By Geoff Simmons*
The Government has already announced a $20 billion stimulus in response to COVID-19 and the Budget could include $20 bln more. So far it looks like this will all be funded by increasing debt. If we are going to burden younger and future generations with more debt, we have to make sure this package is fair and future proofed to deal with issues like housing and climate change.
The goals of the recovery package should be to make housing affordable, improve the environment and protect the vulnerable. Here are five ways to nail the reboot.
1. Kiwibuild - the Sequel
During the Global Financial Crisis, house building dried up. This, plus high levels of immigration led to a housing shortage. Kiwibuild Mark One failed because affordable housing requires affordable land prices. That shouldn’t be a problem now. The Government should look for bargains to keep house building going, especially townhouses and apartments in our cities near to public and active transport routes.
This is also a great time to solve the other roadblocks to building affordable houses in the future. The RMA process is being simplified which will help. The building code also needs reform to make building easier and cheaper - such as automatically accepting products from other similar countries. Vocational education could also do with an investment to allow more people to start working in the sector and learn as they go.
2. Infrastructure Funding
When it comes to infrastructure, the political debate is pretty shallow - road vs rail. Infrastructure can be so much more; including water, electricity, internet access, and environmental infrastructure. We need to stop using infrastructure as a political football. Instead we need to find the projects with the best returns for our economy, society and environment. For example investing in natural infrastructure - creating wetlands, trapping pests and planting trees on erosion prone land or waterways - is a great way to provide jobs in hard hit areas.
What we know for sure is that Local Government is the poor cousin when it comes to infrastructure. Councils own 38 percent of the infrastructure in our country but only get 7 percent of the revenue to maintain it. That is why we have water pipes bursting all over the country and sewage on our beaches.
Doing density well in our cities will require reform of local government funding. This coming stimulus package is an opportunity to do that. Investment in water infrastructure, public and active transport in particular is crucial to allow more inner-city housing.
3. Give journalism a hand
Kiwi-owned media is in trouble. Facebook and Google have been eating away at the media’s advertising revenue, trimming the ability for journalists to do their job. Some organisations are responding with paywalls and donations, but this will be unlikely to provide enough money to stem the loss. We can blame Covid-19, but Facebook and Google are the real culprits.
If we want public interest journalism, we are going to have to pay for it. However, the money has to come from somewhere. How about taxing Facebook and Google as the UK are doing? This could net $30–80m: easily enough money to form a public-interest journalism fund.
4. Invest in prevention
While the Government’s pre-Budget health announcement was generous, it is simply funding more ambulances at the bottom of the cliff. Countries around the world have responded to Covid-19 in a variety of ways. Prepared nations have fared the best, ones with epidemic experts leading government action. For example, countries which experienced the SARS outbreak in 2003 were ready for another pandemic.
More pandemics like Covid-19 are inevitable, and with the world brought to its knees by this one, we should take pre-emptive measures. This time we need to learn our lesson and invest heavily in prevention. Currently our health system is focussed on hospital treatment instead, as we saw from the Government’s health announcement. We need greater investment in primary care and to re-establish the Public Health Commission to ensure we are prepared for future events.
Lastly there will continue to be debate about the best way to support those who are struggling as a result of this crisis. With businesses struggling, more minimum wage increases are likely to be off the table.
Wage subsidies can work well if we can quickly reboot the economy. The longer this crisis drags on, the more businesses will close and people will end up cast into our punitive, complex welfare system. Benefits are hard to get and even harder to get off, as people get sucked into a poverty trap.
By contrast a Universal Basic Income (UBI) gives everyone a basic level of support. The real winners from a UBI are the working poor. It encourages people to work, and would boost people on minimum wage up over the level of the living wage.
We recently launched our UBI policy which would see an annual $13,000 Universal Basic Income (UBI) given to all kiwis providing a major stimulus response. In addition, TOP would introduce a flat rate of income tax at 33 percent. Coupled with the UBI, this would leave every working Kiwi with at least $3,920 more in their pocket after tax. Full-time minimum wage earners would be $6,285 better off; taking them above the living wage.
A UBI honours unpaid work such as raising kids, caring or environmental volunteering. It also encourages people to work, retrain and start businesses. COVID is a glimpse of the future. As automation and artificial intelligence gain a hold on our society, as we sink deeper into the gig economy, our welfare system will struggle. A UBI provides a basic platform upon which everyone can reach for the stars.
*Geoff Simmons is leader of The Opportunities Party.