Power hurting pockets
The number of people who received hardship grants for energy bills soared this winter, increasing by 46 per cent on the year before.
In September 2019, 15,594 people received the grant, up from 10,656 the year before. It equated to $6.2 million in grants paid out.
National Party leader Simon Bridges said the increase in grants was due to the increased cost of living, which had forced people on low incomes to turn to the Government for help. ‘‘A third of New Zealanders rent.
‘‘They are paying $50 more a week in rent, and in Auckland they are paying more than that. Then you have got petrol with increased taxes – that [the price of petrol] moves round a lot but it is higher than it has been.’’
Hardship grants are paid by the Ministry of Social Development for immediate needs that put people on low incomes into financial hardship.
Data from the Tenancy Bond Service, which measures the cost of each new rent, shows median rent has increased from $400 a week when the Government was formed in October 2017 to $445 now.
In context, median rents increased from $340 a week to $400 a week under the last term of the National Government, and from $310 a week to $340 a week in the term before that.
Bridges put the problem down to excessive regulation, citing the ban on negative gearing, which previously allowed landlords to write off losses on rental properties against their other income. He also cited the extension of the bright-line test (essentially a capital gains tax that applies to investment properties sold within five years of being purchased), and higher petrol taxes as things that had increased the cost of living.
The Government blamed the increases on its less punitive regime than National’s. ‘‘We said we would provide assistance to those who need it and this increase demonstrates that we are,’’ said Minister of Social Development Carmel Sepuloni.
‘‘The need has always been there.’’ She said the increase in the number of grants was due to escalating housing costs, which were still high after the previous Government failed to build enough houses.
‘‘The rise in grants is related to the costs of housing, so where housing costs are high like in Auckland that is where we see people coming in for assistance. National’s nine years of neglect – selling state houses and not building new homes, is still having an impact,’’ Sepuloni said.
But Bridges said the increased cost of living was mainly to do with higher taxation and the unintended consequences of increased regulation flowing on to consumers.
The Government passed a 3.5 cent per litre fuel tax increase this year, and Aucklanders are currently charged an additional 10 cents per litre to fund Auckland-centric roads.
Fuel prices tend to be more responsive to external factors – predominantly price changes on international markets – but nearly half of the cost of fuel is tax.
Petrol prices themselves fell 2.9 per cent nationwide over the past year, according to inflation data from Statistics NZ.
The cost of electricity is actually down. Data collected by the Ministry of Business, Innovation and Employment showed the real cost of a kWh of electricity for residential consumers is down 1.3 per cent on last year, and the average household pays $100 less per year in electricity than five years ago.
Nevertheless, rents have increased more steeply than under the previous Government, and petrol prices would be lower had the Government not legislated its price increases.