Beneficiaries and low-income earners can breathe a sigh of relief now that a raft of policies putting more money in their pockets has finally arrived.
As of April 1, benefit rates increase by between $20 and $42 per adult per week compared to July last year, while the minimum wage rises from $20 per hour to $21.20, and Working for Families tax credits are bumped up too.
Then in May, the Winter Energy Payment returns until October - $20.46 a week for eligible single people with no dependents and $31.82 a week for couples and people with dependent children.
The benefit boost comes from the Government's Budget in 2021 - a $3.3 billion package. The Government already increased the benefit by $25 a week in 2020.
The increases come against the backdrop of three-decade high 6 percent inflation, sparked by a mix of COVID-19 supply-chain constraints, Government stimulus-spurred consumer spending and Russia's invasion of Ukraine.
Here's how much incomes are up
(More details at the bottom of this article)
- Jobseeker support for sole parents is up 8 percent - $440.96 a week compared to $406.78
- Jobseeker support for singles 25 and over is up 13 percent - $315.00 a week compared to $278.50
- Jobseeker support for couple with partner on benefit, with children is up 18 percent - $566.00 a week compared to $481.30
- Youth payment for 16-17 year olds is up 14 percent - $274.37 a week compared to $239.70
- Young sole parent for 16-17 year olds is up 8 percent - $440.96 a week compared to $406.78
- Orphan's benefit / Unsupported child benefit is up 26 percent for under 5s - $254.95 a week compared to $203.03
- Family Tax Credit for eldest child is up 13 percent - $127.73 a week compared to $113.04
- Family Tax Credit for subsequent child is up 14 percent - $104.08 compared to $91.25
- Best Start Tax Credit for newborns is up 9 percent - $65.15 a week compared to $60.00
- Superannuation payment for singles increases fortnightly from $1013.28 to $1076.48
The Ministry of Social Development estimates that, compared to 2017, 364,000 beneficiaries will be better off by on average $109 per week, increasing to $133 per week during the 2022 winter period.
It's also estimated that 109,000 beneficiaries with children will be better off by an average of $175 per week, increasing to $207 per week during the 2022 winter period.
The Government also announced earlier this month that $0.25 per litre of fuel will be slashed from petrol taxes and public transport costs will be halved for an initial three months to help ease the financial pressure at the pump.
According to Stats NZ, imports of petroleum and petroleum products, needed to fuel the domestic food supply chain, have increased 81 percent across January and February 2022 when compared to the same period in 2021.
This has contributed to a 6.8 percent rise in the price of food, squeezing low- and middle-income earners, and forcing the Government to acknowledge a cost of living crisis.
The price of fruit and vegetables increased by a whopping 17 percent in February compared to the same period last year. In addition, the latest Trade Me data shows rents increased by 8.5 percent or $45 to a record-breaking $575 per week in February.
"There's no silver bullet that will fix the current situation, which is why this Government is being responsive by implementing a range of changes to reduce costs on families who need it most," said Prime Minister Jacinda Ardern.
"Just as the Government supported New Zealand families through COVID-19 we will support them again through the economic response. So in addition to increasing financial support for families we are also committed to getting to the source of the problem, including the lack of competition in our supermarkets."
The Greens are sceptical about the benefit increases because of what's known as abatement thresholds, where supplementary payments people receive - such as help to pay the rent - can be reduced, or "clawed back", if their main benefit increases.
"In other words, as the main benefit goes up, other essential income support comes down," said Green MP Ricardo Menéndez March.
In 2019, the Welfare Expert Advisory Group recommended increasing abatement thresholds for main benefits. The Government responded by making the largest change to abatement levels in two decades at a cost of $393.98 million over five years. It meant people could earn up to $160 a week before their benefit started to be affected.
The Government also indexed benefits in line with the rise in the average wage, meaning benefits will consistently increase over time to match wage growth. Some financial sanctions on beneficiaries have also been axed.
The Government has also increased the abatement rate for the Family Tax Credit and the In-Work Tax Credit from 25 percent to 27 percent.
Social Development Minister Carmel Sepuloni said on Thursday abatement levels will be a consideration of the Government's in-progress review of its Working For Families (WWF) package, first introduced in 2004 by Helen Clark's Labour Government.
Child Poverty Action Group (CPAG) says the latest benefit and tax credit increases are little more than an overdue inflation catch-up, and substantive improvements are needed to unlock all families from the constraints of poverty.
CPAG spokesperson Susan St John said poor children are still denied the In-Work Tax Credit of $72.50 per week when their parents are receiving a benefit, or part-benefit, because they can only receive it if they work part-time.
"The Government can significantly reduce the burden of the deepest income poverty by first, ensuring the full Working for Families reaches the 150,000 children living in the severest income poverty who currently miss out. Secondly, annual indexing of all aspects of WFF to wages is essential, as is done for benefits for adults and NZ Superannuation."
Ardern responded: "We've often had issues raised with whether or not that was applied fairly and we actually have made adjustments to widen the group of people who receive that and we did that last Budget."
National leader Christopher Luxon says the April 1 changes will be no consolation for squeezed middle-income earners.
"Spare a thought for the forgotten squeezed middle who are paying higher prices at the supermarket and petrol pump, have seen costs rise faster than their wages, but will get no relief from today's changes," Luxon said.
"A family with two kids on an average household income of $110,000 will get absolutely nothing out of this package as they don't qualify for Working for Families entitlements."
He touted National's tax cut proposal - lifting the income tax brackets by just over 11.5 percent, to match the 11.5 percent increase in the cost of living over the last four years.
"Under National's proposal to inflation-adjust income tax brackets, they would qualify for a $1600 income boost," Luxon said, referring to the family with two kids on an average household income of $110,000.
National's same tax proposals would see Luxon himself get an $18,000 income tax reduction.
