Cost of living: Changes to benefits and work for families could soften blow from rising inflation, advocates say

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March 21, 2021 | Cheree Kinnear takes to the streets of Auckland city to find out how Kiwis are being affected by the latest increases in inflation. Video / NZ Herald

In addition, significant measures are needed to help low- and middle-income households survive crippling increases in the cost of living, advocates say.

Inflation has reached its highest level in 30 years, which increases the pressure on household budgets.

Rising food and fuel prices were pushing people to food banks and labor and income offices for additional support. And advocates said working families are increasingly in the queue.

“It’s going to be so difficult,” said Child Poverty Action Group economist Susan St John.

“You have just heard reports from the social sector about the deteriorating financial situation of families who have to go into debt just to pay ordinary living expenses.

“The use of charities…and Winz’s hardship grants just skyrocketed – we know things are already bleak.”

Council of Trade Unions economist Craig Renney said wages were rising at less than half the rate of inflation, underscoring the need for wage increases.

Fruit and vegetable prices rose 17% in the last year alone and 91 liter of petrol jumped 8.7% despite a government cut in petrol tax.

“These are all unavoidable costs for many New Zealanders and they hit those with the lowest incomes the hardest,” Renney said.

The government has already taken some action in response to rising costs. Public transport fares have been halved and fuel taxes have been reduced by 25c/litre. Benefits were lifted on April 1, although the increase was expected before inflation soared.

More support was needed, the defenders said.

St John wanted a comprehensive and urgent reform of Working for Families, which is under review. Among its recommendations were indexing payments to inflation and wage increases, similar to NZ Super.

She also wants families to be able to earn more before their WFF payments are reduced and the abatement rate is lower.

Nick Stoneman, a disability advocate, said he sometimes has to go without vegetables because of food prices.  Photo / Provided
Nick Stoneman, a disability advocate, said he sometimes has to go without vegetables because of food prices. Photo / Provided

Nick Stoneman, a disability advocate from Christchurch, said the rising cost of food, particularly milk, bread and vegetables, had taken a toll on his household budget.

“I notice it more and more. It’s so easy now to go to the supermarket and spend [an extra] $25 or $30 all at once and you don’t realize it until you pull out your Eftpos card.”

This meant that he sometimes had to leave things out of his basket.

“Most weeks I have to sit down and figure out what I need to miss. It’s usually vegetables. The price for a packet of mushrooms is $9 now.”

Stoneman goes by bus to his work. The half-price public transport subsidy has made a big difference, he said.

“It puts some money back in my pocket. I only recharge my metro card every fortnight.”

In addition to working part-time, Stoneman receives Supported Living Payment and Disability Allowance. Without the allowance (about $70), he would have about $10 left over a week after paying his bills.

Benefit increases on April 1 increased his payments by $29, which did not match the increase in costs, he said. And if he works more than 15 hours a week, his benefits are reduced.

Stoneman noted that he was fortunate not to have rising housing costs like many other renters. He said his landlord never raised his rent by $420 a week.

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