Rhetoric made real but who’s listening?
Greens’ poverty plan sets bar for addressing tax, ACC, welfare
Silly me. I thought the Green Party’s policy announcements last Sunday might have been acclaimed from the rooftops. Or at least generated a bit more debate.
After all, while the other parties have all been blowing hard on generalities and getting condemned for it, here was a party releasing actual, costed, doable policies. The Greens’ Poverty Action Plan covers tax, welfare and ACC, all usually considered areas of quite large public interest.
Also, the one big thing we’ve all learned about ourselves this year is that we believe in kindness. It’s true we’ve also learned we’re not always very good at it, but we still believe, don’t we? We want to be good at it.
The Greens’ plan is the rhetoric made real.
To recap, they have proposed:
• A Guaranteed Minimum Income (GMI) for working-age people not in work, set at $325 after tax, which is $1 less than the rate of superannuation for a married person. Those in work but earning less than $325 a week would have their income topped up;
• Supplements for sole parents, and a simplified and more generous approach to Working for Families;
• A tax of 1 per cent on net wealth over $1 million (and 2 per cent on net wealth over $2 million);
• Two new taxation steps: A 37 per cent marginal rate for income over $100,000 and 42 per cent for income over $150,000;
• A new, all-inclusive ACC: Instead of the Accident Compensation Corporation, an Agency for Comprehensive Care, covering illness as well as injury.
Announcing the plan, party co-leader Marama Davidson said successive governments had “made decisions that put people into poverty”. This plan was a way to reverse that.
Speaking about the new ACC, she said the simple idea was “to provide help when you need it”. That went for the whole package. They would do it, she said, “because it is the kind, and the right, thing to do”.
The policy does have its critics. One or two commentators lumped the GMI in with the Universal Basic Income (UBI), as if they are fundamentally similar. In fact, they’re fundamentally different. A UBI is a basic payment to everyone, and its main failing is that the people who need it don’t get enough while those who don’t need it get too much. A GMI is not universal. It’s only for those not in full-time paid work.
As for the amount – $325 a week – it’s higher than current jobseeker rates, but it’s not massive, is it? The extra payments for children will raise the level for many, but we’re definitely not talking about creating a new leisure class here.
And the new taxes?
National’s Paul Goldsmith complained about “extra taxes” in a way that suggested everyone will be paying. But the wealth tax, the Greens calculate, will apply only to the top 6 per cent of wealth owners while the new top steps will catch only 7 per cent.
The wealth tax will cover homes, farms and other major property, but only the proportion you own outright, and only if that’s worth over $1 million. It’s a marginal tax. Couples will be taxed individually, and household goods and vehicles worth under $50,000 are exempt.
Put that another way. If you and your partner own a $4 million worth of Auckland property, that’s $2 million of wealth each. If half of it is tied up in mortgages, that’s $1 million each. Neither of you will pay any wealth tax on that property. It’s that generous.
If you’re retired and own a valuable house but have little income, you can defer payments. It’s that generous.
It’s not a Capital Gains Tax. It’s better than that; fewer anomalies, more focused on serious wealth.
And the changes to ACC? The existing setup, excluding illness, is a long-standing and often tragically unfair anomaly.
It’s only like that because of historical expediency: In 1974, when ACC began, it was judged too hard, fiscally and politically, to do any better. But there’s no logic to it and it should go.
By using some of the $46 billion ACC investment fund and signalling changes to levies (to start in five years’ time) the Greens have worked out how to do it.
Some, including the PM and commentators close to the National Party, have said a wealth tax is too hard to implement; those cunning rich folk have ways to avoid it, etc.
The Greens address this in their plan: you won’t be able simply to hide wealth in trusts, for example, and Inland Revenue will be instructed to go hard on compliance.
But the criticism raises a larger issue. If any other party supports the goals of the Poverty Action Plan but thinks a wealth tax won’t work, okay then: let’s see your better ideas.
The remarkable thing about this plan is that it reveals how much can be done with even quite small adjustments to tax. How could anyone of conscience say no?
Oh, goodness, is that you, Jacinda Ardern?
The PM said the plan makes some “heroic” assumptions. Well, if it’s heroic to find a way to fix ACC’s biggest weakness, add dignity and simplicity to welfare, and tax wealth a little more to pay for it, I say bring on the heroes.
Ardern also said Labour would have its own plans. Actually, it’s entirely possible the Greens’ plan won’t end up being the best on offer.
But right now, they’ve set the bar. Not a fringe aspiration, but a costed, coherent and compassionate example of what mainstream policy ought to be in the post-Covid era.
It’s a very big thing, this. We don’t always know when we’ve living in a historic moment, but we sure know it in this moment. We have the opportunity to build back better. Are we going to let it pass?
If it’s heroic to find a way to fix ACC’s biggest weakness, add dignity and simplicity to welfare, and tax wealth a little more to pay for it, I say bring on the heroes.