Robertson tackles the cost-of-living crisis which the PM did not recognise – now let’s see if he can steer clear of recession

Prime  Minister Jacinda  Ardern  early in March  insisted  there was  no  cost-of-living “crisis”  in New  Zealand. Now  her  right-hand  man, Grant Robertson,  has presented  a  budget which he  proudly  claims  deals  with that  very  same “crisis”, giving  away $1 billion in an emergency cost-of-living  package.

About 2.1 million New Zealanders will get a $350  payment spread  over  three months, while fuel tax  cuts  and half-price  public  transport continue  for  another two  months.

Will  that  be enough  to relieve those  suffering  in what Labour now  accepts   is a crisis?  And  will  it  halt  Labour’s  slide  in  the  polls.

On  that,  opinions  are mixed, with Labour’s  partner  in government  being the most  expressive  in  their  doubts.  Here’s what a Green Party press statement had  to  say  on the  subject:

“The $350 Cost of Living payment should be available to those who need it the most. Labour can do that today by including people on the benefit as well as under 18’s on Youth Payment and in work,” says Ricardo Menéndez March, Green Spokesperson for Social Welfare.

 “Excluding people from the Cost of Living payment because they already receive government support means more families will be unable to make ends meet through the winter.”

The Green Party  says:

“It is punitive and unfair”.

Oh  dear. So  what  should be done?

Menéndez March  offers a  solution.

“The Green Party is calling on Labour to reconsider this poorly targeted approach. Additional temporary assistance should be provided to those who need it most.  The legislation to introduce the Cost of Living Payment, which Parliament has debated today, doesn’t set out the eligibility requirements, so Labour can still decide to broaden it – and that’s what we’re asking them to do”.

Rubbing salt into  Robertson’s  (possibly  bleeding) wound,  Menendez March  says

“… in 2020, the Government doubled the Winter Energy Payment to provide extra support. Now, they’re saying that people who get this payment shouldn’t have any top up – despite rising costs of living, and despite slow progress on child poverty targets.”

The Green Party is also calling for investment in what  it  says are  long-term solutions, including increasing benefits to liveable levels, increasing and expanding Working for Families, and expanding the Income Related Rent Subsidy to local councils.

“Poverty is a political choice. No one should be struggling to pay the power bills or feed their kids in this country. People on the lowest incomes need a government that is committed to liveable incomes for everyone – and with more Green MPs we can make it happen,” says Menéndez March.

That   statement  might have been written by  an  Opposition  politician.

Of course,  as  Brian Fallow put it in the NZ Herald, Robertson  had  to be  careful not to  fling  additional  fuel on the  inflationary  fire.

But the big question left unanswered by the budget is the  continuing  effect of  falling real incomes  for most  wage  and  salary-earners.

Rising mortgage  costs  and falling   house  prices reinforce  the destruction  of  the  wealth  effect  which helped  boost  consumption.

That  could  herald  the  arrival  of  the  recession,  which is  a  dirty  word  in Robertson’s  lexicon,  just  as  the  cost-of-living “crisis”  was  in  Ardern’s  back  in  March.

Even though  it  has  been  hailed  as  filling an  important gap in NZ’s  social  insurance  framework,  the  government’s decision  to  push through legislation on  its income insurance scheme is  problematic  in  its  timing.  Whether  it  deserves   the  towelling  it  got  from the  Taxpayers’ Union is  less certain.

The union contends the government is using “dirty tactics” as it pushes through enabling legislation to increase PAYE revenue by 10% under the cover of the Budget.

Union spokesman Jordan Williams says,

 “This is a tax branded ‘insurance’ by spin doctors to try and make it palatable. They are polishing a stinker. The ‘premium’ is not risk-based or reflective of individual circumstances. It is in practice a massive extension of PAYE, increasing revenue from the PAYE system by 10%.

“The audacity of the timing cannot be understated. Labour is pushing it through first reading in a special Friday session of Parliament, less than 24 hours after a massive Budget that taxpayers, the media, and the Opposition are still busy digesting. This is cynical politics – Labour is playing dirty to push through a tax it knows will not stand up to public scrutiny.   

“Even worse, the Government is pushing this new tax as the costs of living spikes. The tax on workers will reduce take-home pay by up to $1,820 a year – far more than the temporary cost of living handouts announced yesterday. The additional tax on employers will in practice be passed on to workers, or translate to higher prices adding fuel to the inflation fire. 

‘Unemployment insurance’ might be the name the PM’s media advisers have come up with, but Kiwis are smart enough to see right through it. 

“It’s a nasty tax on employment, at the worst possible time. It’s also a recipe for rorting: family businesses will manufacture redundancies to take advantage of the generous handouts; and people on salaries as high as $131,000 will take six month sabbaticals between jobs, on 80 percent pay, courtesy of tax-paying workers.”

Clearly, Robertson,  and  the  government,  will have  to  work  hard to  convince  sceptical New  Zealanders it  is  steering the  country  out  of  the  cost-of- living crisis.

One thought on “Robertson tackles the cost-of-living crisis which the PM did not recognise – now let’s see if he can steer clear of recession

  1. Amateurs messing with well developed tax systems they cannot understand. The more they take the more people dodge.

    Like

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