The Finance Minister said it's not unusual for him to disagree with Treasury advice after it emerged officials warned the Government against its $350 cost-of-living payments.
"I want to make sure no one thinks it's unusual that I disagreed with the Treasury advice, nor has many, many Finance Ministers in the past," Grant Robertson said. "They do a great job but we don't always agree."
As part of Budget 2022, the Government unveiled an $814 million initiative to pay Kiwis who make under $70,000 and aren't eligible for the Winter Energy Payment $350 (or $27 per week) over three months from August. The policy is part of the Government's $1 billion response to skyrocketing inflation in the Budget.
A supplementary analysis report about the payments published by Inland Revenue shows Treasury "recommended against progressing a broad-based payment" and suggested the Government instead focus on a "more targeted form of support to lower-income households".
Among concerns shared by Treasury and Inland Revenue is that the one-off payment "would add to inflationary pressures in the short term", other options would "more directly impact on interim child poverty targets" and that delivering the payments would "compromise" the "already-stretched" public service workforce.
Despite that, the Government's gone ahead with the policy to provide assistance to 2.1 million New Zealanders. Robertson's said it supports a wider group of Kiwis than the Government's April increases to the minimum wage, tax credits, and benefits.
"We decided that we did want to do something to be able to work through [cost of living] for a wider group of New Zealanders, but that was also affordable for the country as a whole," he told reporters. "That's why we settled on the package."
In terms of concerns the package may lead to further inflation, Robertson pointed out the report said that was "mitigated" by the payments being a temporary measure.
"I think on balance, that's okay. I don't think it will have a significant impact on it," he said.
Speaking at an ANZ post-Budget event, the minister said the Government was trying to show that there is "a recognition that there was a wider group of New Zealanders who were facing cost of living pressure".
"But we didn't want to put in place something such as, I don't know, untargeted tax cuts that reach people who earn more than $180,000, but rather have something that's targeted to those on middle incomes."
That's a reference to part of National's tax policy, which would scrap the 39 percent tax rate on those earning more than $180,000 and also adjust tax thresholds to inflation. According to National that would result in someone on $55,000 getting about $800 more in their pocket over the year.
Inland Revenue admitted that because of the speed in which advice was produced and other constraints "it is also possible that the problem definition has not been fully analysed by officials".
"Owing to the very compressed timeframes and budget sensitivities, no consultation outside of government agencies has taken place. There is a risk that significant issues with the resulting proposal have not been identified."
National finance spokesperson Nicola Willis said on Friday that "it's clear it was a panic measure".
"What Treasury said was, we don't support this. It is a temporary solution to a long-running problem. That's the reality," she said.
"In November, when that payment stops going into bank accounts, the cost of living crisis will still be going and inflation will still be high next year and the year after that. So to put in place a band-aid and try and hoodwink New Zealanders into thinking that you're doing something, that's not good enough."
