National's Erica Stanford knocks Government's cost of living payment

"I'm not sure there's anyone out there who thinks that this is going to make a difference."

National MP Erica Stanford has knocked the Government's upcoming cost of living payment but Labour's Michael Wood says it's a "targeted, practical" way to take some pressure off some New Zealand families.

On Monday, about 2.1 million Kiwis will see the first portion of the payment arrive in their bank accounts. The $350 payment is split across three months, with New Zealanders who earn $70,000 or less and who aren't entitled to the Winter Energy Payment eligible.

It was first announced in the May Budget to help New Zealanders struggling with rising inflation. Annual inflation was 6.9 percent in the March quarter and then 7.3 percent in the June quarter. A study out this week found one-in-four Kiwis are struggling to make ends meet at least once a month.

Wood on Friday said the payment is a "good news story".

"It's targeted at people on lower and middle incomes," he said. "We do know those pressures are there and this is a targeted, practical thing that we can do just to take a little bit of pressure off."

New Zealanders on the main benefit or receive the pension aren't eligible for the payment, something that has frustrated the Green Party. The Government's said the payment is intended for those who didn't benefit from increases to the minimum wage, benefit rates and other supports in April.

But Stanford doesn't believe it's enough.

"I'm not sure there's anyone out there who thinks that this is going to make a difference," the National MP said.

"What we wanted to see and what we needed to see from these guys was a plan to keep a lid on inflation. 

"We've got a plan, a five-point plan. This band-aid economics that these guys are talking about is just a very short-term solution."

National's main proposal is to index tax thresholds to inflation, which would in effect raise the thresholds and mean New Zealanders have to pay less in tax. Criticism of that has centred on the suggestion it would mean the Government would have less revenue to spend on public services.

"I'm not sure there's anyone out there who thinks that this is going to make a difference."
"I'm not sure there's anyone out there who thinks that this is going to make a difference." Photo credit: AM.

Stanford said the cost of living payment scheme was created by the Government at a time when "their polling was going down" and formulated at the last minute. 

"The Treasury said this isn't a good idea and actually it's going to be really difficult to implement," Stanford said.

While the Government had previously cut the Fuel Excise Duty, Road User Charges and public transport fares going into the May Budget, it was under pressure to provide additional support to combat inflation.

A Newshub-Reid Research poll at the start of May showed Labour down 6.1 points to 38.2 percent and National up a huge 9.2 points to 40.5 percent. Asked if the Government had done enough to address the cost of living crisis, 15.2 percent of respondents said yes, while 77 percent said no.

After the May 19 Budget was presented, Inland Revenue (IRD) published advice about the payment given to ministers on May 4. It showed Treasury "recommended against progressing a broad-based payment" and that IRD believed administering it would have "critical operational impacts" and "compromise" its "already stretched workforce".

Opposition parties this week have hit out at the Government after it emerged that IRD doesn't have the bank accounts of about 164,000 people, meaning they may miss out on the payment. 

Stanford said that showed concerns about the implementation of the payment had been borne out.

"We finding out four days beforehand it is really difficult to implement and those most vulnerable people will miss out."

Wood urged people to check the IRD has their details.

"If you've got your bank account in with IRD, you don't need to do anything. The payment will be made, but make sure you get that in."