Two Pillars - Both Need to Go
The Greens and the Opportunity Party have each built half a masterpiece. Let's introduce them.
In a previous post I outlined the absurdity of having a two-tiered health and welfare system based on causation, injury ACC, everything else Health NZ and MSD (except for the carve outs).
But categorising ACC as a health and welfare system is a problem. It is not even a disability system. It is a cause-sorting machine. Every entitlement, assessment, dollar disbursed or withheld depends on the answer to a single question: Can you prove what caused your incapacity?
If you can prove it, and it’s an injury, you’re in. Comprehensive rehabilitation. Eighty percent of your pre-injury income. Home modifications. Vocational retraining. The works.
If you can’t, like if your child’s brain injury exists in the grey zone of probabilistic medicine or if your chronic illness wasn’t triggered by an identifiable “accident,” or if your genetic condition simply manifested on its own schedule, then you’re out. You get the public health system’s waiting lists, the Ministry of Social Development’s means-tested pittance, the disability support system’s chronic underfunding, and a byzantine navigation task that would challenge a cardigan-wearing senior public servant, let alone a parent running on three hours’ sleep.
This in-or-out debacle was never meant to be permanent. Owen Woodhouse (the author of the AC scheme) knew it. When the Royal Commission he chaired reported in 1967, it explicitly acknowledged that the logic of its own principles (community responsibility, comprehensive entitlement, real compensation) pointed towards a universal scheme covering both sickness and disability, not just “accident.” Woodhouse recommended accident compensation as a staging post, a proof of concept. Get the no-fault principle established and demonstrate that it works. Then extend it to all incapacity, regardless of cause.
That was fifty-eight years ago, its nine years older than me and I creak when getting out of a low slung chair. We’re still at that first staging post.
Every few decades someone tries to move us along. The Law Commission recommended extension to sickness in 1988. Sir Owen himself, as Law Commission president, pushed the Rehabilitation and Incapacity Bill in 1990 which was designed to do exactly what the Royal Commission had envisioned. It died. ACC’s own annual report in 1989/90 proposed dropping the distinction between “accident” and “illness.” Nothing happened. My colleague from a previous job Grant Duncan at Massey canvassed the idea again in 2016. The Court of Appeal in Trevethick v Ministry of Health acknowledged that the disparity between ACC-covered disability and non-ACC disability is prima facie discrimination - but then ruled it justified anyway.
And it’s a cost problem basically. So always the same result: the two-tier system persists, distributing life chances according to a distinction its own architect said was temporary.
But enough of the bitching. What I want to do in this article is to sketch a policy, a real one, not a thought experiment, for a progressive political party willing to finish what Woodhouse started. But I want to go even further. What if we were to think about this differently.
A two-layer universal income security system.
A synthesis between two ideas, from two different but progressive political parties.
At least for a the last couple of cycles the Green Party has been walking the Woodhouse talk. Their ACC policy proposes transforming the Corporation into an “Agency for Comprehensive Care” covering injuries, disability and illness no matter their origin. Entitlement based on need, not cause. The Woodhouse principles, completed. Credit where it’s due.
And while the Greens have been trying to knock down one pillar, The Opportunity Party has been trying to knock down the next. And those two pillars are supporting the same load-bearing wall that Labour and National have been proudly sitting on for 58 years.
So the first pillar is the cause-based sorting hat sitting at the core of our social security system. The Green’s ACC policy will blow that right up.
The second pillar is financial: the Ministry of Social Development asks how poor are you? To access the Supported Living Payment, Jobseeker, or any other benefit, you must demonstrate that you are sufficiently destitute. You must disclose your partner’s income. You must accept intrusive scrutiny of your bank accounts, your living arrangements, your willingness to seek work. You must navigate a system that was designed, at every level, to make you prove you really, truly need it.
Both pillars are towers of degradation. They are expensive and gross to administer. They both produce weirdly perverse outcomes. And they are both defended by the big two political parties.
The Greens want to demolish pillar one. The Opportunity Party wants to demolish pillar two. What I haven’t seen anyone propose is demolishing both at once — and building something coherent in the space where the wall used to be.
I wrote about the Opportunity Party’s Citizen’s Income here: a regular unconditional payment to almost every adult New Zealander, set roughly at the level of the current Jobseeker benefit. Everyone gets it (unless you earn more than $350K). There’s no stand-down periods. There are no case managers asking whether your partner earns too much. You get it because you’re a citizen. It replaces Jobseeker, Sole Parent Support, the Supported Living Payment, and (I guess controversially) New Zealand Superannuation. It is funded by a land value tax and paired with a flat income tax that, the OP claims, would leave most low- and middle-income earners better off.
The Greens’ Agency for Comprehensive Care extends ACC’s rehabilitation model, the 80% earnings-related income replacement, the treatment funding, the vocational retraining, the home modifications, to everyone with significant incapacity. Not just accident victims. Not just treatment injury claimants. Everyone. Entry by functional assessment: what can you do, what do you need, what’s the plan? No causal adjudication required.
Read separately, each policy has a well-known vulnerability.
The Greens’ ACC expansion has always stumbled on funding. Extending ACC-level entitlements to every incapacitated New Zealander is expensive, and the numbers get uncomfortable quickly when you’re building on top of the existing welfare architecture rather than replacing it. Critics consistently ask: where does this money come from?
The OP’s Citizen’s Income has the opposite problem. It provides a universal floor, but the floor is low, Jobseeker-level. For someone who was earning $90,000 and has just been diagnosed with multiple sclerosis, or whose child has suffered a brain injury at birth, a Jobseeker-equivalent payment is not a solution. It’s a starting point at best. Critics reasonably ask: what about people who need substantially more?
Each policy answers the other’s question.
Layer One: The Floor.
The Citizen’s Income provides a universal, unconditional base. Every adult gets it. If you’re working, it supplements your income (offset by the flat tax). If you’re studying, caregiving, starting a business, or between jobs, it keeps you afloat. If you’re incapacitated, from any cause, for any duration, you don’t fall into a means-tested hole while you wait for assessments and bureaucratic processes to grind into gear. The floor is immediate. The floor is always there.
This replaces: Jobseeker Support, Sole Parent Support, the Supported Living Payment, NZ Superannuation, Accommodation Supplement (partially), and the entire MSD benefit administration apparatus that currently occupies thousands of people to interrogate citizens about their poverty.
Layer Two: The Scaffold.
When incapacity is significant and sustained, whether from accident, illness, disability, or mental health crisis, the reformed Agency for Comprehensive Care activates on top of the Citizen’s Income. This is the rehabilitation layer. Earnings-related top-up compensation (maintaining ACC’s 80% income replacement principle, calculated above the Citizen’s Income floor). Treatment funding. Vocational retraining. Home and vehicle modifications. Disability support services. Assessed by multidisciplinary teams on the basis of functional capacity and rehabilitative potential. No causal gatekeeping. No “was it an accident or an illness?” No mother testifying she would have terminated her child’s pregnancy so that child can receive support (yes, this is really a thing).
This replaces: the current ACC scheme (expanded and de-caused), Whaikaha’s operational disability support functions (which would be integrated), and the fragmented, underfunded, poorly-coordinated collection of services that currently serves as New Zealand’s second tier.
The Funding Architecture.
The Citizen’s Income is funded by the land value tax, the OP’s mechanism for shifting the tax burden from labour onto land, discouraging speculation, and generating a revenue stream tied to something that can’t be offshored or hidden. The Agency for Comprehensive Care is funded by a broadened ACC levy, expanded from “accident insurance” to “incapacity insurance”, supplemented by general taxation reflecting the Woodhouse principle of community responsibility. ACC’s existing reserves (north of $50 billion) underwrite the transition.
The critical insight is that combining the two makes each cheaper. If every New Zealander already receives a Citizen’s Income, then the Agency for Comprehensive Care doesn’t need to fund the base, it only funds the top-up above the floor. That dramatically reduces the marginal cost of ACC expansion, which is the number that has killed every previous attempt to extend the scheme to sickness. Meanwhile, the Agency provides the incapacity-specific support that the Citizen’s Income alone cannot deliver, answering the criticism that a flat universal payment ignores the variable and sometimes extreme costs of serious incapacity.
Each policy subsidises the other’s viability.
I can already hear the objections. This is too expensive. This is too radical. You can’t restructure ACC, MSD, and the tax system simultaneously. Pick one battle.
But we’ve been picking one battle at a time, and losing, since 1967. Woodhouse recommended the staging post. The Law Commission tried to extend it. Sir Owen tried again as Law Commission president. Labour introduced a bill in 1990. ACC’s own board proposed it in 1989. The Greens have had it in their policy book for years. Every single attempt has failed, because every single attempt has tried to bolt an expansion onto the existing architecture without addressing the architecture itself.
The architecture is the problem. You cannot fix ACC without also fixing welfare. You cannot fix welfare without also fixing tax. And you cannot fix tax without deciding what kind of society you want to be and funding it honestly. These are not three separate problems. They are one problem viewed from three angles, and solving it requires a party (or a coalition) willing to look at all three at once.
The Greens have done the work on the ACC side. The OP has done the work on the tax-and-welfare side. For me, between them, they hold the two halves of what would be the most significant social policy reform in New Zealand since 1974. They are, structurally, natural coalition partners on this issue, even if their respective electorates might not immediately see it.
What would it take? Get people from both parties, and any others that want to join to complete a serious costing exercise (I mean serious, not the back-of-envelope stuff that lets Treasury kill proposals in the crib). We need a proper modelling exercise with realistic transition assumptions. We also need an agreement that this is a long term reform. A willingness to spend political capital on something that won’t produce a ribbon-cutting photo op but will, over time, fundamentally reshape how New Zealand treats its most vulnerable citizens.
Please consider sharing this. I think it is the type of conversation we need to be having right now.
