Budget 2022: $350 middle-class cost-of-living reimbursement for 2.1 million people, huge health boost

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  • Each adult earning less than $70,000 will receive three payments of $117 starting in August to help meet rising costs.
  • Fuel tax cuts and half-price public transport have been extended for two months.
  • A $13.2 billion health boost will pay off DHB deficits, fund more drugs and ambulances.
  • Unemployment is expected to fall to 3% and wage growth will again outpace inflation in 2023.
  • Home price caps will be changed or removed for first-time home buyers.

A $350 payment for the middle class was placed at the center of Finance Minister Grant Robertson’s 2022 budget, in an effort to help families cope with 30 years of high inflation.

The payment will automatically go to every adult who earned less than $70,001 in the last financial year – about 2.1 million people – and will be paid in three monthly installments starting August 1, or about $27 per week.

ELLA BATES-HERMANS/STUFF

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Those who receive the Winter Energy Payment, which is worth a little more, will not be eligible, nor will those who already receive benefits such as a retirement pension or jobseekers.

The government has also extended its 25-cent-a-litre petrol tax cut, alongside half-price public transport, by two months until August 2022.

The surprise payment came after Robertson indicated the budget would focus on longer-term investments in health care and climate change, and after National relentlessly attacked the government for failing to provide aid to the “middle press “.

The government estimates that around 81% of all adults will receive either the cost of living payment or the winter energy payment, which is $450 for singles or $700 for couples.

A $350 payment for the middle class was placed at the center of Finance Minister Grant Robertson's 2022 budget.

ROBERT KITCHIN/Stuff

A $350 payment for the middle class was placed at the center of Finance Minister Grant Robertson’s 2022 budget.

Prime Minister Jacinda Ardern said it was essential to reduce inflation in the short term.

“The budget mitigates the impact of global inflation on families. While we know the current storm will pass, it is important that we do what we can to clear the hard edges of it now. »

The budget fell short of what Robertson had expected, with $5.9 billion in new annual operating expenditures instead of $6 billion.

Paying the cost of living will cost $814 million, while extending gas tax cuts will cost $235 million and public transportation $132 million.

Treasury forecasts in the budget show unemployment will decline to 3% in 2022 and wage growth will outpace cost inflation from early 2023.

Finance Minister Grant Robertson reveals the cover of the 2022 budget ahead of the announcement.

ROBERT KITCHIN/Stuff

Finance Minister Grant Robertson reveals the cover of the 2022 budget ahead of the announcement.

The Treasury that there was a risk of inflation would however be more persistent, resulting in a longer period where cost increases outpace wages, as has been the case since September 2021.

Net debt is expected to peak at 19.9% ​​of GDP in 2024, with economic growth reaching 4.2% in 2023.

Robertson said he had targeted the payment to end around the time the Treasury believed wage growth would again outpace inflation.

Asked if it could be extended if needed, Robertson said it was “the plan we have at this point” but that Covid-19 had taught the government to always be “adaptable and nimble”.

Most of the cost-of-living measures are temporary, but one is not: half-fare public transport will be made permanent for Community Service Card holders. This will disappoint many climate activists, who have been pushing to make the discount permanent for everyone.

Robertson says the budget will focus on longer-term investments in health and climate change.

ROBERT KITCHIN/Stuff

Robertson says the budget will focus on longer-term investments in health and climate change.

The government is also seeking to urgently pass a budget bill on Thursday evening which aims to introduce more competition into the supermarket sector.

A change to child support will mean that single parents will receive the full amount of child support, which the government says will lift 14,000 children out of poverty.

Funds to repay DHB shortfalls and fund new drugs

Elsewhere in the budget, there is a big increase in funding for health, with $550 million provided to fill shortfalls for individual district health boards as the government seeks to consolidate them into a single new organization.

A total of $13.2 billion is earmarked for new health operating spending over the entire four-year forecast period, in what Health Minister Andrew Little says is an attempt to provide certainty to the system, without increasing future deficits.

In the first instance, that’s $2.3 billion in operating expenses over the next year, the largest single-year increase in healthcare spending ever.

This includes a $191m increase for drug buyer Pharmac over the next two years – which has come under heavy pressure to buy expensive new drugs for rare diseases – $157m for ambulances and helicopters and an increase of $102 million for community health care.

The Labor Party has also fulfilled a promise it made in the last election to increase the amount available for the poorest people in need of urgent dental care, from $300 to $1,000.

Health Minister Andrew Little said the cash for health is an attempt to provide certainty to the system, without increasing future deficits.

ROBERT KITCHIN/Stuff

Health Minister Andrew Little said the cash for health is an attempt to provide certainty to the system, without increasing future deficits.

Help for home buyers, people with disabilities, SMEs

The budget also proposes changes to help first-time homebuyers.

The house price cap for the “First Home Loan” policy has been abolished, so it can be used for a house that costs anything. Early stay-at-home grant caps were also raised across most of the country, to $875,000 in Auckland and $925,000 in Wellington.

The government estimates that these changes will result in an additional 7,500 first home grants per year and an additional 2,500 first home loans.

A $350 million “Affordable Housing Fund” will also be set up to finance new rental units for those struggling with market rents but not eligible for public housing.

The government will also spend $107 million to create a new Ministry for People with Disabilities, which will provide support services.

The Warmer Kiwi Homes program which funds insulation renovations has also been extended to 2024.

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