Tuesday, April 23, 2024

Capsule Votes – Cost of Living Edition: How the Parties Stack Up on the Issues YOU Care Most About

What issues do you feel most strongly about as the election looms? We asked our readers this on social media – and you answered with five issues that are top of mind right now: the cost of living, health, education, childcare and climate change. So we’ve TRAWLED through party policy, and here we’ve broken down the policies on these five issues in this series in the lead-up to the election. Up first, your number-one issue – cost of living. How are the main parties planning on tackling the HUGE challenge of simply living? Read on, especially if you’re not sure who you’re giving your vote to just yet!

Note – we don’t have the scope to mention absolutely everything, but we’ll bullet-point the key moves and measures that we think you’ll care about, and we encourage you to head to the individual parties’ websites for more in-depth details.

The Cost Of Living

The issue that many of us currently care most about is, unsurprisingly, the cost of living. Some call it a cost-of-living crisis. Inflation has reached its highest levels since 1990. The cost of living for the average New Zealand household increased by 7.2% in the year to June 2023, and there’s no sign of a turnaround.

Many people are finding it damn hard to make their (often stagnant) incomes cover rising rents or steeper mortgage repayments, higher grocery bills and petrol prices, and other bills and essential expenses. It’s tough going out there. A recent report found that half of New Zealanders under 40 couldn’t find $5000 for an emergency without going into debt. 

A recent Ipsos Mental Health Survey shows one in two New Zealanders reported having felt severely stressed and/or depressed in the past year, with concern about personal finances as the biggest factor.

The political parties know the cost of living is top of mind, so of course they’re promising major measures to ease the pressure. What are these?

Labour would:

  • Labour’s ‘Cost Of Living Plan’ would assist low-income and middle-income working families. Changes to the Working For Families scheme (through which Work and Income and Inland Revenue help families financially) include the largest-ever boost to the existing In-Work Tax Credit: a payment available for families who have some income from paid work each week. Increasing it by $25 (from $72.50 to $97.50) a week will help around 160,000 families with costs associated with being in work.
  • Labour would also lift the Working for Families abatement threshold (the point at which your benefit is affected by any income you earn) to $50,000, meaning 175,000 households will gain on average an extra $47 a week.
  • Labour would remove GST from fruit and vegetables.
  • It would expand free basic dental care to under 30-year-olds.
  • It would keep prescriptions free.
  • It would make public transport free for under-13s and half-price for under-25s
  • Labour says tax cuts would make inflation worse. It says, instead, it will maintain prudent levels of spending, hit a surplus in 2027, and return inflation to the Reserve Bank’s target range.
  • The current Labour-led government has already taken measures to help people with the cost of living.

National would:

  • National would introduce a ‘Back Pocket Boost’ to help the ‘squeezed middle’. This would mean a family with children on the average income of $120,000 would be up to $250 a fortnight better off; and an average-income child-free household would be up to $100 a fortnight better off.
  • The Back Pocket Boost tax-relief plan effectively increases the after-tax pay you take home, by adjusting income-tax brackets to compensate for inflation (except the top rate for income over $180,000). The 17.5% threshold on income tax would change from $14,000 to $15,600, the 30% threshold would change from $48,000 to $53,500, and the 33% threshold would change from $70,000 to $78,100.
  • The Back Pocket Boost would expand tax credits (meaning a reduction in the amount of tax you have to pay) to reach modest-income earners.
  • The Back Pocket Boost would increase Working for Families Tax Credits.
  • The Back Pocket Boost would introduce its FamilyBoost childcare tax rebate (see our upcoming piece on childcare).
  • National would ensure benefits keep up with the cost of living, and would index benefits to inflation.
  • National would abolish Fair Pay Agreements, arguing these are contributing to inflation by adding pressure to businesses.

The Green Party would:

  • It would introduce an ‘income guarantee’: a weekly minimum income. That would be $385 for individuals, $770 for couples, and $735 for single parents.
  • The income guarantee includes a tax-free threshold of $10,000 and adjustments to tax rates; anyone earning under $125,000 will a tax cut.
  • It would replace Working For Families with a single payment: parents would receive $215 every week for their first child and $135 per week for every subsequent child. Parents would receive an additional top-up of $140 a week for every child under three.
  • The Greens would shift people receiving the Jobseeker benefit, the Sole Parent Support benefit, and the Student Allowance to a single payment of $385 per week (plus any inflation adjustment). A single-parent top-up of $135 per week would be introduced.

ACT would:

  • ACT would implement two income-tax rates: 17.5% for those earning less than $70,000, and 28% for those earning more than $70,000.
  • It would, over three years, take New Zealand down to three income-tax brackets.
  • It would implement a Low and Middle Income Tax Offset, worth up to $800 per annum for those earning between $12,000 and $48,000.
  • It would abolish Fair Pay Agreements.

NZ First would:

  • NZ First would adjust income-tax brackets to match inflation.
  • It would remove GST on fresh food, including vegetables, dairy, meat and fish.

Te Pāti Māori would:

  • Te Pāti Māori would make the first $30,000 of income tax-free.
  • It would increase take-home pay for 98% of whānau.
  • It would double current baseline benefit levels.
  • It would increase income tax on those earning more than $200,000.
  • It would implement a new tax bracket for net wealth over $2 million per annum.
  • It would introduce a Wealth Tax, Foreign Companies Tax, Land Banking Tax, and Vacant House Tax.
  • It would remove GST from all kai (food).

The Opportunities Party (TOP) would:

  • TOP would introduce a universal basic income: a weekly tax-free payment to those aged between 18 and 65, totalling $16,500 per person per year.
  • TOP would change income-tax thresholds to increase incomes for most New Zealanders. For starters, it would make the first $15,000 of income tax-free.

Tune in on Saturday to read our policy breakdown on Health!

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