Promoting well-being in this year’s Budget (and avoiding an inflationary cycle) will be challenging for Robertson

Budget  Day  is  now  seven weeks  away  and  lobby   groups  are  hammering  on  the Finance  Minister’s  door    for  the  relief   they believe they need, deserve, and which is  their  right.

The Save the  Children lobby group issued  a  press  statement this week saying:

“The  grim reality is many families are continuing to try to make do without life’s essentials such as healthy food, warm homes or access to health care”.

Advocacy and Research Director Jacqui Southey says while the child rights organisation is supportive of the lift in core benefits that will come into force later this week  these “small lifts” will not cover the steep rise in the current cost of living.

“Economic modelling on adequate benefit levels released by the Fairer Futures Coalition clearly shows that even with the new increase, benefit levels fall well short of covering the basic cost of living.

“It is essential that every New Zealander can attain their right to a decent standard of living and incomes levels are critical to achieving this. “Families on the lowest incomes are so stretched they do not have the luxury of cost cutting to make ends meet”.

But Finance Minister Grant Robertson, who  delivered  what he  labelled  a  well-being   budget last  year, may  not  find it  so easy  this  year. Already inflation has reached  levels not  experienced in decades and the ANZ  Bank’s  economists have  warned  it  could reach 7.4% in the  second quarter.

That could  swallow  any value from an  increase in  benefits  just  as  it  might be  reaching   those to  whom it  is  directed.

The government’s  own  measures are   not  helping  to  ease  cost pressures, although it  did  claim the  credit for the (temporary) reduction in  fuel  costs. The boost  in the  minimum wage, for  example, is   no help to  many  of  those businesses  struggling  to   survive in the  wake  of  the  Covid pandemic.

Now the  government  is  introducing  what  it  calls “a major step towards a fairer system for New Zealand workers”.  It has   introduced its Fair  Pay Agreements  Bill to Parliament, fulfilling (it says) its pre-election commitment “to lift incomes and improve working conditions of everyday kiwis” .

Workplace Relations and Safety Minister Michael Wood  says people are at the heart of the Government’s economic recovery plan.

“We know when we invest in New Zealanders, they have greater opportunities to prosper, provide for their families, and contribute to our nation’s success.”

Wonderful,  you say.

But  don’t be  surprised if  it feeds   another inflationary  cycle,  just  when  the  current  one  may be  easing.

And  just  as  new  fair pay  agreements  come  into effect, so  their value  is eroded  by the impact of  inflation.

It’s  a  grim cycle  that New Zealanders had  to live  with way  back in  the 1970s  and  1980s.