This is Budget week, and we have asked six experts at the University of Auckland and Victoria University to tell us what they think should be included. Today, Victoria’s Norman Gemmell and Marjan van den Belt give their views
Professor Norman Gemmell is Chair in Public Finance at Victoria Business School.
This would be a good Budget if it included measures to simplify income tax, and redesigned social welfare to target those most in need of support, including improvements to social housing.
Income tax
Who would design income tax with “half percent” marginal tax rates, like the current 10.5 percent and 17.5 percent? They make no sense. So I would regularise income tax by reducing the bottom rate to 10 percent, with rates of 15 percent, 25 percent and 33 percent on incomes above $15,000, $40,000 and $80,000 respectively. It would cost about $1.9 billion in reduced tax revenue. I would recoup some of this cost by reducing family tax credits for middle-income taxpayers.
I would also index future tax thresholds to prices—perhaps every three to five years. This would stop governments coming to rely on ‘automatic’ tax increases when prices rise by taxing away wage rises intended to help maintain real living standards.
Social welfare
Poverty, especially involving children, is reprehensible in any society. Unlike some commentators, however, I am not calling for higher welfare payments “to eradicate child poverty”. Such advocates often define child poverty as any family with children having income less than 60 percent (sometimes 50 percent) of median income in New Zealand, and propose higher welfare benefit levels for such families.
But this means low income parents who choose to prioritise their limited spending on themselves rather than their children gain just as much support as those for whom their children are always first priority. Better to use the more targeted tools of a ‘social investment’ type approach based on delivering basic needs provision for such poor families; for example, by helping them budget welfare support towards the material needs of their children. These entitlements should also come with responsibilities, such as demonstrating that children’s needs (adequate meals, school uniforms and so on) are being met.
Social housing
In addition to adequate diet and clothing, dry, warm housing is perhaps the most basic of material needs necessary to help children in poor families realise their potential. I would like to see more attention given in this Budget to ways of improving such housing. Options are reforms to social housing provision, a ‘Warrant of Fitness’ for rental accommodation or targeted help with heating costs. Assessing the pros and cons of each will be tricky, but these seem like the places for policy advisers to start looking for possible solutions.
Associate Professor Marjan van den Belt is Assistant Vice-Chancellor (Sustainability) at Victoria University of Wellington.
This would be a good Budget if it included adequate funding for a sustainable future based on a deep understanding of the United Nations Sustainable Development Goals (SDGs). The SDGs were accepted in 2015 and New Zealand, like all UN signatories, committed to contributing toward them. The SDGs’ Agenda 2030 is set for all countries to work together for a more sustainable future. While the targets are very specific in one way, the SDGs also provide an organising framework to connect across all Goals. It is an opportunity to discover synergies and persistent contradictions. We have here a great catalyst and opportunity to coordinate and prioritise our work and investments, across sectors (policy agencies, academics, NGOs, youth, civic society and others), toward generating sustainable benefits for New Zealand at large.
The Ministry of Foreign Affairs and Trade website says: “Achieving the SDGs will require a cross-Government effort. New Zealand government agencies are reviewing the goals and their alignment with existing Government priorities. This analysis will inform a discussion on how New Zealand focusses its efforts.” The Budget should include funding to develop a sustainability strategy for New Zealand and find opportunities and efficiencies across its agencies.
Some companies are already using the SDGs—for a 15-year outlook—to go beyond their three- to five-year strategies and find opportunities. The Sustainable Business Council (on whose advisory board I sit) and the United Nations Association of New Zealand have submitted pre-election briefs to political parties requesting attention to the SDGs. Victoria University of Wellington and other universities are starting to align with the SDGs and tap into the Sustainable Development Solutions Network. This is a globally resourced and collaborative network that works with and through universities to develop knowledge and local solutions. The SDGs are not for government to pick against particular priorities or to be delivered by government in isolation; they are everybody’s responsibility. The Government should facilitate and invest in New Zealand’s broad and inclusive sustainability.
The first SDG Summits for New Zealand are under development for April 2018 in Wellington and 2019 in Auckland. The aim is to inform, excite and provide a space for cross-sectoral collaborations and actions. These summits and collaborations are to continue until Agenda 2030 is delivered.
Some countries are using the SDGs to increase transparency and to resource cross-sectoral collaboration and actions. New Zealand should be among these leaders.
