In the face of record unemployment, an economic depression like nothing the world had ever seen, and the ongoing effects of a world at war, the New Zealand Government of the 1930s took drastic and unprecedented steps to support the nation. With the introduction of the Social Security Act 1938, Aotearoa established the modern cradle-to-grave welfare state, sparking the quarter-acre, pavlova paradise of lore.

Ten benefits emerged to ensure that every citizen had the right to a reasonable standard of living. Society committed to taking responsibility for all members of Aotearoa, safeguarding the vulnerable from poverty and uncertainty beyond their control. For the first time, welfare was extended beyond the ‘worthy poor’, i.e. those who came by their misfortune by no action of their own, such as widows and orphans – to encompass all those who needed to access it to support their households. The architects of this Act specifically rejected a social insurance concept on this basis – that the care and welfare of citizens is a national responsibility.

How far we have come.

Through the turmoil and disestablishment of the welfare state in the 1980s and 1990s, and the rapid uncertainty of the Covid era, we come now to 2022 where the government is hoping to introduce this very idea.

The Income Insurance Scheme as proposed, would introduce a user-pays, insurance-based safety net for New Zealanders who lose their jobs through redundancy and ill-health. It works just like ACC, requiring a levy on wages from both the employer and the employee. Again, like ACC it would provide up to 80% of the individual’s normal pay (up to $130,911) for 6 – 12 months depending.

This scheme is not a benefit, and so has very different rules to access it. Again, like ACC, eligibility under this scheme will not be asset or partner income tested, defining the individual’s income value on the basis of their contributions to the household alone.

On the surface, this scheme appears well considered and timely, especially considering the current economic uncertainty as we climb out of the Covid Era (not to mention the coming of the robots…). However, the Covid response itself begins to shine a light on some of the holes in this approach to welfare.

The Covid-19 Income Relief Payment (CIRP) was instituted between March and October 2020 to support those who lost their normal form of income due to the pandemic. It was much maligned at the time as creating a two-tier benefit system, being far easier to access, having more favourable abatement rules and with a far higher amount in the hand of the recipient. The reasons given for this approach what that this new class of unemployed faced higher living costs. Effectively that they would need higher levels of support in order to manage their household needs appropriately, having been used to higher incomes. The irony of this on welfare advocates, particularly budgeting services was not lost.

The question was raised then and is now raised again in the light of the Income Insurance Scheme – if the normal amount of welfare support provided is ‘insufficient’ to support the needs of all New Zealanders who need it, is it sufficient for anyone? If the main benefit isn’t enough for most, why is it OK for some?

The welfare changes in the 1930s theoretically removed the restrictions to welfare for those who did not fall into the ‘worthy poor’ category. The reality is that concepts of worthy and unworthy poor persist. Those forced into poverty through injury, illness, or acts outside their control are not begrudged the collective support of our welfare system. Generally, if we know the person, we tend not to judge. But we only have to look to current kōrero from some politicians to see that beneficiary bashing will be back on the table heading into Election 2023. And that there is (sadly) a real appetite nationally for it.

Social Insurance will cement this idea of worthy / not-worthy out of work citizens into the core of welfare support. If you have lost your job in a way that has been outside your control (aka worthy), then you should have access to separate and higher levels of support than others who do not have jobs. If you are not covered by ACC (accidents) or Social Insurance (acceptable redundancy/ some illness or reduced ability), you fall into the un-worthy camp and will be directed to WINZ to receive less.

By moralising the way in which people find themselves without income, we are creating a two-tiered system of welfare that does little to protect a promise that “people have an adequate income and standard of living...(ensuring that they)...can live in dignity and are able to participate meaningfully in their communities” – the government’s own vision for the modern Social Security Act.

If we are so concerned that the Social Security net isn’t enough, we must as a nation ask ourselves why. Every individual, regardless of their economic output, is intrinsically valuable, worthy of respect and dignity, and deserves to be treated as such. If instead of pouring time and resources into a new system for this generation’s new “worthy poor”, we instead invested in a working Social Security system, then this two-tiered system would be redundant.

We have major companies making super-profits, while their workers receive Working for Families, paid for by our shared taxes. We have complex social security legislation and costly structures to deliver it. We are proposing yet another costly structure. We are asking predominantly generations that have user-paid across their lives – Student loans, ACC, Kiwisaver – to again pay a levy reducing their take home pay. We are about to fight for Fair Pay Agreements after decades of stagnating wages and sky-rocketing accommodation costs. We are doing all of this is avoid paying enough tax to pay a main benefit that is enough.

Every Labour leader since 1935 has alluded to the glory of Michael Joseph Savage, first Labour leader and the face of the cradle to the grave welfare system. He and thinkers of the day rejected this concept as unfair. That’s because it is.

Submissions on this proposal close 26th April, 2022, we urge others to submit here.

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