Government reprioritisation 'mixed bag' for businesses, unions


Businesses and unions have found themselves celebrating and criticising the government's first round of reprioritisation measures - for opposite reasons.

While the RNZ-TVNZ merger was put on the bonfire, other programmes were put on ice.

Work on a social insurance scheme would not continue until the prime minister was satisfied the "current economic storm has passed".

The social insurance scheme would have allowed workers to retain 80 percent of their wages after losing their jobs, due to redundancy, layoffs, health conditions, and disabilities.

It would have paid for by a 1.39 percent levy on workers and employers.

The Council of Trade Unions was one of the key partners in the scheme's design. Its president Richard Wagstaff said the announcement it would not progress this term was a set back but he was not giving up on it.

"We still think the logic for having that scheme still stands up. We will be supporting the government picking that up again in time to come," he said.

The scheme was the finance minister's pet project. When the policy was launched, Grant Robertson called it an historic day.

But Prime Minister Chris Hipkins said his money man agreed to take it off the table.

"He's invested a lot of time and energy into that, and I absolutely acknowledge that. And we're not ending the work on the issues that have been raised completely. We acknowledge that there are some issues here that we will continue to work on. But he also acknowledges that now's not the right time for it," Hipkins said at his post-Cabinet press conference on Wednesday.

When it was announced, National went straight to calling it a "jobs tax" and it appears the mud has stuck, for now.

The scheme was still a long way off, with no legislation yet brought to Parliament. Now no work on it will proceed at all this term.

"I think this is a day of the living dead, and some of these policies will come back to haunt New Zealand," National's finance spokesperson Nicola Willis said.

Businesses were also involved in the design, but had grown increasingly wary of its widening scope, and costs.

"Across the array of policies that were controversial, this one was quite near the top," Auckland Business Chamber chief executive Simon Bridges said.

The announcements from the prime minister were a "mixed bag", Bridges said, and he was less enthused about the minimum wage going up by $1.50, in line with inflation.

It was not raised in the meeting Hipkins had with Auckland businesses two weeks ago, but Bridges said they felt it was coming.

"I can understand a Labour government will say 'we know the effects here on workers, and workers are struggling to keep up,' but the reality is it's a bit of a vicious circle or merry-go-round. A lot of businesses are struggling as well, it really does have an effect on them," he said.

But the CTU said it was a welcome announcement for New Zealand's most vulnerable.

"They really are on the breadline and they watch acutely every cent that comes in. So seeing that improvement was really good news," Richard Wagstaff said.

The government said scrapping and delaying a number of key policies would free up in the "low hundreds" of millions of dollars.

But as he wielded the axe, the prime minister admitted it was not just about saving money, but time and energy.

"Governments only have so much bandwidth to take on a variety of different projects and a variety of different challenges. And if you take on too many all at once, and I think that is probably something that we have done, then you can lose focus," Hipkins said.

Prime Minister Chris Hipkins.
Prime Minister Chris Hipkins. Photo credit: Getty Images

The RNZ-TVNZ entity was first to go, but with a commitment RNZ and New Zealand on Air would get a piece of the money meant for the merger.

Hipkins said he did not want to look back, but forward - towards the money being freed up.

But Willis said there should have been a mea culpa for the money that has already been spent.

"I'm just sad that we've wasted five and a half years on this. Millions of dollars have been spent on this doomed project. Some consultants were paid $9000 a day to try and make this dog of an idea bark."

Clearing the desk of some of the government's more contentious and unwieldy policies would also have been done with this year's election in mind. But other policies remain potentially vulnerable for scrapping, or resetting.

The government still has not explained what it was going to do with Three Waters. Hipkins has given the new Local Government Minister Kieran McAnulty more time to come back with a plan.