Labour launches re-election campaign with $300m plan to create thousands of new jobs

The Labour Party has launched its re-election campaign today with a promise to invest $311 million to help unemployed New Zealanders into jobs.

Leader Jacinda Ardern announced the assistance package at the party's campaign launch in Auckland this afternoon.

The government's existing Flexi-wage scheme - a wage subsidy to help employers hire those on a benefit at risk of long-term unemployment - would be revamped and expanded under a re-elected Labour Party, with the average amount a business can access to hire a worker more than doubling.

The party believes scaling up the scheme could enable 40,000 people to be employed.

Jacinda Ardern, speaking at the launch today, said $30 million will also be ring-fenced to help unemployed people start a business through an expanded Flexi-wage self employment programme, which will provide the equivalent of the minimum wage for up to 30 hours a week.

The main elements of the scheme:

• Business subsidy of on average $7500, and up to $22,000, to hire unemployed New Zealanders
• Up to 40,000 jobs to be supported by $311 million investment in keeping people off the unemployment benefit
• Ring-fenced fund to help unemployed people start their own business

The scheme would be paid for out of the underspend from the targeted wage subsidy extension.

Businesses would have to prove that the job is sustainable in the long term, and would only receive the payment once the person had been employed for six weeks.

"The new Flexi-wage scheme is a key plank of our economic plan to support businesses to recover and to provide jobs to those who have lost work due to Covid," Ardern said.

"It will directly help businesses who are getting back on their feet after lockdown to take on new staff while also supporting those New Zealanders who have lost their jobs to get back into work and off a benefit quicker."

She said many businesses were willing to retain staff and take on new employees but needed some extra support.

"They can't do it alone," Ardern said.

"With over 20,000 New Zealanders now receiving the Covid-19 Income Relief Payment and more on the unemployment benefit it is critical we are doing all we can to help get these often skilled workers back into jobs as quickly as possible."

She said Labour wanted to "encourage entrepreneurship and innovation" without forcing people to use their retirement savings to set up a new business.

"Those without formal training qualifications, those over 50, disabled people, and Māori and Pasifika workers will disproportionately bear the brunt of an economic downturn. The scheme is designed to support those hardest hit to find work again.

"This is a scheme that works. Evaluations show it generates $7 in benefits for every dollar invested and that 70 percent of people hired during the evaluation period had a job at the end of it."

Ardern did not have any figures on how many net new jobs the scheme would create.

"Ultimately what we are looking for are jobs that will last in the long term but it may be the case that this is what it takes to make the difference between an employer making the decision to take someone on or not and equally support them to take on someone who otherwise might face longer term unemployment", she said.

National has also promised to introduce a hiring subsidy of $10,000 per worker for any business that takes on a full-time worker, in a scheme that it said would cost $500 million, while another National policy would help people who have recently lost their job to start a business, by allowing them to access up to $20,000 of their KiwiSaver.

"It's important to encourage entrepreneurship and innovation as part of the Covid recovery without forcing people to use their retirement savings to get back on their feet," said Ardern.

She said the wage subsidy scheme - due to finish on 1 September - had prevented a spike in unemployment.

"We need to keep moving with our plan. The Flexi-wage is just the latest addition to the raft of jobs initiatives and business support we have already put in place to drive our economic recovery," Ardern said.

National leader Judith Collins said the Flexi-wage scheme was the policy introduced by the previous National government in 2012.

Labour's announcement was an acknowledgement the scheme was the right thing to introduce eight years ago, Collins said.

"The issue is, that policy is very focused on those people most likely to find it hard to get jobs and that was actually all about getting people who we'd call more vulnerable into work.

"The issue is now actually, things have changed. We're looking at people from one end of the spectrum to the other, highly-skilled and highly-experienced people who are themselves losing jobs, and that's why I think it's not one size fits all, we've gotta be very agile in making sure that we get as many of those people who are finding themselves out of work into work."

When asked if National would support the policy, Collins said: "if we're in government we'll obviously have our own policy, but the policy is a National party policy we put in place so it's hard for us not to support something that's our own policy".

Key achievements

During her speech, Ardern summarised the Labour Party's key achievements in office and then said: "We haven't always achieved everything we set out to, and there have been lessons for us in that.

"We wanted more homes for first home buyers. We wanted light rail in Auckland. But we've had to accept that sometimes when you try things that have never been done before, you won't always succeed, but that doesn't mean you should give up."

She said Labour had undertaken the largest house building programme of any government since the 1970s, with 18,000 state houses to be delivered by 2024.

Ardern also discussed the impact of Covid-19 on the country and whether it was set to dominate the election campaign.

"I would rather not have had to close our borders. Or put in place the most severe restrictions on personal freedoms in our country's history.

"But it has been our new reality, and one that the team of 5 million have made work in the most extraordinary way."

She said New Zealand now has one of the most open economies in the world, and has a head start on its recovery and rebuild, but Labour believed it had unfinished business.

"And so yes, there is no denying that Covid has changed New Zealand, and therefore it will inevitably change what we talk about this election."

Not the "Covid election"

Ardern told reporters following her speech that it wasn't a case that she wanted people to think of this as the "Covid election", more an acceptance that "that is how this will turn out to be".

She said she did not accept that the Covid-19 crisis and Labour's boost in the polls were intrinsically linked.

"Our view is the health response is going to drive just how much New Zealand's economy is affected, and we've always believed it.

"We have to campaign on our recovery and our rebuild. It's not enough to keep looking backwards, we have to demonstrate where we will take New Zealand and how we will support New Zealanders."