Election 2020

In association with

Greens unveil plans to overhaul welfare and tax systems

The Green Party's first election policy is a total overhaul of the welfare system, with a basic income of at least $325 a week at its core, funded by a wealth tax. Marc Daalder reports

In its first election policy announcement, the Green Party has called for a guaranteed minimum income (GMI) of at least $325 a week for anyone not in full-time employment, including students.

The policy, costing a total of $6.6 billion in year one and around $12 billion a year from full implementation by 2023, would be funded by a wealth tax - where people with assets of more than $1 million will pay a 1 percent levy per year - and two new tax brackets for high income earners. The Greens expect to raise $8 billion from the wealth tax in the first full year, rising to $9 billion by 2023/24. 

"During Covid-19 we’ve seen our collective ability to work together to change the system for the better, in a way which benefits all of us. Today, the Green Party is announcing a plan to ensure everyone has enough to put food on the table and a roof over their head," party co-leader Marama Davidson told around 100 people at the launch in Glen Innes, Auckland.

The GMI would replace other income support payments and the student allowance. Although it would start at $325 a week, this would rise in line with the average wage, according to the Greens' policy document. Once the system has been fully phased-in, the Greens say, the worst-off would get $100 more a week than they would under the current Jobseeker Support benefit.

"Under this policy, there will be no stand-down periods, no deduction of child support, and no sanctions," the document states. It would be available to unemployed people, as well as students and people in part-time work.

"Our Guaranteed Minimum Income will mean when people ask for help, they get it. It will replace the dehumanising and unliveable social safety net we currently have, which we know does not allow people to live good lives," Davidson said.

Although the GMI is the centrepiece of the proposal, the Greens' Poverty Action Plan calls for an entire overhaul of the welfare system. That overhaul was one of the key tenets of the Labour-Greens confidence-and-supply agreement, but the effective creation of a two-tier benefit system in May led to recriminations from Davidson that the promise had not been fulfilled.

Injured and sick workers would have an easier time getting an ACC payout, with the crown entity being transformed into an "Agency for Comprehensive Care" which would cover all health-related income support. Payments would be up to 80 percent of the ill worker's salary or at least 80 percent of the full-time minimum wage, whichever is higher.

In essence, the Greens say, this creates a paid sick leave entitlement for all New Zealand workers through the ACC programme.

"When people are sick, injured or have a disability, our first question should be 'how can we help'? Gone will be the days when people are asked to provide humiliating proof again and again and again," Davidson said.

Families with children would benefit enormously from the proposed Poverty Action Plan.

The Green Party policy plan would see single parents get a minimum of $110 on top of the basic income, which is itself a minimum figure. Relationship rules would change so people on welfare - and their partners - could earn more from working without losing benefit support.

For each child under the age of three, all families would receive a $100 a week payment in lieu of the $60 income-tested Best Start payment introduced by Labour.

Working for Families tax credits will be replaced with a Family Support Credit that starts at $190 a week for the first child and $120 a week each subsequent child. Although not universal, more families with middle incomes would be able to access this new credit, the Greens say.

Like the GMI, the new families payments would increase each year in line with the average wage. The minimum wage would also be tied to the median wage under the Greens proposal.

The vast array of new policies would be funded by the Green Party's bread-and-butter: higher taxes on the wealthiest New Zealanders. To pay for the Poverty Action Plan, two new tax brackets would be created to tax income above $100,000 and $150,000 at a higher rate of 37 percent and 42 percent, respectively. This would affect the top 7 percent of income earners, the Greens say, and generate $1.3 billion a year.

In addition to this, New Zealanders with net assets - including a house, but minus mortgages and other debt - worth more than $1 million would pay 1 percent of their wealth in tax each year. For those with net wealth of over $2 million, the payment increases to 2 percent.

"This is about creating a society where we can all move forward - not just the wealthiest few," Davidson said.

The Greens expect this policy to raise nearly $8 billion in the first year of operation. It will be calculated on an individual basis, meaning a couple would have to own at least $2 million in assets for both of them to begin paying the wealth tax.

The tax will also exclude certain assets from consideration, including individual household assets - furniture, electronics and vehicles - worth less than $50,000 and Māori land under the Te Ture Whenua Māori Act. Charity organisations with assets held by individual members would not be counted either.

The wealth tax would affect just 6 percent of New Zealanders, according to the Greens' figures.

Alongside higher tax brackets and the wealth tax, the Green Party also hopes to take aim at big corporations that they say don't pay their fair share. Big tech companies like Facebook and Google would be subject to a 3 percent Digital Services Tax on all revenues from New Zealanders, bringing in an additional $20 million to $80 million.

As it stands, tech giants often pay far less tax on income gained from ads sold to New Zealanders than local advertisers would. An international effort to straighten out the global tax rules on big tech companies is ongoing, but the Greens now say they'll go their own way if progress isn't forthcoming.

"Covid-19 has revealed the glaring holes in our social safety net. It’s also presented an opportunity to fix them once and for all, and create truly equal communities where everyone can thrive," Davidson said.

"This plan creates a fairer Aotearoa, and moves all of us forward together."

Help us create a sustainable future for independent local journalism

As New Zealand moves from crisis to recovery mode the need to support local industry has been brought into sharp relief.

As our journalists work to ask the hard questions about our recovery, we also look to you, our readers for support. Reader donations are critical to what we do. If you can help us, please click the button to ensure we can continue to provide quality independent journalism you can trust.

Comments

Newsroom does not allow comments directly on this website. We invite all readers who wish to discuss a story or leave a comment to visit us on Twitter or Facebook. We also welcome your news tips and feedback via email: contact@newsroom.co.nz. Thank you.

With thanks to our partners