Latest news with #RegulatoryImpactStatement
Scoop
26-05-2025
- Business
- Scoop
New 'Non-Financial' Benefit Sanctions Begin Today
New "non-financial" benefit sanctions starting today are about having "more tools available" than the current options, says the minister for social development. But the Greens spokesperson for social development says it's "misleading" to label them as non-financial, because the impacts of those sanctions will be financial. Ricardo Menendez March also criticised Louise Upston for going ahead with the change, despite a note by officials it could risk increasing financial hardship, a statement the Minister rejects. From today, two new sanctions can be applied when someone on a main benefit does not meet their obligations. The first was 'Money Management,' where someone who did not comply would have half their benefit put on a payment card for four weeks. "The card can only be used at approved shops for groceries, transport, health, and education-related items," said Upston. People would still get the remainder of their benefit, as well as any supplementary assistance, directly into their bank account. Upston called 'Money Management' a "non-financial sanction" and said it would only be available to clients for their first offence, if they are in "active case management" or have dependent children. Those who do not meet that criteria would have a regular financial sanction imposed as before. The other new sanction - 'Community Work Experience' - meant those who did not meet their work obligations might have to complete at least five hours per week for four weeks of work with community or voluntary sector organisations. Ministry of Social Development staff will consider a client's circumstances before deciding on and imposing the new sanction to ensure it is the best option for a client. "These very fair and reasonable sanctions will allow clients to continue receiving their full benefit, instead of the 50 per cent reduction they would have experienced with a financial sanction," Upston said. Upston said she had heard people were concerned, particularly if there was a household with children, if a benefit was reduced. This legislation provided more options, she said, and the new sanctions stay in place for four weeks, "which will support their efforts to find a job." The Regulatory Impact Statement for the legislation had outlined a payment card "exacerbates the risk of a client facing hardship". But Upston "utterly rejects" that, "because if you have 100 percent of your benefit with 50 percent of it on a card, that is still better than only getting half your benefit or no benefit" - referencing the previous sanction options available. She called it a "sensible move" and said the new measures will "encourage people off welfare and into work," but couldn't say exactly how many people would move into work as a result of this policy. "The new sanctions will ensure accountability in the welfare system for people who don't meet their obligations, while also recognising that reducing benefits isn't the answer for everyone." But only about 1.2 percent of beneficiaries are currently not complying - about 4000 people at the end of April 2025 - and Upston said there are "only 288" children affected within those 4000 people. It was not possible to know exactly how many people would have these new sanctions imposed because it depended on decisions by case managers, but the intention is to get people into work, she said. "I want them to realise we're serious about them taking the steps to find a job, and if they don't, there's a consequence," said Upston. "At the end of the day, we want fewer people on welfare and more people in work." When asked how many of those not complying would likely move into work as a result of a new "non-financial" sanction, Upston referenced numbers from the past year showing an increase in the number of people leaving the benefit for work. "It's up 11 percent on the same time a year ago" she said, which was "great news", but was not able to quantify how this policy would make a difference. Green MP Ricardo Menendez March has ridiculed the changes. "The minister has been misleading the public around the impacts of this sanction not being financial, they are financial, and they will cause harm in our communities, which is why the Greens will repeal it as soon as we get into power." He said people would not be able to access financial assistance such as hardship grants, and the "end result will be families unable to afford their rent, their bills and potentially leaving countless of families at risk of homelessness". RNZ reported in March that government data had showed beneficiaries sanctioned with money management cards will often be unable to pay rent, putting them at risk of homelessness. March raised this issue, saying the average person on the job seeker benefit paid more than 50 percent of their income on rent, and those impacted by the sanction would be "unable to afford to keep a roof over their head or put food on the table". Upston acknowledged some people may get supplementary financial assistance as well, to cover rent that was more than half their income, and if that was the case, "they will not be an appropriate candidate for money management". She said Community Work Experience might be a better option for them and those decisions were for MSD case managers. March referenced the Regulatory Impact Statement for the Bill outlining the changes and the potential for hardship to increase, saying the Minister's heart was "rotten to the core" for going ahead with the changes. "She knows benefit sanctions do not work. "She has been told by her own officials that things like compulsory money management can risk increasing hardship, has been told by beneficiaries that these kind of policies don't work, and she does not care." Upston said in response she did care for people, their futures and their opportunities. "I'm very committed to ensuring more New Zealanders are in work than on welfare. And I care deeply. "I don't want to see people trapped on welfare. I want to see them and their families get ahead. And that is because I care." In regards to the Community Work Experience sanction, Menendez March said community organisations did not support it. He said being subjected to these sanctions put people under more stress and made it harder for people to enter into employment. "This just shows that sanctions like community work experience are all about cruelty and stamping down on the poor, rather than supporting people into employment." Labour leader Chris Hipkins also criticised the move, saying it was "mean and petty" to impose sanctions on people in order to try and get them into jobs that "don't actually exist". "Actually, they [the government] should be focused on creating jobs, rather than punishing people for not taking jobs that aren't there." He said things were "getting harder under this government," pointing to the Treasury forecasted unemployment getting higher. ACT leader David Seymour, whose party campaigned on the policy, said the benefit is "there for bad times, not for a long time," and if someone wants the freedom to spend cash "get a job like the other five out of six working age New Zealanders". Seymour said he was proud to see his party's policies reflected in the government's agenda, showing if you "campaign hard" and release ideas and policy throughout opposition "you really can make a difference". Seymour said no country can succeed with one in six working age people on a benefit, and ACT had long campaigned on giving "money in kind instead of cash". "We've got to start introducing mutual obligation if you don't show up and actually look for work, we'll stop giving you cash, and we'll start giving you the things you need in kind on a plastic card. "If it's not acceptable to stop the benefit altogether, then in kind payment is one way of sending the message: if you want the freedom to spend cash as if it's your own, then you should earn it yourself." Seymour acknowledged there should always be support if someone is facing a challenging time, but he expected people to "meet the taxpayer who's paying for all this halfway". Also from today, some people and their partners will have to have a completed Jobseeker Profile before their benefit can be granted, and an obligation "failure" will now count against a person for two years rather than one.
NZ Herald
22-05-2025
- Business
- NZ Herald
Budget 2025: Budget-night papers reveal effective 0.5% tax hike on 180,000 families, KiwiSaver changes may undermine growth agenda
As Parliament enters its traditional Budget-night urgent session, officials tabled papers on policies included in the Budget, revealing what they think about the Government's plans. Working for families One of the cost-of-living initiatives the Government unveiled in the Budget was a $205 million change to Working for Families tax credits (WFF). Working for families gives low-income families who work a tax credit, increasing their incomes. However, those tax credits get withdrawn when the family begins earning a certain amount. The Government has lifted that threshold, known as an abatement threshold, allowing families to keep more tax credit as their incomes rise with inflation. Officials reckon 142,000 families (85% of whom have incomes below $100,000) will receive an average increase of $14 a fortnight. However the Government also upped the rate at which it takes some of this money back, known as the abatement rate, which was lifted from 27% to 27.5%. The Regulatory Impact Statement (RIS) does not make clear the extent to which these change. The rate is the amount of money the Government takes off a person's tax credit when they earn above the threshold. It acts like an extra rate of tax - which is how officials describe it. IRD officials said changes act like a 0.5 percentage point increase to the marginal tax rate of 180,000 families. Officials said lifting the abatement rate had a 'negative impact on income adequacy and debt mitigation as entitlements abate at a quicker rate'. Officials also said the change would discourage work. 'A higher abatement rate also results in a higher effective marginal tax rate, which might have a negative impact on work incentives'. Officials quantified this saying there were about 180,000 families earning above the threshold who would face an effective marginal tax rate of 0.5%, resulting in a small negative impact on work incentives. The abatement rate was set at just 20% in 2007, meaning for every extra dollar earned, the family would lose 20 cents. Under the current system, a family would lose 27.5 cents for every extra dollar earned, which officials think dis-incentivises work. Finance Minister Nicola Willis reading her Budget speech. Photo / Mark Mitchell Other options The Government looked at an enormous 40% super abatement threshold for families earning over $100,000 or $120,000. The also looked at enormous $5000 or $20,000 increases to the abatement threshold, which would have allowed families to keep far more of their tax credits. The Government opted against these options citing cost. The regulatory impact statement also said the Government had begun a broader review of the WFF system, with a view to making it more sustainable over the long term. Best start means testing The Government is means testing the $73 a week Best Start payment, which is currently universal in the first year. Officials said that doing this might have a negative impact on some families getting the tax credit support they're entitled to because they would no longer be automatically enrolled in the scheme. '[F]ewer families may apply due to increased compliance costs in the application process, resulting in fewer families being identified as eligible for other Working for Families tax credits,' officials said. 'Higher wages, employment' - Officials like Investment Boost, considered 5 percentage point tax cut for businesses One of the major announcements of Budget 2025 is the Investment Boost. It's a tax incentive that allows a business to immediately deduct 20% of the cost of a new assets – on top of depreciation – leading to a lower tax bill. The Regulatory Impact Statement reveals officials considered that incentive against a company tax rate reduction. Ultimately, it preferred the expensing regime, with the Investment Boost aligning with that recommendation. The analysis looked at reducing the company tax rate by 5 percentage points from 28% to 23%. This was considered as having the equivalent impact on the cost of capital and therefore GDP as the 20% expensing regime. However, it was found to be considerably more expensive. The expensing regime would cost $6.6b over the forecast period, compared to $10.8b by reducing the company tax rate. Officials also said that partial expensing was targeted towards new capital investment, whereas a company tax cut benefited both new and sunk investments. 'This targeted approach means fiscal resources are used efficiently to stimulate new investments, rather than providing windfall gains to existing investments,' the analysis said. 'This targeting is the key driver for why [partial expensing] has large macroeconomic impacts for a given fiscal cost than a cut in the company tax rate.' Another impact discussed by officials was equity. The analysis found the majority of the increase in national income from partial expensing would flow to workers. 'This increase would come from a combination of higher wages and higher employment. We therefore expect that the benefits of partial expensing will be spread broadly across a wide range of New Zealanders,' they said. KiwiSaver changes risk undermining 'growth agenda' Officials warned the Government halving its contribution to people's KiwiSaver accounts risked undermining its 'growth agenda' by imposing greater costs on businesses. From July, the Government will reduce by half its annual contribution to $260 and stop giving it to people earning more than $180,000, saving about $3b over four years. In further changes, the Government contribution would be extended to 16 and 17 year olds while also increasing employer and employee contributions up to 4% by April, 2028. Finance Minister Nicola Willis promoted the changes as shoring up the retirement savings of a population that lives longer. However, Inland Revenue officials warned it was 'unclear' the benefits of imposing higher contribution rates on employers would outweigh the costs. In its regulatory impact statement concerning the changes, Inland Revenue had recommended deferring the decision, given it would likely increase short-term labour costs for employers. This increase would reduce profitability for many businesses, potentially diverting funds that could otherwise be used to support capital investment. 'This could risk undermining elements of the Government's growth agenda,' the officials said. Economic growth was so central to the Government's priorities, Willis had named Budget 2025, the Growth Budget. Labour appeared to support the Government's moves to increase employer contributions, leader Chris Hipkins saying his party was broadly in favour of upping contributions to boost savings. However, Hipkins has railed against halving the Government's contributions. Inland Revenue's analysis found this change would be beneficial. It noted the payment was untargeted and as such, was collected by people on higher incomes. About 52% of the Government's contributions went to people on more than $70,000 per year. About 8% of people who received it under the current scheme earned more than $180,000.
NZ Herald
22-05-2025
- Business
- NZ Herald
Budget 2025: KiwiSaver subsidies & Best Start payments slashed, enormous $6.6b business incentive
Willis' business incentive, will allow firms to deduct 20% of a new productive asset's value from their tax return. But any return on that investment might be a long time coming for New Zealand's workers. While Treasury advised that ultimately the incentive would be good for growth, it revised up its unemployment forecast and revised down its wage forecast, prepping New Zealanders for another year with the unemployment rate over 5%. Willis also announced how the tax incentive, along with other parts of the Budget would be paid for, revealing the amount of money the Government would be saving by reforms to the pay equity regime: $12.8b over four years (a figure that includes changes to how the government approaches the funded sector). The grand total of cuts in the Budget was $21.4b over four years, meaning more than half of the cuts in the Budget have come from changes to pay equity. Willis said pay equity costs had 'blown out' saying that in 2020, the Labour Government's pay equity regime was expected to cost just $3.7b over the forecast period. In the Budget lockup, Willis launched a broadside on Labour alleging the cost of the blowout was 'hidden' by the last Government from the public in order to preserve commercially sensitive negotiations. How much money Willis has left for new pay equity is also sensitive, so the Government has not revealed how much it has set aside to fund claims brought under the new regime. Bigger cuts than last year - $4.8b a year Elsewhere, the Government announced a sweep of initiatives to hack back at the growth of Crown expenses – cuts that are even larger than last year's. Including the pay equity savings, the Government is 'saving' $4.8b a year from cuts. Last year the equivalent figure was $3.8b or $4.4b if you include the Emissions Trading Scheme. Student loan borrowers will also start paying more, with the Government freezing the repayment threshold, which usually (though not always) rises with inflation, saving $64m. Every dollar a student loan borrower earns over $24,128 will pay 12 cents off their student loan. Investment Boost Treasury estimates the centre piece of the Budget, the depreciation changes will actually lift New Zealand's growth, increasing GDP by 1% and wages by 1.5% - but that lift takes place over 20 years (although half the growth occurs in the next 5). The new rules will begin today, passing under urgency. The effect of the tax changes will be to encourage businesses to bring forward investment, stimulating the economy. Willis quoted from a Regulatory Impact Statement on the change that a large amount of the benefit of the credit would flow through to workers, although Treasury's forecasts show that this has not been enough to stop it from revising work-related changes. KiwiSaver reforms – Government cuts contribution, asks savers to raise theirs Alongside the cuts to KiwiSaver, the Government will try to get KiwiSaver users to front up more money themselves, lifting the default rate of employee and matching employer KiwiSaver contributions from 3 % to 4%. This will be optional, people can opt to stay at 3% if they choose. The new rate will be phased-in. Next year it will go to 3.5% and on 1 April 2028 it will go to 4%. Younger people will be able to contribute with eligibility extended to 16 and 17 year-olds, who will be able to get employer and Government contributions. The Government is keen to personalise these changes and has launched a calculator on the Treasury website that calculates what they will mean to people's savings over their lifetime. FOLLOW OUR LIVE BLOG Do you have questions about the Budget? Ask our experts - business editor at large Liam Dann, senior political correspondent Audrey Young and Wellington business editor Jenee Tibshraeny - in a Herald Premium online Q&A here at at 9.30am, Friday, May 23.
NZ Herald
22-05-2025
- Business
- NZ Herald
Budget 2025: Government saves $12.8b in pay equity, funnels money at $6.6b tax change to stimulate economy
Finance Minister Nicola Willis unveiled the business incentive, which will allow firms to deduct 20% of a new productive asset's value from their tax return. But any return on that investment might be a long time coming for New Zealand's workers. While Treasury advised that ultimately the incentive would be good for growth, it revised up its unemployment forecast and revised down its wage forecast, prepping New Zealanders for another year with the unemployment rate over 5%. Willis also announced how the tax incentive, along with other parts of the Budget would be paid for, revealing the amount of money the Government would be saving by reforms to the pay equity regime: $12.8b over four years (a figure that includes changes to how the government approaches the funded sector). The grand total of cuts in the Budget was $21.4b over four years, meaning more than half of the cuts in the Budget have come from changes to pay equity. Willis said pay equity costs had 'blown out' saying that in 2020, the Labour Government's pay equity regime was expected to cost just $3.7b over the forecast period. In the Budget lockup, Willis launched a broadside on Labour alleging the cost of the blowout was 'hidden' by the last Government from the public in order to preserve commercially sensitive negotiations. How much money Willis has left for new pay equity is also sensitive, so the Government has not revealed how much it has set aside to fund claims brought under the new regime. Bigger cuts than last year - $4.8b a year Elsewhere, the Government announced a sweep of initiatives to hack back at the growth of Crown expenses – cuts that are even larger than last year's. Including the pay equity savings, the Government is 'saving' $4.8b a year from cuts. Last year the equivalent figure was $3.8b or $4.4b if you include the Emissions Trading Scheme. Student loan borrowers will also start paying more, with the Government freezing the repayment threshold, which usually (though not always) rises with inflation, saving $64m. Every dollar a student loan borrower earns over $24,128 will pay 12 cents off their student loan. Investment Boost Treasury estimates the centre piece of the Budget, the depreciation changes will actually lift New Zealand's growth, increasing GDP by 1% and wages by 1.5% - but that lift takes place over 20 years (although half the growth occurs in the next 5). The new rules will begin today, passing under urgency. The effect of the tax changes will be to encourage businesses to bring forward investment, stimulating the economy. Willis quoted from a Regulatory Impact Statement on the change that a large amount of the benefit of the credit would flow through to workers, although Treasury's forecasts show that this has not been enough to stop it from revising work-related changes. KiwiSaver reforms – Government cuts contribution, asks savers to raise theirs Alongside the cuts to KiwiSaver, the Government will try to get KiwiSaver users to front up more money themselves, lifting the default rate of employee and matching employer KiwiSaver contributions from 3 % to 4%. This will be optional, people can opt to stay at 3% if they choose. The new rate will be phased-in. Next year it will go to 3.5% and on 1 April 2028 it will go to 4%. Younger people will be able to contribute with eligibility extended to 16 and 17 year-olds, who will be able to get employer and Government contributions. The Government is keen to personalise these changes and has launched a calculator on the Treasury website that calculates what they will mean to people's savings over their lifetime. Do you have questions about the Budget? Ask our experts - business editor at large Liam Dann, senior political correspondent Audrey Young and Wellington business editor Jenee Tibshraeny - in a Herald Premium online Q&A here at at 9.30am, Friday, May 23.
Perth Now
19-05-2025
- Automotive
- Perth Now
EV, hybrid servicing and repairs set to cost more, take longer under new laws
New regulations for technicians working on electric vehicles (EVs) and hybrids in New South Wales could cause delays and see service costs rise due to a shortage of technicians meeting the new qualifications. The proposed rules would require mechanics to complete additional battery tech and safety courses before they can legally work on EVs and hybrids. The regulations have been proposed as part of a new Act to replace the current Motor Dealers and Repairers Regulation which expires on September 1, 2025. Should these pass into law, the rules will be applied to new mechanics and the 49,000 existing mechanics in NSW – which make up one third of the total number across Australia – even those having already worked on EVs. Hundreds of new car deals are available through CarExpert right now. Get the experts on your side and score a great deal. Browse now. Supplied Credit: CarExpert The regulations extend to technicians carrying out 'steering, suspension and wheel alignment work' meaning tyre fitters may also be required to take the course in order to legally perform a wheel alignment on an EV. The Australian Automotive Aftermarket Association (AAAA) estimates only around 10 per cent of technicians in NSW have completed any EV training. The AAAA also argues it's more challenging for technicians in regional areas to access the training and take the time out of their workshop to complete it. The regulations have been proposed by New South Wales (NSW) Fair Trading, which provides the regulatory framework for the buying, selling and repair of motor vehicles across the state. There are around 7.4 million cars on NSW roads, according to Fair Trading's data. Supplied Credit: CarExpert The official course is the AURSS00064 Battery Electric Vehicle Inspection and Servicing Skill Set. It costs between $1500–$3000 and takes six days to complete, with some education providers advertising it over a four-day period. It's not just EV servicing and repair work affected, with hybrids – which also feature a high-voltage battery – also impacted. The proposed laws state that a tradesperson with certificates in three repair classes, such as electrical accessory fitting work, radiator repair work, and steering, suspension, and wheel alignment work, will also be prohibited from working on hybrid vehicles until they complete a mandatory course, dubbed Depowering and reinitialising BEVs – AURETH101 Depower and reinitialise battery. Supplied Credit: CarExpert According to the AAAA the regulations, revealed in a Regulatory Impact Statement (RIS), are 'deeply flawed' and need to be reviewed. 'This is not just a workforce issue — it's a consumer issue,' AAAA chief executive officer Stuart Charity in a statement. 'This rushed approach will reduce access to essential repair services and increase costs for NSW motorists.' Mr Charity suggests the 'rushed approach' included a lack of consultation with industry groups such as the AAAA, which recommends 'transition plans' for EV training in NSW. 'We agree that technicians working on high-voltage vehicles must be trained and competent — and that's already happening,' Mr Charity added. 'But this proposal creates a legislative barrier that will drastically reduce the number of qualified service providers overnight. It will drive up costs for consumers and cause serious delays in repair and servicing.'
