PM Jacinda Ardern denies Government spending wasteful, pushes back on claim NZ in cost of living crisis

The Prime Minister is pushing back on suggestions her Government has spent wastefully. 

Jacinda Ardern joined AM on Monday to discuss the skyrocketing cost of living and inflation. 

While the Prime Minister acknowledged it was a tough time for many Kiwis, she stopped short of calling it a crisis.

"I wouldn't describe it that way, there is an impact that people are feeling undeniably but I wouldn't describe it in that way," Ardern told AM. 

It comes as the cost of living skyrockets with Kiwis spending on average an extra $4000 and $5000 in the past 12 months on basics such as food, rent and fuel. The majority of the increase is fuel with an extra $678 a year at the pump on average. 

Ardern said while things are bad now, they are expected to improve soon. She also highlighted wage growth and increases to the minimum wage and family tax credits under her Government 

"The thing we've always got to keep in mind is what's happening to people's income relative to the cost of living. Since we came into Government we know that for instance incomes have been lifting more than that cost of living. What we see at the moment is an exception at this period of time."

When asked by AM co-host Ryan Bridge whether she would look at removing or decreasing tax on fuel, the Prime Minister said increases are being driven by COVID, not the Government. 

"What we are seeing is the impact of COVID and the recovery of many countries. We are also seeing the impact of the Ukraine crisis." 

Ardern said price increases from global factors have far outstripped tax increases. 

"The increases we have seen at the pump since even last December, it's been significant and that has not come from an increase in excise. 

"We've said that we won't increase excise over this term. People have seen increases regardless - it has not come from the Government. 

Fuel prices in New Zealand are made up of a number of duties, taxes and levies on top of the price fuel companies place on petrol and diesel. This can change depending on the cost of crude oil and operating costs. Fuel companies also like to make a profit. It's estimated around 52 percent of fuel costs in Auckland go to taxes. 

But Ardern said removing the tax would cut billions from the Government's spending on things like building and maintaining roads.

When asked whether her Government could cut wasteful spending to make up for the loss, Ardern said she "totally rejects" that claim. 

Bridge highlighted the Provincial Growth Fund and a $50 million plan for a cycle bridge in Auckland as examples.

"I totally reject that," Ardern said. "A significant amount of the spending increase we've seen from the Government has funded the wage subsidy and the business support we've put in for COVID, [which] has helped us achieve some of the lowest…unemployment currently in the OECD, some of the lowest New Zealand has seen. 

"We've kept people in work, that has made a huge difference to help us navigate this one-in-100-year crisis."

She said the Government also has some of the lowest debt in the OECD, solid growth compared to other countries and good conditions for exporters. 

"Yes these times are tough, we have seen the impact of inflation, but we have also seen people predict we'll be coming out of that throughout this year. Things will start to get better and ease."

When asked whether she thought her Government had never spent wastefully, she said she wouldn't commit to blanket statements.

"There will, on occasion, be the odd example…I'm not going to speak in absolutes but what I won't accept is a broad brush claim that we've engaged in wasteful spending. I just don't accept that."