“Labour’s income insurance scheme would provide no more income to a family dependant on a median wage as benefits would, the only difference is the same family would have to pay for the income insurance scheme with a tax on their income,” says ACT Leader David Seymour.

“Someone on the median wage of $59,000 will part with an extra $1,634 per year as part of the income insurance scheme 2.8 per cent tax. This same worker, with a partner in part-time employment, children and paying the average rental or mortgage price would get the same amount from benefits as they would from income insurance – about $780.

“Families dependant on a median wage income are being asked to pay an extra tax for no benefit. Families earning less than a median wage income are even worse off, they’re effectively subsidising the scheme for everyone earning above the median wage.  

“I asked the Prime Minister in Parliament whether she was aware of this and if she stood by the scheme, she waffled about the sadness of someone losing their job, but failed to acknowledge her policy wouldn’t change a thing for those people.

“There’s no free lunch with Labour, the Reserve Bank reports inflation expectations are up for inflation to be 4.86 per cent a year from now, and ANZ has just raised their Official Cash Rate forecast to 4.75 per cent. This means the cost of living keeps getting tougher with higher prices at the checkout and higher mortgage rates. This scheme will only exacerbate things by taxing more of Kiwis' incomes

“Advice from MBIE said that implementing the policy during the early stages of our economic recovery would have a “substantial contractionary effect on the economy”. In other words, it would inflict even more costs on businesses that have been through the ringer and are trying to rebuild.

“As released in our cost of living document, ACT says we need to make our society productive again by tackling the labour shortage that is reducing production and pushing up prices. We’d do this by dumping the labour market test, industry specific wage requirements, and transfer restrictions.

“We’d also tackle inflation and restore monetary policy credibility to the Reserve Bank by returning its mandate to solely taming inflation, allowing the appointment of monetary policy experts from New Zealand and abroad, and applying stricter scrutiny in future before granting Crown indemnities.

“ACT’s Alternative Budget for Real Change also shows how the Government could reduce spending without touching any frontline service, and then deliver significant tax cuts to New Zealanders.

“Inflation is at a 31-year high and Kiwis are being squeezed from every direction. The only adequate response is a return to rational economics.”

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David Seymour