BusinessNZCEO, Kirk Hope; Employment Relations Minister, Michael Wood; Finance Minister, Grant Robertson and the President of the NZCTU, Richard Wagstaff, at the launch of the tripartite Social Unemployment Insurance propsoals in February.

The National Party and BusinessNZ now appear to agree that they should oppose the Government’s social insurance proposal.

That is after BusinessNZ sat down with the New Zealand Council of Trade Unions and Finance Minister Grant Robertson and drew up the scheme.

Simply, it would impose a levy (1.4 per cent each on all wages) on employers and employees and then make a weekly payout for six months if a worker lost their job or could not work for health reasons.

Robertson told Parliament yesterday someone on $60,000 a year would get $928 a week.

But National yesterday launched a campaign against the proposal, which they are calling a “jobs tax”.

The proposal was launched in February with BusinessNZ Executive Director Kirk Hope and NZCTU President Richard Wagstaff standing alongside Robertson.

The Chief Executive of BusinessNZ, Kirk Hope, told reporters at that launch that the proposal would support business by offering a system where people got more time to find work that matched the skills they had.

“This would mean better skills matching in the workplace generally,” he said.

“New Zealand has long enjoyed significant skills mismatches.

“One part of this is where mid  Skilled people take low-skilled jobs because they have no other choice.

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“This is a suboptimal outcome and contributes to our poor productivity outcomes.”

And that is one of the reasons why when he was in Opposition, Robertson made the proposal a centrepiece of his “Future of Work” programme.

But within hours of the proposal being unveiled and Hope endorsing it, saying it was not a jobs’ tax, the National Party announced its opposition calling it a jobs’ tax.

“Calling this new tax a ‘levy’ or a ‘contribution’ doesn’t disguise the fact that this will be yet more money flowing from hard-working New Zealanders and businesses to this big-spending Labour government,” he said.

Six days later, Roger Partridge, the chair of the free-market think tank, the New Zealand Initiative, directly challenged Hope’s statement at the launch.

“Proponents of unemployment insurance argue that it allows those laid off a better opportunity to search for and secure good jobs. Without it, they may be forced to accept lower-quality work, resulting in lower wages than might otherwise have been the case,” he said.

Partridge cited a 2016 German study that suggested unemployment insurance had a slight net negative effect on wages.

The Initiative has been an influential force on National’s policy development, and Matt Burgess, the Chief Policy Advisor to Luxon, was the Initiative’s Chief Economist.

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But the opposition was not only from theoretical economists; The Auckland Employers and Manufacturers’ Association ran an online poll and found that 97 per cent of the members who responded were opposed.

The EMA is the largest membership component of BusinessNZ, and by April, they had confirmed their opposition to the proposal.

BusinessNZ were also concerned.

Hope went public, suggesting businesses might look at the proposal more favourably if the health and disability part of the scheme were removed, which would enable its cost – and therefore the levies — to be halved.

BusinessNZ also had proposed that because the scheme made what was effectively a redundancy payment, they be removed from employment agreements.

The NZCTU opposed that.

The EMA then proposed that maybe the Government could provide some funding.

The EMA’s Employment Relations and Safety Manager, Paul Jarvie, said in a submission that the Government should also be paying into the scheme on the grounds that they would no longer need to provide sickness or jobseeker benefits to workers who had just lost their jobs.

“We recommend that Government also contribute into the scheme as the scheme as outlined is merely shifting social welfare costs onto employers and employees,” he said.

“The Government will benefit from this scheme, so to that end, they must also contribute into it.”

That, too, appears to have got nowhere.

BusinessNZ, in turn, argued that businesses should get a tax concession for the levies they would pay to offset the cost of the scheme, making it cost-neutral.

That also was rejected.

There were suggestions that the Prime Minister was also cautious about implementing it, possibly because its need for a levy to be imposed on wages might have been seen to undermine her personal commitment there would be no new taxes during this Parliamentary term.

That caution was evident in Parliament yesterday.

“This work that we’re doing—alongside the Council of Trade Unions and BusinessNZ—would not be due to come into place until 2024 or 2025 at the earliest,” she said in answer to a question from Opposition Leader Christopher Luxon.

Robertson, in turn, emphasised the tripartite nature of the development of the original proposal.

“The scheme was developed at the urging of Business New Zealand and the New Zealand Council of Trade Unions to provide an enduring solution to protect people and the economy after job losses like those seen in the Canterbury earthquakes and Covid,” he said.

But it now appears that Robertson may no longer be able to take BusinessNZ’s support for granted.

POLITIK was unable last night to confirm with Hope exactly what BusinessNZ’s position on the insurance proposal now is.

But it multiple sources from within the organisation say that it has given up negotiating and now opposes it.

This will be a personal blow for Robertson, and National look likely to try and make it a political blow also.