With a general election now less than three months away, the various political parties are trying to position themselves front and centre in the mainstream media. Most days now bring a major announcement from at least one registered party. The announcements made yesterday have the potential to cause a great deal of support to switch from the Greens to The Opportunities Party. Numbers man Dan McGlashan explains.
In the second edition of Understanding New Zealand, I showed that the demographics of Greens voters and TOP voters were very similar. The correlation between voting Green and voting TOP was on the order of 0.8, which shows that the two groups overlapped to a major degree.
Both voting blocs are young, highly educated, urban and white. They are the kind of people who are doing relatively well but who do not wish to use the Government to force themselves into an even better position (in contradistinction to National and ACT voters). They are very similar in demographics and psychology to their social democratic counterparts in places like Northern Europe. In fact, many Green and TOP ideas originally became popular in Northern Europe before being adopted.
When I wrote the article linked in the paragraph above, in 2017, there were no major distinctions between the two parties. This year’s election campaign has already revealed some and will, I suspect, reveal more. Support for my suspicion comes from recent policy announcements.
The Green Party shot themselves in the foot yesterday with their announcement of a Guaranteed Minimum Income. This policy promises to ensure that no New Zealander need live in poverty, by topping up whatever income they get to a minimum of $325 per week. This would mean that all part-time workers would get topped up to $325 per week, as would beneficiaries (apart from pensioners, who already receive more than this).
Green Party support for a GMI will, in my estimation, cause them to lose a significant number of votes to The Opportunities Party.
Although some of the smarter Green supporters have been trying to remedy the error by describing the policy as a universal basic income, it isn’t one. It’s something significantly worse – so much so that The Opportunities Party have stolen a major trick on them through their support of a UBI.
Those who counter that the Greens’ $325 is much better than TOP’s $250 need to take into account that TOP’s offer leaves the part-time worker much better off. The worst thing about the Greens’ guaranteed minimum income policy is that it massively disincentivises part-time work.
Let’s assume, for simplicity’s sake, that our part-time worker is doing 20 hours a week at $19 an hour, for a total of $380 before tax (let’s say $327 after tax, according to this tax calculator).
The Greens’ proposal would see this person not benefit at all. Earning $327 would see them receive no top-ups. This means that, incredibly, anyone working less than 20 hours a week might as well not bother showing up to work anymore. They wouldn’t get any net benefit from working 19 hours or fewer, because their total wage wouldn’t be higher than the $325 guaranteed minimum.
TOP’s proposal is entirely different. A part-time worker working 20 hours would first of all get the $250 universal basic income. The full value of any wage they received from an employer would then get added to that (minus taxes, of course). Because that wage would be taxed at a flat rate, they would come out miles ahead compared to the Greens’ proposal.
Let’s use an extreme example, and say that the part-time worker’s taxes go up 5% under TOP’s proposal (this is not close to being accurate, but let’s assume it for simplicity’s sake). This would leave them with $308 of their wage after tax, plus the $250 UBI, for a total of $558 – i.e. $233 ahead of where they would be under the Greens’ proposal. Even if their taxes went up 10% (an absurdity) they would be over $200 a week better off.
So the Greens’ proposal amounts to maximising the risk of the welfare trap. Anyone employed for fewer than 20 hours would have no incentive to continue with their job. If they can’t get full-time work, they’re better off not working at all.
This is arguably even worse than the status quo, in which beneficiaries make slightly less than $325 but can earn up to $150 from part-time work before their benefit is docked. Someone on the Jobseeker’s Allowance working eight hours a week would make around $250 from the Jobseeker’s Allowance plus $150 from their part-time job, for a total of $400.
A cynic might even say that the Greens’ policy was intended to create welfare dependency in the knowledge that welfare beneficiaries heavily support left-wing parties (as I demonstrated here). That’s possible but it’s more likely that the Greens have erred on account of their naivety and fundamental misunderstanding of economic psychology.
With regards to 21st Century welfare policy, TOP have cleverly positioned themselves close to alt centrism. They oppose the Establishment but are neither left nor right. By supporting a UBI – something closer to a right-wing position – TOP have avoided giving in to the politics of envy that have caused many centrists to become disappointed in the left in recent decades. This gives them a major point of distinction with the alt left, represented by the Green Party.
By avoiding ACT’s politics of greed and the Greens’ politics of envy and dependency, TOP have set a pragmatic, sensible course as the centrist alternative to the Establishment. I predict that the superiority of their UBI proposal to the Greens’ GMI policy will win TOP a significant number of votes from the Greens. The next move to distinguish themselves from the loony left should be for TOP to abandon any proposal to raise New Zealand’s refugee quota.
Understanding New Zealand, by Dan McGlashan and published by VJM Publishing, is the comprehensive guide to the demographics and voting patterns of the New Zealand people. It is available on TradeMe (for Kiwis) and on Amazon (for international readers).
If you enjoyed reading this essay, you can get a compilation of the Best VJMP Essays and Articles of 2019 from Amazon for Kindle or Amazon for CreateSpace (for international readers), or TradeMe (for Kiwis). A compilation of the Best VJMP Essays and Articles of 2018 and the Best VJMP Essays and Articles of 2017 are also available.