Late last year a Productivity Commission report suggested different forms of income insurance to boost income security. Economists and social scientists are worried that a lack of income security, coupled with an increasing proportion of the population that rents, is a driver for a variety of social problems such as homelessness, chronic illness, and the kind of family chaos that wrecks childhoods – and therefore sets up a self-perpetuating cycle of deprivation across generations. Establishing some unemployment insurance, or a ‘portable redundancy account’ as the productivity commission calls it reminds me of another recommendation made during the last term of the Clark labour-led government: for ACC to be expanded to manage long-term sick leave.
Given the recent news about massive losses on income protection products from Australia you might be forgiven for thinking that government intervention might be a relief – but ceding ever more areas of financial services provision to government is hardly a strategy for growth. Even a limited scheme could further confuse the market about the need for income insurance when breadth of participation in a product is one of the fundamentals required for a healthy marketplace.
More can be found through these links:
First, the Productivity Commission itself, with the announcement available at https://www.productivity.govt.nz/news/productivity-commission-suggests-improved-income-security-to-help-those-affected-by-labour-market-change/
And the full report available at https://www.productivity.govt.nz/assets/Documents/437c9e3982/Draft-report-2-Employment-labour-markets-and-income-v3.pdf