Can we calm the country’s inflation levels?

OPINION: Economists say annual inflation has hit a 31-year high, meaning households are seeing their real incomes erode because wage growth cannot keep up with the rapidly rising cost of living. Can Parliament stand by and see families go backwards, struggling to keep afloat after two hard years of Covid struggles? What needs to be done? An MP from each side of the House gives their views.

In the red corner Arena Williams Manurewa MP, Labour

Rising inflation is a global phenomenon. It is not specific to New Zealand, with many other countries experiencing the same global pressures driving it up.

A lot of it is related to Covid, with supply chain disruptions and rising international shipping costs pushing up prices of imported goods like oil and building materials. It is not being driven by Government spending, as some would have you believe.

While global inflation is out of our control, Labour is committed to making life easier for New Zealand families and whānau affected by rising costs.

Cutting spending on health and education or restricting the economic support provided to those affected by Covid won’t reduce the cost of petrol or building supplies. It will just hurt New Zealanders. This Government will instead continue to support New Zealanders as it has done since 2017.

We’ve lifted income support several times during the pandemic and provided targeted relief for low income households along with lifting the minimum wage. As a

result of cumulative increases, low-income families are better off in real terms.

Since taking office, this Government has worked hard to get big things done for people who are bearing the brunt of these costs. For example, our increases to the minimum wage mean full-time workers now earn an extra $170 a week, and our Winter Energy Payment has supported more than 1 million Kiwis with the cost of electricity through the colder months.

Unemployment is at a record low and wages are rising.

Our exporters are seeing robust global demand for our products, which flows through our communities and contributes strongly to our recovery.

As much as the opposition might pretend otherwise, cutting government investment is not the answer – it won’t drive down high global oil prices or the sharp rises in international shipping costs. It is these increases that are contributing to inflation, not government spending.

Actually, well-directed government spending – such as building essential public transport and large-scale affordable housing– can work to lower future inflation.

We are committed to keeping families afloat, and I think we’re making good progress.

We will continue to support New Zealanders and provide effective relief to those who need it while tackling longstanding issues such as climate change, housing and child wellbeing, so we emerge from the pandemic better and more resilient than before.

In the blue corner Stuart Smith Kaikoura MP, National

Inflation sky-rocketing to nearly 6 per cent last year is going to make life even harder than it already is for New Zealanders. The past two years have been hell on earth for most Kiwis, and the inflationary pressure that has arrived on top of the lockdowns and the closed borders will mean we are far worse off economically, and the back pocket of every New Zealander is going to get lighter.

Inflation has not been this high for 30 years. To put that into context, 38 per cent of New Zealanders are under the age of 30 and hence have not seen inflation at this level in their lifetimes.

Of little surprise to many, just under half of those aged under 30 do not own their own home, and median rents have increased

$125 a week under Jacinda Ardern’s watch.

With these numbers, how can we say that we are improving the lives of young New Zealanders when inflation and rental increases are depriving their ability to save and eventually own a home?

Making matters worse, wage growth is stunted at 2.4 per cent. So as inflation drives up the cost of our weekly meals and our

petrol, our wages are not increasing at the same rate.

The inability of Grant Robertson to take control of inflation means that the buying power New Zealanders have is going to diminish significantly.

A core contributor to rising inflation is Government spending and while some of that spending has been vital to recover from the lockdowns, much of it has not.

Robertson needs to seriously rethink how the Crown is spending taxpayer money if we are to calm inflation. Spending has been 40 per cent higher throughout his time as Finance Minister than it was under his National predecessors, and this year he is planning to raise that to a staggering

68 per cent more at $128 billion, with $6 billion in new spending.

The fact is that much of the additional spending has nothing to do with recovering from the pandemic and all it does is stoke inflation along, and force the hand of the Reserve Bank to increase interest rates higher than would otherwise be necessary.

When the borders start to reopen we will lose our best and brightest to Australia, because inflation there is half what it is here. That means those moving to Australia will be able to earn an hour’s New Zealand wage in just 44 minutes.

In 2008, we were losing a rugby stadium of people to Australia each year and I fear we are heading back to those times and the only people coming the other way will be

501 deportees.

Ultimately, inflation hits everyone, but it hits the least well off Kiwis the most.