So why do we need income insurance?

OPINION: The Government wants to create in an Income Insurance Scheme that would pay workers who lose their jobs due to lay-offs or health conditions 80 per cent of their wage for six months. What is the compelling evidence for why we need this? An MP from each side of the House gives their views. In the red corner Arena Williams Manurewa MP, Labour

When my grandfather returned from World War II he worked hard seasonal jobs – fencing, shearing, freezing works. He had been a pilot and an aeronautical engineer but the war haunted him and in his later years he found it hard to work at all.

During those hard times, my grandmother was my family’s income insurance. Naturally gifted with mathematics, she became a teacher and a bookkeeper to keep the household finances going. But in two generations, rising living costs have dramatically altered household labour participation. Now households may even need four working adults to make ends meet.

The reality is that working families no longer have the safety net my grandmother’s ability to earn extra wages provided. If a parent loses their income, economic security can disappear overnight.

That’s why we have proposed an income insurance scheme that would see workers made redundant, laid off, or who have to stop working because of a health condition or disability, receive 80 per cent of their usual salary for up to seven months, up to the current ACC cap.

A job loss often results in a significant income shock that can affect the wellbeing of an entire family, even when a person finds new work. That’s because finding a good job takes time. Many people accept lower-paid jobs that don’t match their skillset because of financial pressure.

This scheme would give people the time and financial security to find a good, new job that matches their skills or to rehabilitate or retrain. With a tight labour market and demand for skilled workers, it is in the best interests of workers and businesses that people are employed in areas that make the greatest use of their skills.

For me, a story that my colleague Minister Carmel Sepuloni shared about a West Auckland woman who she met years ago, highlights why the inclusion of health conditions and disability in the proposal was an absolute must. The woman was a mum with young children, worked as an ECE teacher and had been diagnosed with cancer. Throughout her treatments she continued working – for financial reasons. Sadly, she passed away.

Taking time away from work for serious medical reasons should not be a luxury that only some can afford. No family should be left questioning if things could have been different.

However, the scheme is not a done deal. So please let us know your thoughts: mbie.govt.nz/incomeinsurance

In the blue corner Stuart Smith Kaikoura MP, National

What the Government’s spin machine call an ‘income insurance scheme’ is merely just another term for a ‘‘job tax’’ which hardworking Kiwis will be forced to pay on top of rising inflation.

With inflation growing at twice the rate of wage increases, every cent matters.

With this new tax, workers and employers would have to pay an extra 1.36 per cent each on top of income tax, kiwi saver and student loan if they have one, amongst others.

The cost of living is at ridiculous highs, the dream of owning a home if you are one of the 46 per cent of renters under the age of 30 is near impossible, and petrol prices are approaching and in some cases passing the $3 mark.

It seems the Government has lost touch with the challenges that households are facing and is intent on adding insult to injury by foisting yet more taxes on us all.

That 1.36 per cent might seem small, but it essentially shifts the 30 per cent tax bracket to 31.36 per cent and the 33 per cent tax bracket to 34.36 per cent, these will have real and genuine effects on Kiwis when affording the basics right now is already a strain for many.

This new tax equates to $10-$30 per week from our pay packets, which in these times is money many people do not have.

Spare a thought for New Zealand’s small businesses too, who have frankly been on their knees over the last two years, and just when they need some relief from the Government, they come down and slap another tax on them.

We already have a welfare system and a social security net which helps people get back on their feet after redundancy or illness and helps them to upskill if needed.

National would focus on education and ensuring that people have the skills needed in the modern workplace, but we realise at times there does need to be welfare and that is on offer for those who need it.

But what can’t happen is punishing hard-working kiwis to pay the tab for someone else for seven months.

What this new job tax really boils down to is a $3.54 billion fund, taken directly from you the worker and the business owner, to allow people to sit on the couch for seven months, no questions asked.

The Labour Party are meant to be the champion of the working class, but it’s hard to see that when they are taking away $10-$30 per week from every worker.

Parents are struggling to pay for stationery for their kids to go back to school, construction costs are through the roof, and rents have risen astronomically. This is not the time to be taking from the wallets of hardworking New Zealanders.