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New Government Adjustments Bring Mixed Fortunes For Kiwis

Government Adjustments Bring Mixed Results for Kiwis | RNZ

Financial experts predict that the latest round of adjustments, effective today, will offer some relief to struggling New Zealanders, but for many, the impact will be minimal, The New Zealand Herald reported.

Various government payments, including benefits, superannuation, minimum wage, Working for Families, and Best Start tax credits, will provide a cash boost to thousands of Kiwis. However, some individuals will face new charges, such as a hike in the trust tax rate and road user charges for electric vehicles.

Ruth Smithers, CEO of FinCap, commented that any increase in income is positive and will help alleviate the cost of living burden. However, she noted that for some, it will only make a small dent in their overall debt.



Lara Dolan, CEO of Māngere Budgeting Services Trust, highlighted the positive impact on vulnerable communities, noting that even a slight increase can significantly benefit her clients. She shared the example of a client whose accommodation costs $596 a week, while her benefit is only slightly higher at $650, questioning the adequacy of the current support system.

Labour criticized the government's changes, arguing that despite increases in minimum wage and benefits, many Kiwis will have less money in their pockets. They highlighted that indexing benefits to inflation rather than wage growth will lead to a decrease in real terms for many New Zealanders.

Effective today, several government payments will increase, including:

  • Adult minimum wage rising by 2% to $23.15 per hour.
  • Family Tax Credit (Working for Families) increasing by $8 per week for the eldest child and $6.98 for subsequent children.
  • Best Start tax credit rising by $4.
  • Interest deductibility changes allowing landlords to claim 80% of interest costs.
  • Main benefits increasing by 4.66% to 5.28%.
  • Various other benefit increases depending on the type of support.

However, alongside these boosts, new charges and tax increases will also come into effect, including road user charges for electric vehicles and an increase in the trust tax rate to match the top personal tax rate.

The cost of living crisis is driving more New Zealanders towards budgeting services, with a significant increase in the number of people seeking financial mentoring. Services across the country saw over 69,000 clients in 2023, up from 50,000 in 2022, according to Smithers. Dolan noted a 15% increase in people using their services compared to the previous financial year.

Labour's social development spokeswoman Carmel Sepuloni criticized the government for the "measly" 2% increase to the minimum wage, arguing that it would cause lower-paid workers to fall behind inflation. Sepuloni also raised concerns about the impact of indexing benefits to inflation, stating that it would make life harder for those facing the most significant challenges.

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