Both the Labour/Green and National budget packages make the same old mistakes that their respective parties have made in the past. National wants to give tax cuts, which inevitably end up helping the rich. Meanwhile Labour/Greens prefer to tinker with the benefit system making it more complex, harder to navigate and employing more bureaucrats as a result. In contrast The Opportunities Party (TOP) champions a whole new approach to reducing poverty.
The problems with National’s package have been widely canvassed. The Accommodation Supplement hike is helpful short term but in an overheated market will only put more money in the pockets of private landlords. Of their tax cut package around $400m goes to those on high incomes who clearly don’t need the help.
Labour & Greens
Meanwhile Labour and Greens both seem to want to help young and poor families, especially with the burden of winter power bills. Both their packages share a lot of similarities and the same weaknesses.
In short, these packages are the same old same old targeted welfare. They will help some of the poor but come at the price of increased complexity and bureaucracy. Targeted welfare also creates stigma and poverty traps – as people try to work their way out of poverty they lose benefits and end up worse off overall. We've been down this road before, and it isn't going anywhere pretty.
In some places their targeting is just nuts. Labour are paying the heating bills of NZ Super recipients who have the lowest levels of poverty in society and may in fact still be working. Meanwhile they neglect to help those working two jobs on minimum wage to pay the bills. The Greens heating policy is a bit better targeted, but will come with huge administration costs.
It almost makes you wonder if politicians really want to solve problems, or are they worried that if they did there would be nothing for them to do. Why else do they create these incredibly complicated schemes?
At TOP we think solving poverty is best achieved through a bold shift in our tax and welfare system, not more tinkering. At the moment our tax system favours the owners of assets over people who rent and work for a living. TOP wants a minimum tax on all assets equivalent to bank deposits, with the revenue being used to reduce income tax for working people by up to a third. Housing would become more affordable over time and 80% of people would be better off straight away.
We also want to see stronger rights for tenants and warm dry housing for everyone. This would be funded by reinvesting the proceeds from a stronger Emissions Trading Scheme.
Half of families with children under five experience poverty, while our retirees have the lowest levels of poverty. By means testing super we can afford to give families with children under 3 $200 per week, and free full time high quality early childhood education for 3 and 4 year olds.
These are simple, universal approaches that would reduce poverty. In fact these investments will return dividends to society over time in better outcomes such as reduced crime and health costs. Of course there is still a need for targeted welfare, but it doesn’t need to be as punitive as it is. For example, TOP would also drop the work test for Working for Families In Work Tax Credit.
All those initiatives are fiscally neutral – they can be done without a dollar of new spending. This leaves the budget surplus to do something truly innovative. Watch this space for next week’s announcement.