Cost of living measures

Budget initiatives: social policy and the economy

Cost of living measures

Ministerial statement

“[T]hrough this Budget the Government is investing more than $1 billion in a cost-of-living package targeted at low- and middle- income households.”

Editorial comment

Budget 2022 contains a number of measures that can be grouped together under the broad heading of “the cost of living”, a topic that has been the subject of significant public attention recently.

One item mentioned in the Budget (albeit not a headline item in the Minister’s speech) is the introduction of legislation intended to facilitate new grocery retailers entering the grocery market. The legislation will prohibit restrictive covenants on land that grocery retailers use to limit site availability for competitors. Such covenants will be prohibited immediately once the Bill comes into effect.

A headline cost of living-related item in the Finance Minister’s speech is a short-term “Cost of Living Payment”, which will be provided in 3 monthly instalments, starting in August. The payment will be targeted to low- and middle-income New Zealanders, whom the Minister’s speech identifies as being those particularly affected by cost of living pressures.

Delving into the Budget papers reveals that the Cost of Living Payment will be administered by Inland Revenue, and those eligible for the payment will be people who earned less than $70,000 in the past tax year and who are not eligible to receive the Winter Energy Payment. It is estimated that 2.1 million people will receive this payment. The Budget papers also reveal that the Cost of Living Payment will cost the Government $814 million over the period 2022/23 and 2023/24.

The cost of living measures contained in Budget 2022 also include a set of transport-related items: „ extending the 25 cents per litre reduction of fuel excise duty that was introduced in March this year for a further 2 months, so that it will run until mid-August „ extending the road user charges cuts that were introduced in April this year until mid-September, and „ extending half-price public transport fares that were introduced in April until the end of August, and introducing a permanent half-price public transport concession for those holding a Community Services card.

The reliefs scheduled to run until August and September 2022 may create a political difficulty as their expiration nears. If fuel prices remain elevated at that point, it can be expected that there will be considerable pressure for extensions