When the Labour-led Coalition Government revealed its first fiscal response package to the COVID-19 pandemic I was, at first, jubilant. The pessimist in me had been expecting austerity, expecting cuts and sell offs. This package is definitely not that. $12.1 billion in spending and 4% of GDP – great! But as the afternoon continued and I read the various media pieces on the package, I started to take a more critical view of it. My jubilation waned, and looking past the political spin, the flaws became obvious. While this crisis is unprecedented and the Government’s response so far has been positive, that does not give it a free pass from analysis and critique.
The major share of the package is $8.7bn for business support and wage subsidies. As a worker, this part of the package makes my blood boil. We as the working class are told and expected to save and have a safety net ready for if things in life go wrong – and if we don’t, tough. This is a situation that is all too common as more and more working class people are living paycheck to paycheck, working multiple jobs with precarious hours. If we do need help, the amount of hurdles and bureaucratic busy work needed to even get a mere pittance is extraordinary. Yet when business strikes a patch of trouble (trouble that has been on the horizon for a few years, pandemic or not) they get handouts. No one asks where their safety net is, where their rainy day fund is. I can tell you where it is: it’s been given out as dividends, used for stock buybacks, transferred to owners’ personal assets and similar wealth extraction schemes.
So it’s rather galling that instead of giving the funds directly to the worker, the most likely to be affected by this pandemic, the funds are going to business, with the intent that they will pass on the $5.1bn in wage subsidies to their workers and keep them employed. Employers can access these funds with very little checks and balances. I find it hard to trust that the money will go to the intended recipients in a lot of cases, as the businesses most hit by the virus downturn are the ones notorious for abusing workers’ rights, underpayment and avoiding obligations. These funds should be going directly to affected workers. If the business is essential and needs to keep operating during this pandemic, it should be nationalised – not given tax breaks and corporate welfare.
$2.8bn is going to boost benefit levels by $25 a week and a doubling of the Winter Energy Payment. While this is great, why is it only now the raise is happening and why is it so limited in scope in such extraordinary times? The cynic in me thinks the Government saw this as an easy opportunity to get a hot potato policy sorted with little blowback in this easily digestible response package and potentially be done with it. Community groups have been asking for the benefit to be raised for years.The Government’s own WEAG report calls for an urgent increase of up to $90 per person. Why, in a crisis, are the people who are most likely to be affected the worst being given a pittance of an increase? In a lot of cases, many won’t even receive the full $25 as the temporary additional support payment and accommodation supplement will be reduced due to this new “income”.
Now is the time to show some political will and raise the benefit to the level that is needed for people to survive. If now is not the time, I don’t know when is. The Government should also be looking at removing the bureaucracy, limits and pointless hoops and checks beneficiaries have to deal with. Now is not the time to have Work and Income waiting rooms packed with people trying to access benefits, food grants, housing grants, looking for jobs or taking job seekers courses. Remove the punitive checks and give people easy access to what they need now for the future.
The Winter Energy Payment doubling is great. It is one of the very few universal welfare payments, beside the pension, with little means testing or bureaucracy. If you are entitled to it, you get it. However, it is effectively channeling funds into public and private energy companies that take a bite out of the pie at every step. A bold plan could renationalise the whole of the country’s energy supply chain. This would drive prices down for everyone and would make it easier to invest in infrastructure to move to 100% renewable generation. It would also have the ability to halt consumer payments in a crisis like this one.
$500 million has been put towards the health system to help fight this virus. Once again, while this is good, it falls short on what could be done. Our health system has been underfunded by $3.2bn since 2009/2010. Funding has had some small gains in the 2018 and 2019 Budgets. One would assume, in the time of a global health crisis, that a top priority would be funding the health system properly to be able to be able to face the challenge head on and be ready for the next. One sixth of the funding seems miserly in the face of what could occur if the virus was to take hold in our community. We deserve better.
The package leaves a lot of vulnerable people out. Where is the funding for Māori and Pasifika people who, due to inequity, will face the effects of this crisis much more than others? Likewise where is the funding for students, the homeless, LGBTQI people, and other marginalised people who will bear the brunt of what’s to come more than others? Where the Government has taken a broad brush approach to the problem, they have left many behind.
It has been stated that this is only the first package and, while commendable in its Keynesian approach, I hope the following ones are much more progressive and bold in their scope.
This global event has shown us worldwide that when capital needs money, it can be found easily – none of the hand wringing over how to pay for it, why it’s not possible and the stereotypical other excuses that get trotted out when we ask for the status quo to be changed. So, now is the time we should be asking for more and for better services. It is not the time to be timid and cautious. We should be seeing rent and mortgage freezes, more public infrastructure, more public housing, more action on preventing the impending climate disaster, nationalisation of essential services and the list goes on. This spending is needed to fight the virus effectively and leave us in a resilient position for the future.
Since the article was written the government has announced a $56.5 million on a specific Māori response package. Of course while this is a positive step much more is needed to address the issue sufficiently. https://www.stuff.co.nz/national/health/coronavirus/120473692/57m-to-be-spent-on-mori-coronavirus-response-package