NZ Election 2020: ACT's Brooke van Velden calls for beneficiaries, public service workers to take pay cut

The ACT Party's deputy leader is calling for high-paid public sector workers and beneficiaries to take a pay cut in order to help lower debt levels.

Brooke van Velden was laying out the party's 'Alternative Budget' in an appearance on Newshub Nation on Saturday, and claims ACT's approach will help New Zealand recover from the economic fallout of COVID-19.

The party's policies include abolishing the winter energy payment, scrapping KiwiSaver subsidies and putting interest back on all student loans.

Van Velden says lowering New Zealand's debt post-COVID-19 is important because it's unknown when another event will happen that requires a large sum of money.

"There are two ways we can go about this recovery: we can have a debt recovery or we can have a growth recovery."

ACT proposes the top three tiers of public service employees should have their "over-inflated wages" cut by 20 percent, and benefits would be lowered back to pre-COVID levels.

"All New Zealanders need to sacrifice. We are in unprecedented times in New Zealand's history… What we're talking about here is making a sacrifice for all New Zealanders so that we can have a private growth-led recovery," van Velden says.

She says ACT can cut funding from the range of policies because it found "$8 billion of funding in the system that isn't going to any good use".

But a report released on Monday by the New Zealand Institute of Economic Research shows increasing benefits helps the economy. This is because it creates short-term fiscal stimulus and increases productivity and GDP.

One mother Newshub spoke to about benefits said if she had a bit more money, she'd buy toys for her daughter, along with nappies, wipes, food and clothes. But being on the jobseekers benefit means after rent she only has $130 for food and for treating her baby's heart murmur.

"It's just sad knowing I can't give my daughter everything," she says.

The number of beneficiaries is increasing. In January - before COVID-19 hit - there were 313,480 people on a benefit. That's increased by 40,000 to 353,440.

Benefit rates differ depending on a person's marital status, whether they have children, if they're living on their own, and more.

For example, a married person who is on the jobseeker benefit but doesn't have children currently receives $200.60 a week after tax, whereas someone in the same situation who has one or more children is given $214.03.

The highest jobseeker benefit rate one person can receive is $375.17, but this is only for sole parents.

David Seymour says if changes aren't made now, it will be left to younger generations down the line to pay off debt.
David Seymour says if changes aren't made now, it will be left to younger generations down the line to pay off debt. Photo credit: Facebook

ACT leader David Seymour says its proposals address what he says is a high level of spending from the Government.

"If we don't make changes now, our kids and grandkids will be drowning in debt.

"What will ultimately help struggling Kiwis is a strong economy creating good jobs, and incentives for people to return to the workforce as soon as possible. ACT's five-point plan sets out dozens of ideas for jump-starting the economy and having a faster recovery with lower taxes."

The Government has previously defended it's COVID-19 spending, with Finance Minister Grant Robertson saying it's "fiscally and socially responsible" to have money set aside in the event of a second wave.

"We are sticking to our word on this. We are investing money where it is needed to respond to COVID-19, and we are setting aside a significant sum of money to be used as needed in the future," he said in July.

ACT would also expand the 90-day trial period for employers to one year to give them more certainty and comfort. This is so if an employee doesn't "work out" for the business, they have that option to let them go, van Velden says.

"What we're seeing in COVID-19 is that businesses are hurting, and we need to be making sure that business owners are taking a chance on employees and actually going out there and offering people a new job opportunity.

"While we're asking businesses to take on people and take a chance on people coming into their business, we should be allowing them to actually have that opportunity and have that comfort of knowing that if they don't work out, they can get rid of them."

When asked about a 2016 Treasury report that found there was no evidence 90-day trials boost employment, van Velden said it was about giving business owners a "comfort level".