Cost of living payment arrives: The key details, what political parties are saying

The first portion of the Government's cost of living payment will arrive in 2.1 million New Zealanders' bank accounts on Monday.

It's $116.67 and is the first of three payments, with the second and third portions coming on the first business days of September and October. It works out at $350 and will go to Kiwis who earn $70,000 or less, aren't entitled to the Winter Energy Payment and meet several other criteria.

"The payment will show as 'Living Costs' in your bank account. In myIR the date displayed is the processing date and may be earlier than the day you get your payment," IRD said.

If you're eligible but the payment doesn't arrive, you need to ensure IRD has your bank account details - the department doesn't have them for about 164,000 Kiwis. Also, if you have a credit union account, your payment is unlikely to arrive until Tuesday.

Due to the large number of payments being made, IRD said it will stagger them throughout the day - meaning some New Zealanders will get their payment before others. 

IRD will continue to check if people who have not received the payment are eligible until March 31, 2023. For those who are eligible, you've got until March 31, 2024 to provide your bank account.

Expat Kiwis and foreigners who have previously worked in New Zealand have reported receiving emails telling them they will receive the cost of living payment, despite IRD saying only people present in Aotearoa are eligible.

National's Nicola Willis on Sunday night said it showed the Government "treats taxpayers' money with disrespect".

"New Zealanders will be shocked to learn that their hard-earned dollars are being sprayed around the world in a surprise lottery," she said.

"The Band Aid payment was a policy made on the fly, belatedly responding to the cost of living crisis Labour had previously sought to deny."

The IRD website says it is possible the payment will go to some people who are not eligible.

"It is possible that the information that we have been provided to determine eligibility could be incorrect. The correct information may show that a person is not eligible. For example, a person may be recorded as 27 when they are actually 17 years old," it says.

"However, we'll only apply resources to identify such cases, and to recover payments, when there has been fraudulent or wilfully misleading information provided."

The policy was unveiled at the May Budget.
The policy was unveiled at the May Budget. Photo credit: Getty Images.

The scheme was first announced in the May Budget, with the Government calling it a "targeted" means of supporting low and middle-income New Zealanders as inflation soars.

"The Government is providing significant additional cost of living support as the ongoing war in Ukraine, issues with global supply chains, and COVID continues to drive up global inflation making it tough for New Zealanders right now," Prime Minister Jacinda Ardern said on Sunday.

"There is no easy fix for the cost of living, as we cannot control global inflation, but we do see it as our job to provide targeted and meaningful support to help take the hard edges off for kiwis feeling the pressure through the worst of it."

She said Treasury modelling showed about 1.088 million households will gain an average of $590, which indicates more than half of households will receive two payments. About 478,000 households with children and 610,000 households without children are expected to receive the payment.

But the initiative has come under criticism from other political parties.

"We do think it is a band-aid because what New Zealanders need is permanent help for the cost of living crisis, not a temporary payment that will end," Willis told Newshub.

The Greens believe the payment should be extended to people who receive the benefit or the pension

"It is not fair for the Government to be excluding people on the benefit from the cost of living payment under the premise that because they already get the Winter Energy Payment, therefore they don't face the additional cost of living pressures," Green MP Ricardo Menéndez March said.

"For those that are having to make the decision between choosing rent or paying their bills, every dollar makes a difference and every increase to the basic essentials can mean that it pushes people into debt and into a position where they can no longer meet these essentials."

But the Government said this payment is intended for those people who didn't benefit from increases in April to the minimum wage, benefit rates and other supports. 

"Part of what we've heard as we've been talking to social services and others who have been working on the frontline with families affected by the pandemic has been that they have increasingly seen low-income working families coming in for support," said Social Development Minister Carmel Sepuloni.

"We recognise that there was a gap with regards to any financial support for that particular group of New Zealanders and the cost of living payment addresses that."

Nicola Willis and David Seymour have both said the Government needs to do more to tackle the cost of living crisis.
Nicola Willis and David Seymour have both said the Government needs to do more to tackle the cost of living crisis. Photo credit: Newshub.

While Finance Minister Grant Robertson has touted the policy as "targeted", advice from Treasury to ministers showed they "recommended against" what they called a "broad-based payment".

"Inflation has risen over the past year and is expected to be widespread and persist in the future. This makes a one-off payment a poor mechanism for supporting households with a longer-term problem," the advice said.

"A broad-based one-off payment of this magnitude would add to inflationary pressures in the short-term, although the risk to longer-term inflationary pressures is relatively small assuming any interventions of this nature were temporary."

Robertson said in May it wasn't unusual for him to disagree with Treasury

"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."

He said tax cuts, something proposed by National and ACT as more long-term solutions to rising prices, would only increase inflation and leave future governments with less revenue to pay for critical services. He's also said the cuts would benefit the wealthy more than lower-income families.

Willis disagrees that her party's idea - which is to adjust tax thresholds to inflation - would only add to inflation.

"No, the Treasury has been clear that Government spending adds more to inflation than tax reduction. Our proposal for tax reduction is that it's permanent. 

"It's something that people can rely on, not just a temporary band-aid that will get ripped off all too soon."

One of the other concerns raised in advice to ministers prior to the policy being announced was that it would have "critical operational impacts" for IRD if the department was to administer the payments and "compromise" its "already stretched workforce". It was suggested up to 750 full-time staff may be needed over the three months.

The IRD told Newshub last week that "temporary contingent workers" had been hired to work on the payments, while the "work of a number of full-time staff has been re-prioritised". While the policy is expected to cost $814m overall, the cost of administering the payment is $14m.

Willis hit out at that.

"We are very concerned that we are having to hire hundreds of people to administer that payment and even so, some of New Zealand's most vulnerable, lower-income people will not access it because the Government doesn't have their details," she said.

ACT, which has also said the payment is just a short-term solution, criticised the Government as being "incompetent".

"I always thought if the Labour Government could do one thing right, it was to give out taxpayer money - turns out they cannot even do that," leader David Seymour told Newshub. 

"How they can fail to get over 100,000 bank accounts for the purpose of giving away money for free in the middle of a cost of living crisis, I don't know. One of the answers is that they weren't prepared, they didn't accept there was a cost of living crisis, they belatedly accepted there was and now we end up with these rushed measures that don't work."

ACT also wants to reduce tax for Kiwis by simplifying the tax system. It would have just two rates; 17.5 percent for income up to $70,000 and 28 percent thereafter. 

The party would also offer a low and middle-income tax offset.

"Instead of taking Kiwis' money from them and then spending $14 million to create a complicated new scheme to give it back, why doesn’t the Government simply let people keep more of what they earn?”

The cost of living payment isn't the only step the Government's taken to try to support New Zealanders. As well as the increases to some financial support in April, it's also cut the Fuel Excise Duty, Road User Charges and public transport fares until the end of January next year.