Economist slams Govt's Covid-19 self-isolation payment scheme as 'unfair and untenable'

A top economist is backing National's policy to match self-isolation payments to people's wages, saying the Government's current model is "unfair and untenable".

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Shamubeel Eaqub says the Government's current model is "unfair and untenable". Source: Breakfast

Shamubeel Eaqub this morning told Breakfast the excuse that it is too expensive to pay in full those exposed to Covid-19 and have to isolate for 14 days doesn't make sense when compared to the cost of a lockdown if there's no compliance.

"Our Covid response has been all about kindness and generosity and I think people have done that in terms of doing a lot of self sacrifice," he said.

"But asking somebody who has relatively low income and precarious work to not be able to pay their rent and pay for their food and utilities is not reasonable."

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The Government’s current Leave Support Scheme pays full-time workers $1176.60, pre-tax, as a lump sum for a fortnight of self-isolation. Median rent prices in South Auckland, where the latest Covid-19 cluster is concentrated, is between $500 to $600 a week, adding up to $1000 to $1200 a fortnight. 

Part-time workers, meanwhile, are paid a $700 lump sum.

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The National Party leader says she would pay those forced to self-isolate in full, as well as penalties for those who don't. Source: Breakfast

However, National's Judith Collins yesterday said the Government should pay 100 per cent of someone’s wages and salary for the two weeks they’re self-isolating to make it easier for them to stay at home.

Collins said her party's proposal would see the payments go directly to employees, with no requirement for employers to claim it. 

"We must make it easier for people to stay home when required," she said.

Eaqub agreed, saying National's was the sensible policy.

"We know that just asking people to isolate without giving the means to isolate means that those orders are not effective and we've got to have these things effective," he said.

Eaqub said there was already a good template in place with ACC, when someone gets injured and cannot go to work, so suggested using that model for those having to isolate due to Covid-19 exposure.

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But the Government isn’t keen to implement the idea, which would see a larger payout to those staying home to protect the community from Covid-19. Source: 1 NEWS

"I don't know why we need to replicate what others are doing or what we have done previously with MSD. Really the main thing for me is 'what's the easiest way we can pay workers so they can continue to isolate safely and effectively'.

"We have a system [with ACC] that's actually geared up to look after people quite well and we need to do something similar."

Eaqub said people want to do the right thing, but at the moment they are imperiled if they do because they won't get their usual pay.

"We've seen that in New Zealand compliance has been relatively high so it's not like people want to break the rules, but we still have to pay the rent, we still have to look after families.

"It's not fair to go 'we're going to be kind and generous when it comes to the wage subsidy and all those other bits and pieces, but when it comes to low income households and low income workers, you know what, tough luck, you're out of pocket and have to dip into your savings you don't have'."

However, he added that it was "bizarre" for the Government to say New Zealand can't afford it because the cost of lockdown "far exceeds" what it is to pay people forced to stay home.

"The trade off we're talking about is really quite huge, right. A week of lockdown has enormous consequences for the economy, it has enormous consequences for the fiscal cost to our tax coffers.

"When we had our lockdown in August, that was $300 million worth of tax; $300 million buys you two weeks of isolation for 78,000 families at the Auckland median income."

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CTU’s Richard Wagstaff says “there should be no disadvantage or penalty of any kind for shielding others from Covid-19”. Source: 1 NEWS