The $350 cost-of-living relief payment for more than two million New Zealanders in Budget 2022 was a surprise to some, but Finance Minister Grant Robertson says it is something the government has been working towards since the beginning of the year.
Part of an almost $1 billion package to help New Zealanders struggling with the rising costs of living, New Zealanders aged 18 and over will be eligible for the $350 payment unless they are beneficiaries, earn more than $70,000 a year or already receive the Winter Energy Payment.
Robertson went into the latest Budget having to balance short-term welfare pressures against longer-term economic investment.
"There's a wider group of New Zealanders who are really feeling the pressure from the cost of living increases" - Finance Minister Grant Robertson
He said the government had already addressed some of the impact inflation was putting on households by increasing income support, superannuation and student allowance payments in April, and introducing the Winter Energy Payment in May.
But he said it felt a wider group of New Zealanders also needed some "temporary support".
The $350 sum will be paid to those who are eligible in three instalments over August, September and October, working out at roughly $27 a week.
Robertson told Morning Report those on the Jobseeker benefit had received a 46 percent increase in payments since Labour came into office, about 22 percent of which was delivered over the past year.
"The support that we've given to those on the lowest incomes is permanent; this [the $350 payments] is temporary, and so therefore we felt that there was a wider group of New Zealanders who could benefit."
He said 81 percent of working-age New Zealanders would be getting some support due to the various relief payments and allowances.
"We feel that we have been supporting those on the lowest incomes," he said, pointing to other Budget initiatives including the trebling of dental grants and the resolution of "discriminatory child support issues".
"So we think we've got the balance about right, but I don't think there's any doubt that there's a wider group of New Zealanders who are really feeling the pressure from the cost-of-living increases and this Budget does support them."
However National Party finance spokesperson Nicola Willis told Morning Report the "big-spending" Budget had failed to address the domestic pressures driving inflation and it would leave the country worse off.
"He's gone on a massive spend-up, it's a huge amount of money being pumped into an inflationary economy" - National Party finance spokesperson Nicola Willis
"After the Global Financial Crisis, we suffered in New Zealand, from high unemployment; right now, New Zealand has historically low unemployment, so what that should mean is that less spending is needed to support people in the welfare safety net."
She said Treasury had warned in the Budget documents that it did not think Robertson had put enough aside for future years.
"He's gone on a massive spend-up, it's a huge amount of money being pumped into an inflationary economy, and we're really worried about the long-term impact of that," Willis said.
"Make no mistake, this is a big-spending Budget; there is a lot of money being sprayed around, a lot of it into restructures, into more policy advice, into more plans to make plans, and we do not think it is the time for that."
Photo: RNZ // Angus Dreaver
Willis said National would have saved money by not undertaking three waters - which she described as a restructure of local government assets that was "not wanted" - or the merger of RNZ and TVNZ.
She also said it would not be restructuring the health system with "a fatigued health workforce who've just come through a global pandemic".
National believed the savings from not restructuring the health system would be "hundreds of millions of dollars", Willis said.
"We're going through the Budget documents to identify what, of this extra health funding, is actually going into patient services, because it's not actually at all clear what increased outcomes will be got for that spending."
She said spending under a National government would focus on health and education and that it would hold itself accountable by putting measurable targets in place.
"If hundreds of millions of dollars [of the funding announced in this Budget] end up in backroom bureaucracy, in additional layers of management, in red tape, and they're not getting maximum outcome for patients, then New Zealanders won't thank us for that."
Willis also took issue with Robertson's assertion that inflation would peak mid-year and begin to fall after that.
Robertson said the targeted payments for a three-month period, and the two-month extension of public transport price reductions reflected that forecast.
"[Inflation will] still be at levels elevated from what we've seen in recent history - and it is more persistent than had been earlier forecast - but that certainly is the forecast," he said.
"We're just simply not going to have inflation at the rate that this government does," Willis countered.
"Treasury have been very clear that it is domestic pressures that are driving New Zealand's inflation right now ... there is a domestic issue at the heart of our inflation problem."
ANZ chief economist Sharon Zollner agreed it was a "big-spending Budget" but told Morning Report some of the money was being used to move debt off balance sheets to allow reforms in the health sector.
"Clearly everybody hates inflation, but the fact is, technically, the economy's still in a pretty strong place" - ANZ chief economist Sharon Zollner
"There's no shortage of good things to spend your money on but it does add up to a very large number."
She said the Budget was probably inflationary "at the margin".
"Anything you do to relieve the cost-of-living pressure on households and enable them to spend more, by definition is working against the monetary policy tightening, which is trying to make consumers spend less in order to bring inflation down."
She said it was a catch-22 situation, but the spending in the Budget allowed the government to "shift the burden a little bit" by giving the "squeezed middle" some relief.
But she said it was important the government got back to saving while times were relatively good.
"It doesn't feel good to everyone, clearly everybody hates inflation, but the fact is, technically, the economy's still in a pretty strong place."