An income guarantee that transforms the current benefit system, new tax brackets, lots of top-ups for people with kids – what all does the new Greens tax and income policy propose?
The Green Party this morning announced its new tax and income policy for the 2023 election, which includes an income guarantee as well as a sweeping overhaul of the tax system, a new system of support for jobseekers and beneficiaries, and a system of universal support for children.
“This is a promise that no matter what, you will always have enough to afford the weekly shop, pay the rent or cover unexpected costs” said James Shaw in a speech announcing the new policy at Covert Theatre in Grey Lynn. The income guarantee would ensure that anyone who is out of work or studying would receive a minimum of $385 a week to cover essentials, with a range of top-ups for children, single parents, and people who can’t work due to disability, injury, or illness. These benefits would not have the stand-down period of current Jobseeker benefits.
In a room filled with Green supporters, the atmosphere was enthusiastic; loud cheers followed many of Shaw’s statements, and there were multiple people wearing the Green vintage sweater, and at least one person with a hand-painted Green logo on their t-shirt.
These changes will be funded by revisions to New Zealand’s tax system. Crucially, under Greens’ policy, the first $10,000 of income wouldn’t be taxed; instead, a new top income rate of 45% on income over $180,000 would be added, a 2.5% wealth tax on assets worth more than $2m per individual (minus mortgages or other debt), and an increase to corporate tax levels to 33%, the amount it was set at before the National government came in in 2008. Having an initial tax-free threshold would bring New Zealand more in line with Australian tax codes; Shaw said that this policy creates tax cuts for those who need it most. The full policy, which the party is calling “Ending Poverty Together”, can be read here.
Some of these proposals resemble Green policy at the 2020 election, where it proposed that net wealth over $1m be taxed at 1% and over $2m be taxed at 2%, and created new tax brackets for those earning over 100k and 150k. At that election, the party also proposed a minimum income of $325 per week.
Shaw, co-leader Marama Davidson and Green MP Chlöe Swarbrick all referenced the study by IRD earlier this year which revealed that untaxed assets and trusts meant New Zealand’s wealthiest families had an effective tax rate of only 9%, far less than most income owners. Shaw, citing this research and more like it, emphasised the unfairness of the current tax system and suggested that the new Greens policy would go some way to rectifying it. “That inequality is not an inevitability – it is a political decision,” he said, to an echo of “kia ora” from the crowd.
Support for families would replace the current Working for Families regime. The income guarantee would top up the minimum guaranteed income by up to $215 for the first child and $135 for subsequent children, with those earning less than $60,000 receiving the full amount. An extra, universal benefit of $140 per week would apply to all children under the age of three.
“We’ve got kids that walk around with no shoes [in South Auckland],” said Agnes Magele, co-chair of Auckland Action Against Poverty, in response to the announcement. “This will be really awesome for families and tamariki to do things like have a party, buy balloons – mums and dads being able to take them out, to have enough. People in poverty can’t do things like that at the moment.”
Is this income guarantee a step towards a universal basic income? “This is targeted to the people who need it the most when they need it. A UBI because it goes to everyone including people who don’t need that support, and what that means is that the rate has to be low to spread it around,” Shaw said, in response to The Spinoff, at a press conference after the announcement.
Shaw dismissed concerns that the income guarantee could exacerbate inflation. “We’re not increasing the money supply into the economy that would cause inflation,” he said. “The areas you’re seeing inflation, in the construction sector and so on, are not going to be the areas that would be put under pressure by the transfers we’re talking about.” The income would be pegged to inflation in the future, and the amount reviewed every three years, he said.
Shaw dedicated the end of his speech to describing the difference between the Green Party and the Act Party, saying “It’s becoming clear that any sense of direction to guide the next government will come from the Greens – or from the Act Party.” He listed a number of comparisons between the party’s policies. “Act want to stop te reo words on road signs. We want to stop climate change.” When asked why more of the speech was dedicated to Act than National – or indeed Labour – Shaw said “Frankly, Act worry us deeply.”
“People are doing their best [but] Act tends towards a toxic narrative that dehumanises people in poverty,” added Marama Davidson.
Shaw said that their new system of benefits would cost $10b, less than the government currently pays for superannuation. After the announcement, Shaw elaborated, saying that by their “conservative” estimates, the revised tax system would generate more than they’re proposing to spend – money that could, presumably, be spent on other policies.
At the media stand up, Shaw and Davidson responded to questions about how their income policies related to housing, but said only that an announcement on housing was coming in a few weeks and wouldn’t be drawn on details. They also answered questions about whether the party’s position on genetic engineering had changed, following Christopher Luxon saying that GMO laws would be loosened under a National government on Q + A this morning. “We’re comfortable with the government reviewing the settings, including for medical care,” said Davidson. “We also have to prioritise reducing climate pollution and not just leaving it all up to technology alone.” However “it’s not going to be an issue we’re fighting this campaign on,” Shaw said.