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  • rmacculloch

National Party Leader Chris Luxon's First Mistake which will return to haunt him

The last few days have featured prominent news headlines about Finance Minister Grant Robertson's proposals to introduce an Unemployment Insurance (UI) scheme, paying a percentage of previous wages for a period of up to about six months. Such schemes form the bedrock of the welfare state in most civilized countries, including the United States.

Almost to the day when National Party leader, Chris Luxon, stated at their party conference he wanted the Nats to be seen as a party that cares about people and is "compassionate", he has dismissed a UI - social insurance - scheme - that would be endorsed by even the most extreme right wing of Americans.

And if you don't believe me, go read how President Trump extended the duration (and thereby generosity) of Unemployment Insurance during the pandemic as unemployment rose in the US during 2020-21. As the Federal government passed laws to enact such changes, the article below describes how many State UI funds were becoming depleted, meaning "significant" increases in payroll taxes on employers. Even in the US under Trump, all Americans, Democratic & Republican alike, 110% endorsed more generous UI to alleviate the pain & hardship of unemployment during the pandemic. The "deep" economic rationale was that job loss these past years has overwhelmingly NOT been associated with laziness or idleness, but has been due to a shock over which workers had no control, were not at blame or fault. Risk has been rising. In such an instance, insurance, and more of it, is a good thing.

Yes, the Nats don't seem to have the foggiest clue what they have just gone and done. The problem appears to be that they don't understand the scheme. Their policy should have been that they endorse UI, but to ensure workers & firms are not made worse off due to new payroll taxes, its introduction (should National gain power) would be accompanied by a cut in the rates of personal and corporate taxes. To ensure no additional public borrowing took place, those tax cuts should be accompanied by reductions in "wasteful" government spending, which includes transfers made to the highest of income earners, like in the case of KiwiSaver subsidies and the winter energy allowance.

However, a simple rejection of the scheme by National with its leader referring to the UI proposals as a "job tax" reveals in one fell swoop that the Nats are still, at present, a party with next to zero understanding of economics nor how to do an economic reform. New face, but same old rubbish.



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