Budget 2022: Over 2 million Kiwis to get cost of living payment

Budget 2022 contains a new cost of living payment, an extension of the fuel tax cut and half price public transport, a $3.1 billion boost to health and a new law which intends to pull down grocery prices.

Grant Robertson in the Budget lock-up

It comes with an admission Governments over decades have been denying sole parents on benefits "money that is rightfully theirs", with an estimate that changing the rule will pull thousands of children out of poverty.

Budget 2022 main points:

  • New 'cost of living payment' for people earning up to $70k.
  • The fuel tax and road user charge cut, as well as half price public transport is to be extended for another two months.
  • Ongoing half price public transport for community service card holders.
  • Urgent new law to go through Parliament to try to reduce grocery prices by introducing more competition.
  • $3.1b for Health NZ over two years, $168m for Māori Health Authority over four years, $191m over two years to Pharmac to buy medicines, 248 new paramedics.
  • Scrapping rule that denies sole parents on benefits their child support payment.
  • Emergency dental grants increase from $300 to $1000.
  • House price caps for First Home Loans removed.

- additional reporting by Irra Lee

Cost of living payment for people earning up to $70k

There will be a new temporary cost of living payment for people who are earning up to $70,000, who aren't eligible for the winter energy payment (usually people on benefits or superannuants).

That could see about 2.1 million New Zealanders entitled to three monthly payments from August, receiving a total of $350. It is about $27 extra a week over the three-month period.

Finance Minister Grant Robertson said Treasury suggested high inflation would have "more of an immediate impact on low- and middle-income households than on high income households".

It'll cost the Government $814 million.

"What we're dealing with here is targeted support," he said.

Fuel and public transport

The half price public transport and reduced petrol tax policy is to be extended by another two months, originally set for just three.

Community service card holders will get permanent half price public transport.

The extension to the reduction in fuel excise duties and road user charges will cost $235m, while the public transport changes will cost $130m.

Insulation

There will be 26,500 more insulation and heating retrofits for low-income homeowners through the extension of the Warmer Kiwi Homes programme.

Groceries

New legislation going through the House urgently intends to "remove barriers" to new retailers entering the grocery market.

It comes after the Commerce Commission found issues in New Zealand's supermarket sector, with a lack of competition and cutting out smaller players.

The new rules will stop supermarkets from blocking competition from accessing land to open new stores, Robertson said.

Health

The new nationalised health body - Health NZ - is set to get a large $1.8b injection in its first year "to meet cost pressures and start with a clean slate as it replaces the fragmented DHB system", then another $1.3b in its second year.

Robertson called it the "largest investment ever in our health system".

Health Minister Andrew Little said "the record $1.8b funding boost in this Budget clears the financial desk so Health New Zealand and the Māori Health Authority can have a clean start".

He said having certainty of funding across two years, part of the $11.1b across the forecast period, "will allow Health NZ and the Māori Health Authority to get on with the job of delivering".

It is set to cover financial deficits left behind by DHBs, which have run deficits in almost all years since 2008, "improvements" to health services as the system moves to nationwide planning and preparing for an ageing population.

He said the bodies would tackle "the postcode lottery that for decades has meant different patients with the same conditions have had different access to care, in areas like cancer care and orthopaedics".

"Budget 2022 provides a $102 million boost for community healthcare to identify and treat issues earlier to prevent small issues becoming big problems," Little said.

There will also be another 61 new emergency vehicles (with 48 of those ambulances) and an extra 248 paramedic and frontline staff added.

Dental

Increasing dental grants for low-income New Zealanders was a Labour election promise. It will increase the dental grants from $300 (which generally only covers one tooth extraction, even if patients require more work) to $1000.

"Many low income New Zealanders find it difficult to afford immediate and essential dental care, and increasing the level of the grant will ensure more people can receive the urgent help they need," Minister Carmel Sepuloni said.

The grants no longer need only to be for emergency work.

Poverty

Sole parents on benefits have for decades "been denied money that is rightfully theirs by an outdated rule that has seen the Crown retain their Child Support payments," Prime Minister Jacinda Ardern said.

However, the Government won't be reversing the rule until mid-next year, despite the estimate that it could lift between 6000 to 14,000 children out of poverty and was also a recommendation in the Welfare Expert Advisory Group report.

Ardern said it was thought that it would encourage more parents to pay their child support payments as it would mean the money would go to their children - rather than the Crown.

Social Development Minister Carmel Sepuloni said it was estimated more than 40,000 families would get a median gain of $24 per week after the rule is reversed.

"This will be the first time in New Zealand's history that children of sole parents on a benefit will receive their full child support payments."

She said changing the policy "isn't an easy fix", with changes to the law introduced later this year, only coming into force mid 2023.

READ MORE: Budget 2022: Outdated sole parent law to be reversed

Support for first-home buyers

There will no longer be caps on First Home Loans, which are designed to help first home buyers with their deposits, from May 19 this year.

House Minister Megan Woods said it would allow first home buyers a greater choice of homes.

Caps on First Home Grants have also been increased in most major cities, including Auckland, Hamilton, Tauranga, Wellington, Christchurch and Queenstown. These changes would kick in from June 1, 2022.

Woods said it would mean the caps would better align with lower quarter market values for new and existing properties.

“We estimate that these changes, along with other changes to the eligibility criteria, will help thousands more first home buyers, with funding available for approximately 7000 extra First Home Grants and 2500 extra First Home Loans available each year,” she said.

READ MORE: Budget 2022: Cap on First Home Loan scheme scrapped

Money to help support renters

Budget 2022 puts in place an Affordable Housing Fund, a new programme the Government said is designed to meet people’s rental costs if they can’t get access to public housing.

“The $350 million fund will leverage partnerships with investors, philanthropic organisations, developers, and the affordable housing sector to expand the range of housing options for people whose needs are not currently being met by the market,” Housing Minister Megan Woods said.

The first stage of the fund would offer $50m worth of grant funding to not-for-profit organisations to deliver affordable rental housing in Auckland, Tauranga, Rotorua, Napier/Hastings, Wellington and Nelson/Tasman.

House prices

The economic outlook from Treasury, released on Thursday, showed house prices are forecast to drop by 2.5% in 2023, after an estimated rise of 5.8% this year.

The forecast then sees a 0% change in 2024, before it increases by 1.7% in 2025 and 1.9% in 2026.

Climate Change

It adds to the $2.9b climate change funding to reduce emissions, released earlier this week, from revenue created by the Emissions Trading Scheme.

RMA

Budget 2022 will put in place $178m towards the Government’s ongoing work on reform of the Resource Management Act.

Environment Minister David Parker said the new system would mean it is “easier, faster and cheaper to consent housing”.

The money will go toward the development of the National Planning Framework, which aims to combine planning systems into one, and help councils develop new plans under the new framework.

Public media

The Government will be allocating $327m over three years for the new entity that will replace TVNZ and RNZ.

“This is for the three years from 2023 when the new entity will begin operating, through to 2026,” Broadcasting Minister Kris Faafoi said.

Additional funding would also be given to the Ministry for Culture and Heritage to monitor the new entity.

The Broadcasting Standards Authority will receive $1.2m over the next for years, while RNZ Pacific receives $4.4m in capital funding for a new transmitter.

Defence

Defence Minister Peeni Henare is putting $662.5m to maintain the country’s existing defence capabilities.

Lower-paid Defence Force staff would also get a pay bump worth $90m over four years.

Money will go towards the likes of search and rescue, disaster response, and maritime patrols.

Henare said the Defence Force had been “very busy” in the past two years while responding to Covid-19, the war in Ukraine, and natural disasters in the Pacific.

It comes amid ongoing tensions over a new security arrangement between China and the Solomon Islands, and ongoing tensions between Canberra and Beijing.

More money for infrastructure

Budget 2022 puts $1.3b in capital funding for health over the next two years. That will fund the rebuilds of Whangārei Hospital and starting the redevelopment of Nelson Hospital.

That’s on top of the $572m from Budget 2021 into the first stage of the redevelopment of Whangārei Hospital.

Funding is also being put to add 280 classrooms over 40 schools to the tune of $777m in capital investment.