National, ACT want support for 'ordinary taxpayer' as Government hikes minimum wage, benefits, Superannuation

National and ACT are calling for more support for the "ordinary taxpayer" and "people who work for a living" as the Government dials up the amount paid out in benefits and Superannuation.

But about 223,000 workers who do work for a living are getting an increase in their wages from Saturday with a $1.50 per hour increase to the minimum wage. More Kiwi families will also be eligible for childcare assistance. 

The Greens meanwhile want benefits to be increased to "liveable levels" and a set of other changes to ensure "people should be able to afford a safe, warm, affordable place to call home, with food on the table".

Annual increases to a range of Government supports came into effect on Saturday. Many of them have been tied to the rate of inflation to help Kiwis amid the current cost of living crisis.

On top of the $1.50 per hour jump in the minimum wage rate, as well as increases to main benefits and the Superannuation rate in line with inflation, Working for Family tax credits are going up, the amount tertiary students can get in allowances is rising, and more families are eligible for subsidised childcare assistance. 

But, despite those increases expected to help more than a quarter of Kiwis, National argues there is "no relief in sight for hard-working New Zealanders".

"It’s good to see some relief for Kiwis affected by the cost-of-living crisis in the annual April 1 changes to benefits, childcare, and superannuation," finance spokesperson Nicola Willis said.

“The past two years have been extraordinarily difficult for New Zealanders as prices across the whole economy skyrocket."

But she said there's "no relief on the way for the ordinary taxpayer".

"Most New Zealanders are looking down the barrel of a really tough winter, with inflation continuing to bite and rising interest rates making life more expensive than ever before. It’s time to let those Kiwis just keep more of what they earn."

Willis made the point that the Government is taking in more in tax than when it was elected, something fuelled by wage increases, more corporate tax being made, and a jump in the GST haul. 

"Small businesses are also set to struggle this winter, with rising interest rates and a weakening economy set to pummel household spending," she said.

"With businesses already scrambling to keep up with record minimum wage hikes and a tsunami of new costs and regulations, it’s clear the Government needs to finally deliver an economic plan."

Willis said inflation isn't expected to return to the normal range until next year. The Reserve Bank's latest projections show the annual inflation rate won't return to the 1-3 percent band until September 2024. 

She reiterated National's proposed approach of indexing tax thresholds to inflation, reducing what the party sees as "wasteful spending", focusing the Reserve Bank on inflation, and cutting red tape.

Nicola Willis and David Seymour.
Nicola Willis and David Seymour. Photo credit: Newshub.

ACT's David Seymour said the Government's forgotten about "approximately 2.8 million Kiwis who rely on working, saving, or investing to get by". 

"Today’s tax changes mean the Government is going to give more money to beneficiaries, students, and minimum wage workers. What about the rest of the country – all the people who work for a living?"

Many on the minimum wage do work for a living.

"As the cost of living crisis drives prices up people are losing more of their income to the Government," Seymour said. "Somehow the one thing that doesn’t get you ahead in life anymore is work."

He pointed to Ministry of Business, Innovation and Employment advice that about 5100 jobs will either be lost or not created as a result of the minimum wage hike. 

"In a classic example of good intentions and poor results, some of New Zealand's most vulnerable workers will be stripped of an opportunity to gain valuable skills and work experience. This is condemning young, unskilled workers to the scrapheap."

ACT proposes delivering tax relief by dumping the bright line tax and the 39 percent tax on workers making $180,000 or more, as well as restoring interest deductibility and readjusting tax thresholds. 

Prime Minister Chris Hipkins on Friday said he acknowledged that for small businesses, the minimum wage can "put an extra cost on them and extra pressure on them". 

"But in my conversations with small business owners, they also want to make sure that they're doing the right thing by their staff as well. They also want their staff to benefit from their hard work too.

"I acknowledge that it is something that businesses always face that difficult juggling act when it comes to things like the increase in the minimum wage. But it is the right thing to do."

The Greens want the Government to permanently change how benefit increases are dealt with each year. 

In 2019, the Government made changes so that benefits are indexed to the average wage growth. However, as that was below inflation this year, Cabinet decided to instead increase main benefits in line with inflation.

Green Party social development spokesperson Ricardo Menéndez March wants main benefits indexed to inflation or average wage - whatever is highest. 

He also wants Civil Defence Payments - which have been used a lot recently with Cyclone Gabrielle - increased, more public housing and an expansion to in-work tax credits. 

"When benefits don’t keep up with rising prices, people are forced to make impossible decisions about whether to feed their children, or pay the bills," he said. "This is why we need to permanently index benefit increases to inflation or wage growth, whichever is higher."

"The progress to lift people out of poverty has been woefully slow. But it doesn’t have to be like this.

"The Greens are clear that bold, permanent solutions to lift people out of poverty exist. We just need to use them. Now."

The Government last year launched a cost of living payment to help Kiwis with the rising prices. 

The $350 cost of living payment was split across three months, with eligible Kiwis receiving about $116.67 on the first business day of August, September and October.

The payment was intended for those who had a net income of $70,000 or less, were aged 18 or older, didn't receive a main benefit or the Winter Energy Payment, and were a New Zealand tax resident and "present here".

However, the Greens wanted it extended to people on the benefits as well.