Ardern rejects claim Govt spending making inflation worse

Source: 1News

Prime Minister Jacinda Ardern has rejected criticism that the Government's spending has made inflation worse.

It comes ahead of the first instalment of the $350 cost of living support payment, which will be paid out to more than 2 million Kiwis on Monday.

READ MORE: Thousands who are eligible could miss out on $350 payment

In an interview on Q+A on Sunday, Ardern rejected claims that this payment would be inflationary.

"The advice that we got from Treasury was the fact that it was time-limited and targeted, it would lessen any potential impact on inflation," she said.

"Compare that to alternative measures like tax cuts, not so, because it's less targeted."

In March, the Government announced it would be reducing the fuel excise duty in a raft of measures to tackle the cost of living crisis.

READ MORE: Government extends cost of living support measures

This reduction will remain in place until the end of January 2023.

Ardern conceded this policy is less targeted, saying it was "very hard" to target it to low income drivers, but defended its necessity.

The PM also discusses the upcoming cost of living payment.

"What we also know is that fuel costs knock on to other parts of the cost of living. If it's costing more to transport goods and services, that has a knock-on effect.

"The universal element there pays dividends."

Ardern also responded to critics accusing her Government of overspending.

"There is an assumption spending, just spending, is in and of itself inflationary.

"It very much depends on where that investment is going."

She said increased spending in the 2022 Budget was "required to keep the services we have going."

"The opposition coming at us and saying that their response would be to see a reduction in investment - that is a reduction in education, healthcare, law and order."

READ MORE: Fact-checking claims about inflation

Ardern said the Government's investments had "been about maintaining and growing services New Zealand rely on", and it would be "questionable" whether or not cutting this spending would have an impact on inflation.