Cost of living payment is coming: key details, what political parties say
While Finance Minister Grant Robertson touted the policy as ‘targeted’, Treasury advice to ministers showed they were ‘recommending against’ what they called a ‘broad-based payment’.
“Inflation has been rising over the past year and is expected to be broad-based and persist in the future. This makes a one-time payment a poor mechanism to support households facing a longer-term problem,” according to the advice.
“A broad-based single payment of this magnitude would add to short-term inflationary pressures, although the risk of longer-term inflationary pressures is relatively low assuming any such intervention is temporary.”
Robertson said in May it was not unusual for him to disagree with the Treasury.
“We decided we wanted to do something so we could work through [cost of living] for a wider group of New Zealanders, but it was also affordable for the country as a whole,” he told reporters. “That’s why we went with the package.”
He said the tax cuts, proposed by National and ACT as longer-term solutions to rising prices, would only drive up inflation and leave future governments with less revenue to pay for essential services. He also said the cuts would benefit the wealthy more than low-income families.
Willis disagrees that his party’s idea – of adjusting tax thresholds to inflation – would only add to inflation.
“No, the Treasury has been clear that government spending adds more to inflation than tax cuts. Our tax cut proposal is that it is permanent.
“It’s something people can rely on, not just a temporary band-aid that will get ripped off too soon.”
One of the other concerns raised in advice to ministers before the policy was announced was that it would have ‘critical operational impacts’ for IRD if the department had to administer payments and ‘compromise’ its ‘already overstretched workforce “. It has been suggested that up to 750 full-time staff may be needed over the three months.
The IRD told Newshub last week that “temporary workers” had been hired to work on payments, while “the work of a number of full-time staff has been reprioritised”. While the policy is expected to cost $814 million in total, the cost of administering the payment is $14 million.
Willis knocked at that.
“We are very concerned that we will have to hire hundreds of people to administer this payment and even so some of the most vulnerable and poorest people in New Zealand will not have access to it because the government does not have their contact details” , she said. .
The ACT, which also said the payment was only a short-term solution, criticized the government as “incompetent”.
“I’ve always thought that if the Labor government could do one thing well, it was to give taxpayers’ money – it turns out they can’t even do that,” leader David Seymour told Newshub.
“How can they fail to get over 100,000 bank accounts in an effort to give away free money in the midst of a cost of living crisis, I don’t know. One of the answers is that they weren’t prepared, they didn’t “I don’t accept that there was a cost of living crisis, they belatedly accepted that there was and now we’re left with these hasty measures that don’t work.”
ACT also wants to reduce taxes for Kiwis by simplifying the tax system. It would only have two rates; 17.5% for income up to $70,000 and 28% thereafter.
The party would also offer tax compensation to low and middle incomes.
“Instead of taking the Kiwis’ money from them and spending $14 million creating a complicated new system to give it back, why doesn’t the government just let people keep more of what they earn? “
Paying the cost of living is not the only measure taken by the government to try to support New Zealanders. As well as increases in some financial support in April, it also cut fuel excise duties, road user charges and public transport fares until the end of January next year.