Budget: The cost of living and what's in it for you

Claire Trevett, NZ Herald,
Publish Date
Thu, 19 May 2022, 2:21pm
Housing affordability is a focus of the Government. Photo / NZME
Housing affordability is a focus of the Government. Photo / NZME

Budget: The cost of living and what's in it for you

Claire Trevett, NZ Herald,
Publish Date
Thu, 19 May 2022, 2:21pm

Cost of living key points:

- Cost of Living payment of $27 a week for three months for low-income earners
- Fuel tax cuts and half-price public transport extended to end of August
- Govt takes first step in acting on supermarket competition problem, more to come soon
- Dental grants increase
- First-home buyers support

People on low incomes are set to get a $350 payment as part of a $1 billion cost of living Budget package that also extends fuel tax cuts and half-price public transport for a further two months. 

And Finance Minister Grant Robertson has also taken the first step to address the problem of competition in the supermarket sector, with urgent legislation going in tonight to ban the use of covenants, which make it hard for new players entering the market. 

The cost of living measures in the Budget are mainly temporary and targeted at those on lower incomes. 

The new cost of living payment will total $350 and be paid monthly for three months for those who earned less than $70,000 in the last year - about 2.1 million people.  
It will not be available for those who get the Winter Warmer payments, such as pensioners and beneficiaries. It is expected to cost $814 million. 

Half-price public transport will also now be permanent for the one million people who have community services cards. 

Robertson defended the decision to target it at those on low incomes, saying targeted and short-term relief would help those hardest hit by inflation without running the risk of making inflation worse - which tax cuts would have done. 

However, he said it was also affecting middle New Zealand - and the extension of the fuel tax cuts and half-price public transport was targeted at them. 

Robertson said inflation was affecting low- and low- to middle-income people the hardest - and 81 per cent of workers were now getting either the winter energy payment or the new cost of living payment. 

Extending fuel tax cuts and half-price public transport to the end of August will cost a further $235m. 

Robertson said the measures would help people get through peak of the "inflation storm" and the oil price spikes as a result of the war in Ukraine. 

Forecasts showed inflation would peak in the middle of the year and then ease back in 2023 before dropping back to around 3 per cent in the following years. 

Asked what would happen if inflation stayed high for longer than the support packages are in place, Robertson said they would continue to monitor the situation and had learned to be adaptable. 

The Government has also leaned on its existing programmes to extend more assistance, including expanding insulation and heating retrofits. 

Other measures of support for those on lower incomes include Labour delivering on its manifesto promise increase dental care grants from $300 to $1000. 

The grants were previously only available for emergency treatment, but Social Development Minister Carmel Sepuloni said that had now changed. 

Steps taken during Covid-19 to expand the criteria to get hardship assistance such as food or dental grants had now also been made permanent. 

First-home buyers 

Other measures in the Budget include more help for first-home buyers - including lifting the caps to qualify for a First Home Grant, and removing the cap to qualify for a First Home Loan. The caps would also be reviewed every six months to keep them up to date. Housing Minister Megan Woods said it would open up more choices for first-home buyers and could help thousands more people to get a home. There was funding for 7000 extra first home grants and 2500 more first home loans each year. 

The price of food – action on the supermarkets is coming 

The Government will also move tonight to try to increase competition in the supermarket industry - urgent legislation will be introduced to make it easier for new retailers to enter the market. 

Asked why he was not doing more, Robertson said the legislation was something the Government could do quickly - and would allow new entrants to plan to enter the market. 
He said further action would be announced in the coming weeks. 

One of the Commerce Commission's findings was that restrictive covenants were a barrier to new operators entering the market, and the legislation would ban those covenants to stop them being used. 

The Government is also looking at a code of conduct between retailers and suppliers and its formal response to the Commerce Commission's report was due in coming days.