The association said the implementation of the policy should be fair and efficient
The Chartered Accountants Australia and New Zealand (CA ANZ) has announced that it will be holding consultations with its members regarding the government's proposed Income Insurance Scheme.
The scheme, which was jointly designed by the government, Business NZ, and the NZ Council of Trade Unions, seeks to provide economic security to individuals who lost their jobs due to varying reasons so they can have more time to transfer to a new employer.
CA ANZ said in a statement that their industry is looking into the proposed scheme from the perspective of a public good and whether it would work with the current employment, welfare, and taxation framework.
Peter Vial, CA ANZ New Zealand country head, said they are expecting feedback from all levels of businesses, from entry-level to chief financial officers.
"We're expecting a wide variety of viewpoints that contribute to the conversation and the policy development process," said Vial in a statement. "I suspect that, while many people will support income insurance in principle, they will be concerned with making sure we cut our cloth to fit our purse. If we do introduce a scheme, it needs to be as fair, efficient, and economically viable."
The statement from the association said they also need to consider the "behavioural" implications of the policy, such as its effect on the relationship between employers and employees.
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It also noted down a list of their "key considerations," which include:
- Is the scheme too generous and can we afford it as it is proposed? e.g., should entitlements and levies be reduced?
- Is the timeframe for the proposed introduction (2023) too tight? In fact, is now the right time to introduce such a radically new and expensive initiative?
- Will all the costs fall on employers, with employees expecting employers to cover their levies through increased wages and salaries? Or is there a risk of wage and salary suppression?
- Will the costs of administering and complying with the scheme be proportionate to its benefits?
- How will any unintended consequences and unexpected behavioural changes be managed?
- How will the scheme impact existing redundancy practices?
- Should employees be able to opt out in certain circumstances?
- Should employers be able to set up their own insurance schemes?
- Will the cost to employees of compulsory income insurance drive down KiwiSaver enrolment or contributions?
- How will the scheme intersect effectively and fairly with the welfare system?
- Should employee levies be tax deductible?
- What is international best practice and what can we learn from overseas models, being mindful that New Zealand’s welfare and tax systems are different from those in other countries?
The Income Insurance Scheme, if passed, will grant employees who lost their jobs due to redundancy, layoffs, health conditions, and disabilities with a financial cushion to give them time to find a better job, according to the government.
Employers are also expected to benefit from the scheme, according to Business NZ, because it will help them find employees with matching skills much faster.
The scheme will be funded by both employers and employees, who are expected to pay 1.39% each from their wages. Employers and Manufacturers Association, however, expressed disapproval over the proposal, after it was initially briefed that the scheme was cost-neutral for businesses.
