there—maybe you want to think about that if you want to put on more costs in the future, with the “possible” bill, and then we have to remember that this is supposed to be a Budget to help those that are struggling, but all it will possibly do in the future is take more money out of the pockets of hard-working—

💬 Matt Doocey: That’s right. They don’t care.

Exactly. They say that over there that we’re representing rich people, but I would like to dispute that. Many of us within the ACT Party, and our friends, have done some of those low-end jobs, because we knew that we had to do those low-end jobs to feed ourselves. And you’ve got to remember that they’re not horrible—yes, for some people, I think, but any job can be a good job, and it can be a stepping-stone job as well. A lot of employers love to see people who can actually do their job. Also, we do have stuff in place already to help people that fall on hard times, and this is not the time to do this, while we’re right in the middle of cost of living crisis. Even if it is 6 months or 16 months down the track, we don’t know what the future’s going to bring and we need to support people by giving them a tax-bracket break now. Drop the taxes.

There is also the question of consultation. It’s about the everyday New Zealanders who don’t necessarily sit and watch Parliament TV. A lot of them don’t know about these bills and how they’re going to affect them until they see it in their pay packet. They don’t know why they have $3.50 less until they see such-and-such a levy or a “dollar for this”. Every frigging dollar counts for everybody in this reaction.

Now, this is true—somebody just told me today that a Tasty block of cheese is $21.50—$21.50 for a block of cheese. I know that not everybody eats the expensive cheeses—they might eat the Tasty cheese—so I would hate to think how much the other cheeses are costing. I’m not a big cheese eater so I can’t testify on that one. But there are those who do like to make toasties, and a lot of families love to make cheese sandwiches.

But we do not agree with this bill, this framework, to set up an “if” bill. It is just taking more taxpayers’ dollars away from where they should be going, and that is to hard-working Kiwis. So ACT opposes this bill.