ANALYSIS: How does the Opportunity Party's big tax-and-welfare rethink stack up?
Summary:
The Opportunity Party wants to introduce a land tax in order to fund a universal income for all adults, and lift compulsory savings to 12% of wages
The party argues this would reduce house prices, give individuals greater dignity and build national savings
However, its plans run into formidable obstacles philosophically, politically and pragmatically, especially when it comes to reducing disparities
Land taxes and a universal income
The Opportunity Party (TOP) has announced a plan to spend at least $60bn a year in non-means-tested payments to all adult citizens, funded by income tax rises and a tax on virtually all the land in the country.
The third plank in its ‘tax reset’ would replace KiwiSaver with an Australian-style compulsory savings scheme in which all workers would have to save 6% of their salary and their employers contribute another 6%, those contributions being tax-free.
Currently polling at an average of around 2.5%, the party hopes to make it over the 5% threshold and be able to work with both left and right, thus enjoying significant power in post-election negotiations. Its ‘tax reset’ is designed to encourage land to be used more productively, reduce the complexity and stigma of the welfare system, and boost savings.
A universal basic income
Probably the most attention-grabbing of the reforms is the proposal for a Citizens’ Income, effectively a universal basic income (UBI). This would be a payment of $19,400 to “every New Zealand citizen and resident aged 18 and over” without any means-testing whatsoever. Billionaires would get it alongside beneficiaries. Proponents of a UBI have long argued that it would give people independence and dignity, and remove the welfare state’s intrusive and expensive means-testing.
The payment is set at $19,400 because that is the Jobseeker Support level. Top-ups for sole parents, superannuitants and disabled people would ensure no beneficiary was worse off.
In addition, a range of child-related payments – Best Start, the Family Tax Credit, the In-Work Tax Credit and Paid Parental Leave – would be rolled into one Child Support Income which would be worth around $350 a week in a child’s first year and which, on first glance, would equal or exceed the amounts paid under the current system.
Counting the costs
The gross cost of the Citizens’ Income or UBI is given as $62.8bn. It is not clear how this is calculated, however. Divided by $19,400, that $62.8bn cost implies a recipient population of roughly 3.2m, whereas Statistics New Zealand states the 18+ resident population is 4.1m. This implies around 900,000 adults do not fit TOP’s description of “New Zealand citizen and resident”. It would be useful if TOP explained this (apparent) discrepancy.
