Robertson defends short-term fix
Minister says relief for longer would stoke inflation more
Finance Minister Grant Robertson is defending his cost-ofliving Budget package from criticism it is too short-term and narrow, saying long-term or widespread relief would only stoke inflation further.
Robertson delivered his fifth Budget yesterday — the first since 2020 in which Covid-19 was not the dominant feature but which addressed one of the hangovers of Covid-19 — rising inflation.
It included a whopping $11 billion for the health system as the Government beds in its reforms, pays off district health board deficits and absorbs the cost rises in the sector.
It also included a total of $61.9b earmarked for infrastructure spending over the next five years.
But the Budget surprise was a $1b cost-of-living package, including a new temporary payment totalling $350 for about two million workers who earn less than $70,000 and don’t get the Winter Warmer Payment.
That payment was being passed into law under urgency last night and the $814 million for it will come out of the now disestablished Covid-19 Fund. However, it will be paid out for only three months.
The Budget also extended the 25c-a-litre fuel tax and road user charges cut and half-price public transport for a further two months until the end of August
Robertson has not ruled out extending support beyond those three months, saying the Government would monitor the situation.
However, he said inflation was forecast to ease after peaking in the middle of the year, and the support was to help those on lower to middle incomes ride out that peak — not for the long term.
The Budget’s offerings were slated by National Party leader Christopher Luxon and finance spokesman Nicola Willis as spending too much on the wrong things and not enough on the “squeezed middle”.
Willis said the temporary payments were a Band-Aid measure — and suggested the $350 could end up being used by people to buy a oneway ticket to Australia instead for better conditions.
She took aim at Robertson’s claim high inflation was a temporary issue, pointing out that Treasury forecasts still had inflation at more than 5 per cent next year — and not dropping back to about 2 per cent until 2026.
She said mortgage rates were up, food prices were up, petrol prices were up and they would not be going down any time soon. “Don’t think it’s getting any better under Labour.”
Prime Minister Jacinda Ardern also defended the Budget, saying it was aimed at giving people as much certainty as possible in an uncertain time.
“[We are] dealing with the immediacy of the economic and health challenges Kiwis are facing, while also looking to the challenges of tomorrow, and seeking to buffer our people from both.”
Robertson said the Budget was aimed at addressing long-term issues such as infrastructure, climate change and the health sector, and cutting spending would not reduce the prices Kiwis were facing at the pump or in the supermarket. “It will only undermine the wellbeing and security of our people. That is not an option I am prepared to consider.”
The biggest ticket spend was in the health sector, which got its own cost of living adjustment: More than $11b — the largest in history.
Most of that would be soaked up covering rising costs in the health sector and to clear DHB deficits to allow the new Health NZ agency to start off on a level footing.
There were some well-received elements in the Budget — including changes to the caps for first-home buyers to qualify for grants and loans, and more funding for ambulance and helicopter services.
There was also a boost for Pharmac, which Health Minister Andrew Little said he expected would be used primarily for better cancer treatments.
Te Pāti Māori co-leader Debbie Ngarewa-Packer said the Budget fell short in delivering to New Zealanders who needed help the most. “Whilst two months’ further relief at the pump is welcomed, this is no solution to curbing the rising costs to live in Aotearoa.”
Her fellow co-leader Rawiri Waititi said the offering for Māori, especially in the health budget, were pitiful given the Government’s promises.
The Green Party also said more should have been done for those on lower incomes, given the new payment excluded beneficiaries.
Act leader David Seymour said the Budget had failed to deliver with inflation and rising prices.
“Jacinda Ardern and the Labour Government have today presented New Zealand with the Brain Drain Budget. Ambitious New Zealanders, tired of being milked, will weigh up leaving for greener pastures.”