The Greens have shaken up the election campaign with the announcement of their radical poverty and action plan to reform welfare provision and introduce a new wealth tax for millionaires. It’s a big-thinking, controversial policy and has generated a lot of disagreement over how radical it is, whether it could work, and what it might mean for the election. 

For the best reporting on the announcement, see Henry Cooke’s Green Party’s $8b plan would guarantee income of $325 a week, and pay for it with a wealth tax on millionaires. This explains how the Greens’ wealth tax would apply a 1% levy on people who have net assets above $1m – exempting the first $1m – and this would rise to 2% for subsequent wealth over $2m. There would also be new higher marginal tax rate of 37% for earnings over $100,000 a year, and 42% for earnings over $150,000. The increased revenue would be used to pay a “guaranteed minimum income” welfare payment of $325 to all those not in full-time work (including students, unemployed, part-timers, retired).

Praise from the left

Leftwing blogger No Right Turn is incredibly happy with the policy, saying: “Its bold, its progressive, it would make us a better, more equal society” – see: The Greens’ opening bid is transformational change.

Although the blogger would prefer a land tax rather than a wealth tax, which he suggests is easier for the rich to evade, he says a lot of the quibbles with the policy – such as whether the rich will simply be able to avoid the tax – are unfounded, as these can be fixed in the implementation phrase. However, he’s disappointed that the Labour Party appear to oppose the policy, which he puts down to too many in the party owning investment properties and generally being a force for the status quo.

Leftwing commentator Chris Trotter is also deeply disappointed by Labour’s apparent opposition to the policy, and suggests it’s typical of the party’s general moderate orientation in a time that requires boldness – see: Labour will not win with a yeah-nah strategy.

Trotter believes the Greens’ new policy “has the capacity to get young, poor voters up off the couch and into the polling booths.” He foresees the party possibly rolling out a similarly radical suite of policies which might “offer the voters something pretty close to a complete re-prioritisation of all the activity that makes up the New Zealand economy”.

Fellow Daily Blog writer Martyn Bradbury, is also a big supporter of the new policy: “For the first time in 3 years, the Greens finally give a reason why New Zealander’s should vote for them, and I’m genuinely surprised and pleased. The middle class woke identity politics, which has been so toxically alienating for the Greens and is why they have been floundering in the Polls, has been sidelined in favour of genuine social justice in welfare and a real economic philosophy of taxing the rich” – see: Finally a reason to vote for the Greens!

Newsroom’s editor Tim Murphy also praises the Greens’ policy for its radicalism and vision, saying the party deserves praise for being “the first party to offer a big, detailed and transformative policy in response to the economic tornado that is Covid-19. This is what political parties should be doing, 80 or so days out from a general election in the context of a major economic downturn” – see: The Greens’ cunning plan. He adds, “The Greens have shown us a medium to longer-term response to the economic crisis that challenges current political limits.”

Here’s Murphy’s main point: “the value in the Greens going early and going hard with such a sweeping policy is that the party has offered a response to the biggest crisis since the Great Depression that offers change beyond an orthodox, vast Government stimulus and infrastructure build. The party will be betting New Zealanders shaken by the rapid and comprehensive threat to jobs, incomes and futures will be open to a new, collectivist and non-judgmental platform where Kiwis accept they need to pay more from any wealth they have above million and two million dollar limits to help their sisters and brothers. Is there a new normal in compassion and sharing the burden?”

Critiques from the left

How radical is the policy? Leftwing playwright and satirist Dave Armstrong is generally supportive of the new policy but warns against seeing it as some kind of socialist nirvana: “So when we look at the Greens’ ‘far Left’ wealth tax, we have to remember that it is a slightly Left-of-centre party big on the environment and with the Right-wing ‘realist’ faction of the party firmly in control. To pay the Greens’ wealth tax you have to own an asset worth more than a million dollars. Even then you only pay a small amount of tax based on the amount over a million. So all those residents of leafy Wellington suburbs, mine included, can relax – especially if you co-own a house. Even if you own a million-dollar house and a million-dollar company, you’ll more likely be paying your accountant more per year than the wealth tax” – see: Greens’ wealth tax will appeal to Labour’s Left-wingers.

Armstrong points out that not only will the wealth tax be “about as potent as a shandy in global terms”, the resulting increased welfare payments will still be inadequate: “For many of us, living on $325 a week would be incredibly difficult. It’s hardly largesse.”

The Greens, Armstrong argues, are actually in broad alignment with all the parliamentary parties, who largely agree on the basic taxation settings: “Our five parties have an unspoken consensus that corporate tax must stay low, that indirect taxes must rise and direct taxes must fall, that our crippling – for the poor – GST rate of 15 per cent must remain, and that corporate tax be modest.”

However, the Greens’ policy will be useful for Labour, Armstrong says, because it means that they will be able to “come up with a wishy-washy centrist scheme to address child poverty and inequality and when there are howls of outrage from the anti-beneficiary Right, Labour can say, ‘it’s very moderate – nowhere as radical as what the Greens were proposing’.”

Leftwing blogger Steven Cowan is dismissive of the new policy, largely because it amounts to a band aid rather than a solution for inequality and poverty, which is actually produced in the economic system rather than the welfare system. He complains that the Greens are only willing to treat “the symptoms of the disease itself” as a way of avoiding the necessity of fundamental economic transformation – see: Treating the symptom and not the disease.

Like Armstrong, Cowan argues that the Greens’ proposed $325 per week isn’t enough to live on, and in fact is much lower than what the current government has deemed is necessary for those who lost their jobs during the current recession (they get $490/week). And because the Greens haven’t so far pushed Labour to be transformative during the last three years, Cowan finds it hard to imagine them doing it in the next term – hence he sees the policy as dead in the water.

Critiques from Labour and the right

Prime Minister Jacinda Ardern has poured cold water on the Greens’ policy, saying the wealthiest New Zealanders would simply change how they structure their assets in order to pay much less tax than the Greens have calculated. She has complained that the Greens have included some “fairly heroic assumptions” in their calculations that the proposed new tax would raise $8bn – see 1News’ ‘Significant behaviour change’ needs to be factored into Green’s proposed wealth tax, says PM.

Here are Ardern’s main points: “Some of the assumptions around people’s change in behaviour, they aren’t necessarily factoring in a significant behaviour change which often tax amendments like this would drive… Also the fact that people would change the value of their assets in order to avoid tax, the fact that people will often move funds offshore and also I’m interested in the underlying modelling which is not necessarily something I’ve had access to.”

On the political right, others have made some similar arguments about the weaknesses of such a wealth tax. National-aligned blogger David Farrar says the wealthiest can afford to use accountants and lawyers to hide their wealth: “Of course the super wealthy will pay nothing. They will have all their assets in trusts. This asset tax will just affect the prudent retired person or small business owner who has managed to save some money, but don’t have fancy lawyers to hide everything in trusts” – see: Greens want to tax, tax, tax.

Evaluations of wealth taxes

For an in-depth and thoughtful examination of the general pros and cons of wealth taxes, it’s worth reading Henry Cooke’s The crucial feature of the Greens’ wealth tax that would exempt most family homes. He explains why such taxes are not commonly advocated for in New Zealand: “There is a reason we tax income more than wealth in this country. Taxing wealth is very hard – both politically and logistically. It’s fairly easy to clip the ticket on someone’s pay packet every week, but a lot more difficult to ascertain exactly what they own, what it’s worth, and whether the public morally thinks that worth should be taxed at some level.”

Cooke also outlines how the Greens’ version of a wealth tax is actually rather moderate, and says it is difficult to see how it would raise as much revenue as the Greens suggest. This is because the tax only applies to the marginal income above a very high threshold, and assets such as houses are divided in value between the various owners – with each owner getting a $1m exemption.

So, for example, even if a couple owned a $2.1m home and had no mortgage, they each would only pay $500 a year in the tax. And, in fact, such couples might have the potential to reduce this further by making their children co-owners of the home: “it isn’t clear what would happen to stop people just putting their kids on the title of their home, spreading the wealth around a family and avoiding the tax.”

Similarly, Thomas Coughlan has written about how a wealth tax fits within the broader tax system, again pointing to the complexities of introducing this type of taxation – see: Taxing wealth: a necessary step, or unachievable pipe dream? He argues the benefit of the current system – which relies heavily on tax on incomes, spending, and corporate profits – is its effectiveness: “This ensures high rates of compliance because there’s no great reward for the costly practice of stashing your income somewhere the taxman can’t get at it.”

Coughlan interviews Robin Oliver, formerly the IRD’s deputy commissioner of policy and a member of the Government’s tax working group, who argues that such a wealth tax will have problems with valuing assets. He says a land tax would be preferable: “A land tax would be relatively more easy to implement as land values were independently calculated for rating purposes.” Oliver says: “All we’ve really got in New Zealand in assets is land… What we have is land, what’s untaxed is land.”

How the Greens’ policy might impact the election

Is there growing public interest in a wealth tax? Richard Harman thinks there might be, and he also points to growing international interest in such taxes – see: Ardern shuns Greens’ wealth tax; Nats mount scare campaign.

The problem, Harman says, is that the Labour Party will have very little desire to implement such a policy, making it “more or less dead on arrival”. And with Jacinda Ardern being so opposed to implementing a capital gains tax, she is “hardly likely to agree to a capital gains’ tax’s lesser cousin, a wealth tax.”

The Greens could yet get their plan implemented according to Barry Soper, who points out that with NZ First likely to be out of the picture the Greens might have the ability to make the policy a bottom-line for post-election negotiations – something the Greens aren’t ruling out – see: Is the Greens’ poverty plan a flight of fantasy? Think again.

For this reason, Soper suggests Labour’s best bet is to totally rule out the Greens’ proposal, otherwise it will give National and NZ First a strong campaigning message: “Smiling all the way to the ballot box if that doesn’t happen will be National, which will be out selling what a Labour/Greens coalition could look like. And so too will be handbrake Peters, who’ll be out there reminding the electorate of what he stopped Labour from doing”.

Similarly, Heather du Plessis-Allan urges Labour to unequivocally rule out the policy, lest it chase away centrist voters – see: Why the Green Party’s wealth tax is bad for Jacinda Ardern.

Here’s du Plessis-Allan’s main point: “Labour clearly hasn’t learned from the capital gains tax fiasco last election. Remember how that played out? As soon as the PM promised a CGT, her polls started falling. This time, it might not be her policy, but if it’s coming from a party she is most likely going to need, it’s close enough for some voters. Unless she rules this out, there is the risk that this becomes capital gains tax 2.0.”

Finally, for more about the advantages of a wealth tax, details of how it might work, along with some of its challenges – it’s worth reading Max Rashbrooke’s January report for the Tax Justice Aotearoa NZ: The case for a net wealth tax in New Zealand.

The original news story by Nita Blake-Persen was published on the RNZ website, and relayed how “Parents lined up in the torrential rain for hours this morning outside Manurewa’s Work and Income office to meet with advocates who help them with their claims. Without them, they say their desperate pleas for cash are almost always denied” – see: People queue from 2am outside Work and Income for help.

The first person in the queue, who arrived at 2am, told the reporter he needed a grant, as he was struggling to buy basic necessities for his three children: “I need to buy long pants, jumpers, jerseys and that, and then I need to get food, because I stay in a three bedroom house – I pay $610 a week.”

Like others lined up at the Work and Income office, he had come on that particular Thursday because the advocacy group Auckland Action Against Poverty (AAAP) come along on that day every week to help beneficiaries obtain their full entitlements. Those advocates claim that beneficiaries are otherwise being turned away from proper grants.

One of the AAAP advocates appealed to the Prime Minister to sort out the situation – Kathleen Paraha challenged Jacinda Ardern, saying: “The government needs to get off their bums and come down and have a look for themselves.”

The story has provoked some strong reaction on Twitter, with many saying it epitomises this Government’s failure to deliver the transformation it has promised. For example, Newsroom editor, Tim Murphy, stated “This is one of those stories that will be remembered about a government’s time in charge”, and “The more that this Governments term progresses, the more clear it is that that they are at their core no better than the last guys, or the ones before that. Virtuous media soundbites & photo ops aren’t making a difference”.

And his business journalist colleague Bernard Hickey pinpointed the conservative fiscal approach of Ardern and her Government as being responsible, saying the 2am welfare scenes occurred “At the same time as a ‘progressive left’ Government has a $7b budget surplus and has net debt so low that even Moody’s says we could almost double it and keep our AAA rating. Yet…budget Rules…”

Political activist and former MP Sue Bradford suggested that the Government was not following through on its promises: “Minister Sepuloni used to talk about the culture change she wanted at Work & Income, but the ongoing desperation of people who need help to get the most basic of needs from W & I flies in the face of Labour’s supposedly ‘kinder’ approach to welfare.”

In the blogosphere, some on the political left expressed their frustration. Steven Cowan blogged to say the continued plight of beneficiaries was a case of Paying the price of Jacinda Ardern’s austerity policies. He argued “these Auckland beneficiaries provide more stark evidence of a society where the depth of poverty continues to deepen and the chasm of inequality continues to widen”.

And he pointed out that “It was only two months ago that the Labour-led government declined most of the recommendations of its own welfare working group”. Similarly, Martyn Bradbury argued the incident was an example of The Toxic culture of WINZ & MSD laid bare,

But is it really fair to see the 2am Manurewa event as representative of the Government’s failed welfare reform agenda? The Minister of Social Development, Carmel Sepuloni, went on RNZ’s Checkpoint programme to dispute this version of the story – see: Long queues outside MSD ‘shocking’ but not the norm – minister. Sepuloni’s reaction to the story was: “I saw the image and I saw the story and no one would pretend that it’s not shocking to see that… that is not a normal occurrence at MSD (Ministry of Social Development) offices around the country.”

The Minister’s main point was that the queues from 2am in this instance were not directly due to Work and Income decisions, but because the advocacy group AAAC had arranged for beneficiaries to gather in a way that they needed to arrive early to get the chance of advocate help.

She said: “They’re not meeting with MSD at that hour, they’re actually meeting with their advocates… We tell AAAP… on Thursdays they have guaranteed appointments for their clients, that we will see them on that Thursday – so there’s no reason for them to turn up at that hour of the morning.”

In another interview, Sepuloni explained “I am advised that the long queues seen at Manurewa are the result of benefit recipients being encouraged by their advocates to all congregate at the same time on Thursdays”. She has also called on AAAP to work differently to help beneficiaries: “The queues can be avoided if AAAP works with MSD to deal with these cases in an orderly way across the week, rather than creating a bottleneck that forces everyone to be there at once in the rain” – see Michael Daly’s Auckland Action Against Poverty hits back at Government over WINZ queues.

The same article reports Work and Income regional commissioner Mark Goldsmith claiming that the AAAP advocacy group had refused “numerous attempts” made to work together. And, further, that “We would be happy to pre-book appointments with clients and AAAP advocates so clients don’t have to wait, but so far AAAP haven’t agreed to this.”

The group has responded, disputing this: “It’s categorically untrue we’ve refused to engage with MSD re:Manurewa.” And in open letter to the Government, published on The Spinoff, the group say: “When you say we should go to different offices to spread out the work of Ministry Social Development staff and avoid ‘creating a bottleneck’, what you are admitting is that MSD staff all over Aotearoa New Zealand are failing the people they are meant to be assisting. You are admitting that there is something seriously wrong with our welfare system” – see: We should not have to do MSD’s job for them.

The group also challenges the Government on its welfare policies in general: “There is enough money to end poverty but you need to be bold. You need to tax wealth and redistribute it into social welfare and public housing. You need to spend that surplus you are sitting on. It is socially and fiscally irresponsible to allow people to continue to live in poverty. We would like to see this rhetoric on well-being and kindness materialise in the lives of the people we work with.”

To get a better understanding of the work that the AAAP group is doing with welfare beneficiaries at the Manurewa office, it’s worth reading Michael Daly and Joel MacManus’ Minister responds to Manurewa Work & Income queue problem. In this, it’s explained: “The arrangement with Work and Income was that AAAP advocates were allowed to help 65 people in the queue on Thursday mornings. There were usually about seven advocates at the office, and they interviewed those 65 people.”

AAAP coordinator Ricardo Menendez March is reported saying: “In reality we always see far more. People have the right to have a support person at Work and Income… Throughout the day we end up helping far more people, explaining to them the process and making sure the case managers are doing their work and following the law adequately”.

Menendez March says that this has been going on for about two years, during which time the queues have always existed but are getting worse. Why? He says: “We know beneficiaries have been the most disproportionately impacted by the rising cost of rent. More people than ever require hardship grants to get by.” And according to this article, “The Manurewa WINZ office gave out $698,000 in Special Needs Grants for food last year, the highest in the country by more than $200,000.”

This article is also useful for providing the Government’s side of the story on what it is changing at the frontline to help welfare recipients, with Sepuloni stating: “this Government has sent a clear instruction to frontline MSD staff that anyone coming in is to be provided with the full financial support they are legally entitled to…. As a result of this instruction the number of hardship grants provided by this government has increased 60% year on year. The value of hardship grants has gone from $81m to $128.5m from March 18 to March 19.”

In addition, the article points out that “The Government has also announced funding for 263 new frontline MSD staff over the next 4 years.”

Perhaps this means that Work and Income offices will also stop referring beneficiaries to loan sharks to help raise their necessary funds, as reported recently by 1News – see: ‘Fundamentally wrong’ – Ministry referring beneficiaries to loan sharks, activists claim.

What else can be done to alleviate the plight of those on benefits? University of Auckland economist Susan St John has come up with a list of possible solutions that could be implemented immediately. Her “emergency package” includes the “Payment of the full Working for Families tax credits to all low-income families”; “An increase in the allowable income before any benefit is lost to 10 hours at the minimum wage or $170 per week”, and “A suspension of all student loan repayments for families who get Working for Families” – see: Poverty: not an earthquake but still a crisis.

As to what reforms the Government has already come up with, St John is derisory: “The tiny changes made in the 2019 budget will miserably fail to make a difference to the immediate problem. Worse still they don’t come in until April 2020.”

And like other economists, she criticises the fiscally-conservative approach of the Government as being at the root of their failure to act: “It may be laudable for the Government to be fiscally responsible, but not in the very narrow ways it has chosen. The nation is facing a crisis, it’s like a slow earthquake shaking our values to the foundation. You don’t store up goodies for the future when faced with life damaging catastrophes, you invest in reversing the damage and in preventing further damage.”

Finally, is there a need for reform of how the welfare system treats people in relationships? A new report out last week challenges the “traditional” and “current rules” in which people’s eligibility for benefits is based on whether they are in “relationship in the nature of marriage” – see Sarah Robson’s Welfare system needs to change how it defines relationships – report. And for a personal version of this story, see Sarah Wilson’s The consequences of love: how finding a partner left me penniless.

Have the political left and supporters of the Labour-led Government been conned again? Big changes were promised in welfare reform, but with the response to the just-released working group report on the welfare system, it looks like very little is actually going to be delivered.

Of course, the left has already been feeling shocked and disillusioned by Jacinda Ardern’s capitulation over the capital gains tax proposals, which is raising serious questions about the Government’s promised “Year of Delivery”. And now the weak response to the Welfare Experts Advisory Group report is essentially “Capitulation Number Two”.

Once again, the Government has opted for caution and conservatism instead of making bold reforms recommended by experts. Leftwing supporters and those who care about a properly functioning welfare system are outraged.

The report released on Friday was radical, with a solid critique of the state of the welfare system, and 42 recommendations for fixing it. But the Government response has fallen vastly short. The Minister of Social Development, Carmel Sepuloni, has come out to say that only three of those recommendations will be taken up. Of course, she’s suggesting that more reforms might happen in the future, but few observers appear to have confidence in that eventuating.

One of the best explanations of the Government’s response is Henry Cooke’s column yesterday Greens fail to win major change with welfare review.

In terms of the three working group proposals chosen by the Government, Cooke explains these are hardily bold: “Given the sweep of the report, these changes seem pretty small. Labour and the Greens have been campaigning on removing the sanction since before the election, and have delayed doing it until this report has come back. The change won’t go into effect until April 1, 2020. The sensible abatement rate changes track with minimum wage hikes and are so non-controversial that National agree with them. New staff are hired all of the time. You can even quantify the smallness. The changes as a whole will cost $286.8m over four years. The working group estimated its full suite of changes would cost $5.2b a year – more than the Government’s entire operating allowance.”

Activist and former Green Party MP, Sue Bradford isn’t mincing her words, saying the Government’s “dismal” response to the report recommendations indicates it’s “neoliberal”, by which she means economically-rightwing and still clinging to Establishment and punitive approaches of the last few decades – see: No hope for progressive welfare reform from this government.

Bradford includes the Green Party in this critique. She says the Greens are good at saying the right thing on welfare but, when it counts, the party is wedded to neoliberal practice. Bradford concludes that for the political left, this latest capitulation proves that a new leftwing political party is necessary.

Other commentators are also acknowledging the Greens’ failure to secure welfare reform. Henry Cooke points out that the party had increased its reputation with the left and the poor on the basis of their 2017 election campaign on reforming the welfare system, but says “The Greens are not living up to Metiria Turei’s promise of transformation.” Given that they promised so much, but are delivering so little, he suggests they now “need to be asking questions of themselves”.

Disappointment with the Greens on this appears widespread amongst activists. Leftwing blogger Steve Cowan says that it’s a failure of Green Party leadership, and especially of co-leader Marama Davidson, who he says “has proven to be yet another routine establishment politician betraying the interests of the very people she claims to represent” – see: Why is Marama Davidson in Parliament?

His disillusionment is clear: “We’ve been shafted again. Watching Marama Davidson blandly smiling as Sepuloni denied beneficiaries and the poor a better and more secure future reminded me that in 2017 Davidson was making speeches at South Auckland rallies, lambasting the National Government’s failure to address growing poverty and inequality. All that passion has faded away to bland smiles and empty words trotted out about she knows about the hardship that many people are enduring and that she will continue to work hard for them.”

And for Cowan it’s not just a case of Davidson and her caucus lacking courage, but that they have essentially revealed their true colours now that they are in power: “But her ‘radicalism’, if it was ever there in the first place, has gone missing in the impenetrable centrist fog that now clings to the Green Party like a wet blanket. She displays exactly the same kind of reverence for ‘politics as usual’ centrist politics displayed by the Labour-led government and her fellow Green MPs”.

On the report and the Government response in general, Cowan is highly sceptical, suggesting there’s been an attempt to bury this embarrassing capitulation: “Was it just a coincidence that Jacinda Ardern’s engagement to Clarke Gayford was announced on the very same day that the Labour-led government announced its shocking response to the Whakamana Tangata: Restoring Dignity to Social Security in New Zealand report? If the motive really was to deflect attention that Jacinda Ardern and her government have shafted ordinary people once again, it kinda worked. The engagement news was the leading item on one of the six o’clock news bulletins (TV3’s Newshub) while it was trending number one on Twitter for most of the day, with the welfare report nowhere to be seen” – see: Government response to welfare report is a shocker.

Others have also expressed scepticism about the Government’s handling of the release of the report. Some have noted that the timing for the release and response from the Government was late on a Friday, and at a similar time to the long-anticipated (but thwarted) Pike River Mine re-entry attempt.

Auckland University economist and welfare expert Susan St John declared her suspicion: “Releasing the Welfare Expert Advisory Group report at 2pm Friday (3rd May) just before the weekend at a far-flung West Auckland venue miles from the train station was a masterstroke of political strategy”, and she complained that the actual launch that she attended was strangely uninformative – see: I am not a conspiracy theorist but….

St John suggests that the whole working group approach lacked transparency and public engagement: “For 11 months no one breathed a whisper of what the WEAG was concocting. All consultation was one way to the WEAG with no outsider trusted to respond to any of the development of ideas. In stark contrast with the Tax Working Group process, no background papers and no interim report were released. There were no public forums preceding the report, and no interviews were given”.

She reports from the launch that the audience were less than impressed with the proposals being adopted, and the timeframes involved: “The Minister’s pre-Budget announcements were breath-taking in their superficiality. There were audible gasps of disbelief when she announced that the sanction applied to sole parents who do not name the father of their children would not come in until 2020.  Another lowlight was very minor changes to the abatement thresholds that are to be phased in over 4 years.”

St John is also highly critical of the “lost opportunity” to fix many different elements of the welfare system such as Working For Families. And she suggests Labour is incapable of facing these problems with the welfare system because the party is complicit in creating many of them.

There are so many important recommendations in the report that the Government appear to be ignoring, but the biggest is benefit levels. Henry Cooke explains this best: “The report presents a coherent argument for greatly increasing benefit rates, indexing them to inflation, and reforming the way relationships are treated by the Ministry of Social Development (MSD). It makes the point that relative to wages, benefit rates have fallen an extremely long way since reforms in the 1980s and 1990s. If implemented, this report would truly represent an ‘overhaul’ of the benefit system, and this Government could make a pretty good claim to being ‘transformational’.”

The issue of benefit levels is discussed by Tim Watkin in his excellent column, Another chance to be transformational rejected… Labour’s cautious welfare response. He says the report “recommended a massive 47 percent increase in current benefit levels. Those would be hugely controversial reforms… or, you could say, transformational. Because the report says if its recommendations were adopted it would lift 40 percent of children in poverty out of that plight. And that it could be done in two years.”

Watkin explains one of the reasons for the proposed increase is the increasing gap between beneficiary incomes and others: “What people seldom consider though is that since then wages and salaries have continued to grow. Super, linked to wages, has grown to. But other benefits – with any increases linked to inflation, not wage growth – have not been increased nearly as much. Until, that is, John Key and Bill English famously raised them in 2015. So the gap between work and welfare has grown since the 1990s”.

Therefore, on this rejected recommendation and many others, Watkin says Labour and the Greens are showing their real colours: “Sepuloni agrees the welfare system is not working. Greens co-leader Marama Davidson agrees the welfare system is not working. And then they commit to ignore the report’s big recommendations. They say no to up to 47 percent benefit increases, preferring ‘a staged implementation’. The call for ‘urgent change’ is rejected. Remarkably, Davidson has put her quotes into the same press release with Sepuloni, tying the Greens to this approach when they could have been dissenting from the rafters. The political and institutional reality is that no government can make these changes overnight. But the cold water thrown on this report underlines what we’ve learnt about this government in its handling of tax, its debt level, labour reform and more. It is not just incremental, it looks timid. There is certainly no sign of it being transformational.”

Once again, therefore, as with other potentially-transformative change in key areas for the political left, the Government has lost its political values and courage: “Ardern has political capital to burn after the Christchurch attacks and twice in three weeks she has chosen not to spend it. She has the political cover of National having increased benefits under Key (so just how critical could Bridges be?)… Yet Labour has chosen not to go to the wall for something it believes in. Again.”

But not all is lost. The report is going to have an ongoing impact. Max Rashbrooke writes about how the report represents a major change in thinking about beneficiaries. Previous and existing models saw “welfare recipients as akin to naughty children, needing a harsh overseer”, whereas “the experts’ report is an attempt to put a nurturing, caring assistant at the heart of the welfare system” which sees beneficiaries as needing support – see: At last welfare emphasis will move from punishment to support.

Also, although Chris Trotter bemoans that the fiscal conservatism of Finance Minister Grant Robertson is behind the Government’s rejection of progressive welfare reforms, he thinks there is still a good chance that Robertson and Sepuloni might yet be able to create a new world “of ‘active’ labour market management and planning” – see: The State and welfare: Opportunity or cost?

Finally, for a first-hand account of how well the welfare system works (or doesn’t), and how life on a benefit could be improved, see Hannah McGowan’s The dehumanising reality of life on a benefit in New Zealand.