The scheme wouldn't make much of a difference to Kiwis, one financial adviser says
New Zealanders will receive a cost-of-living payment starting today, but according to one economist, most of it has already been eaten by inflation.
The $350 cost-of-living payment is for workers who were earning under $70,000 a year and not getting the winter energy payment, split into three months payment of $117, starting Aug. 1, then Sept. 1 and Oct. 3.
Read more: More Northlanders eligible for $350 cost-of-living payment
About 2 million Kiwis qualify for the scheme, although bank details are being sought for 164,000 of them.
Infometrics’ Brad Olsen estimated that 60% of the cost-of-living payment had already been “taken up” by higher inflation since the payment was announced, Stuff reported.
The payment came out to about $27 a week. But since it was announced, a further $16 a week in costs had been added by inflation to the average household budget, excluding interest costs.
Over the quarter when the payment was announced, prices increased 1.7% and food prices lifted 1.2% between May and June.
Liz Koh, a financial adviser, said the payment would not make much of a difference for a lot of people and the money would have been better used elsewhere.
Read next: Cost of living in New Zealand reaches record high – Stats NZ
“For people who are at the top end of the income cut-off, it verges on being insulting,” Koh told Stuff. “At that level of income, it is about 0.6% of after-tax income, yet we have inflation of over 7% and a massive increase in people's mortgage repayments due to higher interest rates. It may have been better to give people on lower incomes a more meaningful payment rather than spreading the available funds so thinly. There are many people on low incomes who are really struggling to put food on the table, and that is where the help needs to go.”
Beneficiaries, or anyone else who receives the Winter Energy Payment, which is $31.82 for couples and people with children, will not be eligible for the payment.
Finance Minister Grant Robertson​ earlier defended the exclusion, saying those on income support were already provided increases by the government.
“In a sense, that’s to be expected – government knew that inflation was heading higher, and so the payment was designed to head off some of the higher inflation expected,” Robertson told Stuff.
