Will the changes made by the government on April 1 give you more money?
Many changes come into effect from Friday in an attempt to give some Kiwis some extra money amid what economists call an “extraordinary” rise in the cost of living.
The government said the package would make a difference for families suffering the effects of inflation, Covid-19, supply chain problems and war in Ukraine. But, it is criticized by National for not doing enough for middle-income Kiwis and by anti-poverty groups as inadequate.
For people on minimum wage
The adult minimum wage is increased from $20 to $21.20 per hour. Meanwhile, training or start-up wages go from $16 to $16.96 per hour.
For adults working 40 hours a week at minimum wage, that will mean an extra $48 a week or an extra $2,496 a year.
This is part of Labour’s 2020 election promise to keep raising the minimum wage.
Labor Relations Minister Michael Wood said in February when announcing the new minimum wage rate that the changes would benefit about 300,000 workers. The Council of Trade Unions said at the time it welcomed the increase, but was disappointed the government had not matched the living wage.
National leader Christopher Luxon criticized the rise on Friday. He said the higher minimum wage barely covered the rising cost of living.
The 6% rise in wages is just slightly above the rate of inflation in the year through the December 2021 quarter, which hit 5.9% – the biggest move in three decades.
The Living Wage Movement also announced on Friday that the living wage will increase from $22.75 to $23.65 an hour starting September 1. The announcement of the new rate in April gives employers time to make adjustments by September.
According to the government, a boost to Working For Families will see around 60% of families receive an average of $20 more per week.
This is due to the increase in the Family Tax Credit, a change in the Family Tax Credit abatement rate from 25% to 27%, an additional $5 in Best Start payments to $65 per week to help families caring for babies, and an increase in the minimum family tax credit threshold.
Luxon said the government offered “no consolation” to middle-income households, which he called the “restricted middle”.
“A family with two children with an average family income of $110,000 will get absolutely nothing from this package because they do not qualify for Working for Families rights.
“Under National’s proposal to adjust income tax brackets for inflation, they would be entitled to a $1,600 increase in income. [annually].”
In response to questions on the subject from National finance spokeswoman Nicola Willis on Thursday, Finance Minister Grant Robertson said the April 1 changes focus on low- and middle-income people “who deserve a helping hand from the government”. [and] denied for many years by national governments”.
Robertson said the $110,000 figure from Stats NZ that Willis used varied “depending on the day or month used”.
Willis said even with the increase in Working For Families, it wouldn’t be enough to meet the projected rise in the cost of living. The SBA has estimated that high inflation and rising interest rates will cost households $150 more per week on average.
This was echoed by the Child Poverty Action Group, who said the increase was ‘little more than an overdue inflation catch’ and that ‘substantial improvements’ were needed to lift families out of poverty . He wanted the government to annually index payment rates to wages and lower abatement rates.
For people receiving an allowance
The second tranche of benefit increases announced in last year’s budget has come into effect. It brings the total increase in benefit rates since July 2021 to between $32 and $55 per adult per week.
Full details of the April 1 changes can be found here.
Premier Jacinda Ardern and Social Development Minister Carmel Sepuloni said during the 2021 budget that the April increases, along with July’s $20 hike in all benefit rates, would help at least 19,000 children out. of poverty.
ACT spokeswoman for social development Karen Chhour accused the government of “facilitating the continuation of social assistance” while lacking the policies needed to grow the economy.
However, the Fairer Future collaboration said benefit increases would still leave families “locked in poverty”. This is after the organization’s research found that some families will still face shortfalls of up to $300 a week after major benefits are increased.
As announced in last year’s budget, retirement benefits are increasing by $52 per fortnight for a single person and $80 for a couple.
Ardern said all 855,000 retirees would benefit from the changes.
According to the Department of Social Development, this means that a single person living alone would receive $462.94 per week if they used tax code “M”. For couples using the same tax code, they would receive $712.22 per week.
For public transport users
From Friday until June 30, the government is providing funds to local councils to halve the price of public transport fares for most routes. Robertson had hinted that the 2022 budget would also provide more funding for public transportation.
The reduction in public transport fares was included in the government’s announcement in March that it would cut fuel taxes for three months as prices at the pump soared.