Budget 2022: Why Kiwis have to wait until August to get their $350 cost of living payment

Grant Robertson says Kiwis have to wait until August to receive their cost of living payment as Inland Revenue needs time to set up the delivery of it.

"At 9am, Parliament will start up again and we'll pass the legislation that's required for the Inland Revenue Department to be able to deliver the payment," the Finance Minister told AM on Friday.  "It is a big deal and Inland Revenue's never really done a payment like this before, so they've got to set up the systems to do it."

But the Government's extension to the fuel excise duty and public transport fare cuts should tie Kiwis over until August, Robertson said.  

"We're continuing to support all New Zealanders through this period and then from August 1, we end up with a more targeted level of support for those earning less than $70,000."

The surprise cost of living package revealed in Thursday's Budget will see New Zealanders who earnt under $70,000 over the last tax year and who are not eligible for the Winter Energy Payment receive $350 over three months. It will be paid out weekly from August in roughly $27 portions.

It's been played up as targeted support for 2.1 million Kiwis in the face of the growing cost of food and fuel prices. Inflation hit 6.9 percent in the year to March, which Treasury says is the result of strong domestic demand, as well as global factors like supply chain issues and the war in Ukraine.

Robertson told AM the Government's been considering how it could assist Kiwis beyond the transport changes from around March. Earlier that month, Prime Minister Jacinda Ardern refused to admit there was a cost of living crisis in an interview with AM, leading to overwhelming criticism from New Zealanders.

The targeted support payment idea was devised ahead of the Budget going to Cabinet in April.

"I've certainly learned through COVID that you have to be nimble and adaptable when it comes to pulling budgets together," the Finance Minister said.

Robertson said it's an acknowledgement that while the Government has increased the minimum wage, benefits and tax credits and brought back the Winter Energy Payment, some middle-income New Zealanders also need assistance. 

"I'm never going to pretend that it's going to meet all the costs that are out there. But clearly with the Russian invasion of Ukraine, the extension of the supply chain constraints from COVID-19, we are seeing inflation higher than was originally predicted late last year. 

"We think this is an important contribution we can make for a wider group of New Zealanders to have some cost of living support."

He said the payment compares well to National's proposal to adjust tax thresholds to inflation. According to the centre-right party, that would result in someone on $55,000 getting about $800 more in their pocket over the year

"$27 a week for three months for these people is more than they would get under Christopher Luxon's package, which would have a worse effect on inflation. That's the point. 

"We've come up with a really good balance here, a targeted piece of support that won't unnecessarily exacerbate the very problem we're trying to solve with inflation. 

"Untargeted tax cuts that give people who earn more than $180,000 is going to make inflation worse. So I think we've got the balance right here."

National's criticised the temporary nature of the Government's payments, saying inflation will still be rampant when the three months are over. Treasury's Budget Economic and Fiscal Update released on Thursday shows inflation will be 6.7 percent over 2022, before falling slightly to 5.2 percent next year, and only hit the Reserve Bank's targeted range in 2025.