Simon Bridges: New Zealand’s cost of living crisis and what we can do about it


Jacinda Ardern and Grant Robertson don’t believe there is a cost of living crisis, but just about everyone else in our country knows there is.

I don’t need to tell you about the rampant inflation driving up food, gas, and housing prices (not to mention everything else). You’re living it.

A recent IPSOS poll and a bunch of other surveys show cost of living as the single biggest concern for Kiwis. Women and those earning $50,000 to $100,000 a year are the most concerned. This is understandable as that kind of wage isn’t big money any more. And we know women disproportionately are the ones making big financial decisions and daily purchases for their families.

The business and consumer surveys by the banks, NGOs and others all say the same:with inflation at 5.9 per cent and wage growth at 2.6 per cent (meaning real wages are going backwards), New Zealanders are finding it much, much harder. It’s a crisis, no matter what Ardern and Robertson want to believe.

So what can we do about it? Chris Luxon gave the Government some good ideas on Sunday that I have been motivated about for some time.

Let’s go back to Kiwis earning $50,000 to $100,000. They are slipping into higher tax brackets and paying more simply because of inflation. That’s not fair.

As Luxon said, the average wage earner now has a marginal tax rate of 33 cents in the dollar – what used to be our highest personal tax rate, until Labour chucked in another higher one.

Even if you’re on the minimum wage, working a 44-hour week will see you pay a 30 per cent marginal tax rate. Utterly ridiculous.

National’s proposals adjust the first three tax brackets to deal with rising inflation under Labour these past four years.

It won’t mean anyone becomes rich, but it would ensure some meaningful relief.

The 33 cents rate will no longer kick in at $70,000, but $78,100. If you earn $55,000 a year you’d keep an extra $800 a year, and if you earn $79,000 you’d be $1000 better off. Superannuitants would also gain between $330 and $546, given their income is linked to after-tax wages.

Robertson’s reply has been remarkably “open and transparent” for his Government. There will be no tax relief for Kiwis under Labour.

He says he’s already put the minimum wage up, so problem solved. Well, most workers earn more than the minimum wage, but they are going backwards; $55,000, or $78,100 for that matter, doesn’t stretch that far any more.

On the attack, Robertson claims tax relief will make inflation worse and there will have to be cuts to existing services to make it happen.

But there is a small technical problem with his claims. After a Government spend-up higher than any other in the developed world during the pandemic, bar the United States, the Finance Minister has made clear he intends to double down on spending taxpayers’ money with an eye-watering new spend of $6 billion in the upcoming Budget – the biggest increase in our country’s history.

How can he plausibly say his spending isn’t inflationary, but tax relief, which at $1.7 billion would be less than a third of his new spend up, would be?

What he seems to be saying, given he intends to spend it all, is that he is smarter than all the rest of us and he will spend the money better than you would.

I beg to differ. In a cost of living crisis, New Zealanders deserve relief. That should be a priority, and National’s proposals would deliver it.

As for the scaremongering about public service “cuts”, our suggested relief would be out of his new spending – emphasis on the “new” – so there would be no cuts.

Robertson has already said much of the big new spend will go on Labour’s health restructure for a new centralised bureaucracy and a new climate change fund.

The thing about the restructure spend is that it won’t deliver a single new operation or ICU bed. In fact, the only people it will deliver for are the Wellington consultants who will dine out on it. Not to mention the serious disruption from doing a restructure in the middle of a pandemic.

As for climate change, it depends whether it’s just spending or real investment. Excuse my cynicism, but just as Labour’s Provincial Growth Fund or Covid Fund have seen huge sums wasted, so it may well prove on climate change.

My view has always been that there are several reasons for our high inflation, but big government spending in an overheating economy is certainly one of them, and the one the Government can most quickly bring under control.

We should provide tax relief to New Zealanders on the way through, whilst also reining in government spending through a focus on discipline and quality investment.

Simon Bridges is the MP for Tauranga and is National’s spokesman for finance.

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