Budget 2022: Two million New Zealanders to receive $350 cash payment to weather ‘global inflation storm’

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Business Editor-at-Large Liam Dann interviews journalists Isaac Davison and Dubby Henry about the effects of the budget on welfare and the education system. Video / NZ Herald

More than two million New Zealanders will receive a cash payment of $350 as part of a series of temporary measures to weather a “global inflation storm”.

The cost of living payment will be available to anyone earning less than $70,000 who is not eligible for the winter energy payment.

Reductions in public transport fares, petrol excise duties and road charges have been extended for a further two months. For Community Services Card holders, half-price public transport will be permanent.

“While we cannot control global inflationary forces, our job is to mitigate their effects for Kiwis,” Finance Minister Grant Robertson said.

The measures would cover what was expected to be the peak of the inflation “storm”, he said. Inflation is expected to decline in 2023 before falling back to around 3% in subsequent years.

The House rushed in last night to pass legislation on the new relief payment, which would be paid in monthly installments of $117 between August and October.

Charities and NGOs immediately protested, saying poorer households had been unfairly excluded. It was a “slap in the face” for recipients whose payments had failed to keep up with inflation, said Brooke Stanley Pao, coordinator of Auckland Action Against Poverty.

Most recipients are already receiving the winter payment, worth up to $700, and were not eligible for the cost of living payment.

Robertson said relief measures were carefully targeted to those most in need.

“Anything too broad could make inflation worse,” he said, noting that this included National’s proposed tax cuts.

While calls to lift basic benefits for the second successive budget have gone unheeded, there have been more targeted measures for low-income people.

Grants for urgent dental care have been increased from $300 to $1,000, fulfilling a Labor election promise in 2020.

Finance Minister Grant Robertson said cost-of-living measures must be targeted or they would make inflation worse.  Photo / Marty Melville
Finance Minister Grant Robertson said cost-of-living measures must be targeted or they would make inflation worse. Photo / Marty Melville

And a change in the law would ensure that child support payments go directly to single parents as income, rather than to the state. The change would cost parents about $24 a week from mid-2023 and lift about 14,000 children above the poverty line.

There were medium-term measures to tackle the price of food, in the form of an urgent change in the law to prevent the two big supermarket chains from preventing new retailers from entering the market.

Asked why it wasn’t doing more, Robertson said the legislation was something the government could do quickly – and would allow new entrants to plan their market entry.
Other measures would be announced in the coming weeks.

Carl Pynenburg, a primary school teacher in Seatoun, Wellington, welcomed attempts to cut the cost of living – although neither he nor his partner, who works at Weta Digital, would be eligible for the new payment.

He said rising costs for housing, gas, energy and food were hard to ignore in their community. For some of the children at his school, the price hikes could be the difference between whether or not they have food on the table, he said.

Pynenburg, who has been looking for a house for two years, was also hoping for measures to make housing or renting more affordable. He and his partner paid $550 in rent, but said if they moved they would pay $700 for a similar property.

Carl Pynenburg, an elementary school teacher, said he feared first-time home buyers' subsidies could be quickly wiped out by rising interest rates.  Photo / Provided
Carl Pynenburg, an elementary school teacher, said he feared first-time home buyers’ subsidies could be quickly wiped out by rising interest rates. Photo / Provided

While eligibility criteria for first-time homebuyer grants were relaxed in the budget, Pynenburg said those grants of up to $20,000 would be quickly eaten up by interest rate hikes.

“Our income doesn’t keep up with the amount we need to save for a deposit. And on top of that, being crippled by rising interest rates, repayments just aren’t affordable.”

In other housing measures, the government will spend an additional $1 billion on public housing, although this will not create more homes, but rather support existing large-scale construction and pay for vulnerable people to stay in motels. until these houses are built.

NGOs building affordable rental properties will also be able to get government grants under a new $350 million fund.

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