"At least $200 out of our single income for him just to get to work and home each day ... that was taking away from our food" - Jeanette, whose family has been hit hard by inflation
If the latest political poll is anything to go by, National is hitting the right note by focusing on the financial hardship faced by many - it's real and just another burden heading into the third year of the pandemic.
The government argues much of the pressure's coming from overseas events out of its control, but National digs into its playbook for accusations of profligate spending and clutching onto hard-earned taxpayer dollars.
Photo: RNZ / Vinay Ranchhod
New Zealand's experiencing the highest levels of inflation for 30 years, with ANZ warning it expects inflation will hit 7.4 percent in the second quarter, with big impacts on household and business budgets.
Some of the causes are clear: supply chain disruption from Covid-19, Russia's invasion of Ukraine, and the related rising price of fuel which also pushes up prices in other sectors through transport costs. Fruit and vegetables are 17 percent dearer this year, the biggest annual increase in a decade.
Prime Minister Jacinda Ardern argues much of the pressure's coming from overseas events out of its control.
But National leader Christopher Luxon's proposed solution is to raise thresholds on income tax to account for wage growth, remove the $180,000 top tax threshold of 39 percent, and abolish taxes imposed under Labour.
These include Auckland's regional fuel tax, interest deductibility and bright-line test changes for landlords, the income insurance scheme, and the value capture scheme for Auckland light rail.
Read more:
- Inflation forecast to go even higher: What you need to know
- Biggest annual increase in food prices in a decade
- Week in Politics: Luxon's tax tactics pay off
- Luxon doubles down on tax cuts
- Business leader backs Luxon's tax-scrapping proposals
Ardern says the government's family tax credit changes outstrip the benefits of the cuts proposed by National for low- and middle-income earners, without the "great cost" cuts for those at the top and potential cuts that go with it.
Her Finance Minister, Grant Robertson, goes to his own playbook, with criticism that tax cuts and debt reduction cannot be done while also maintaining or increasing spending. Voters deserve more detail on National's promises, he says.
National's Finance Spokesperson Simon Bridges brushes that off.
"We will put in a fiscal plan pre-election and we will stand by those numbers. But we do know broadly speaking what the cost of them are now, and there's no sort of trick in any of that," Bridges says.
The income tax thresholds would cost about $1.7 billion a year, plus about $1.3b a year for cutting the other taxes, he says - but they don't have timeframes, and the costs are still viewed as an estimate.
Brad Olsen from Infometrics says the tax cut package will be attractive to many.
"New Zealanders under this policy would be getting more money straight into their pay packet ... the likes of rent, food, fuel and accommodation have increased by between $70 and $100 a week, average wages have only increased by about $50 a week and so again any change there is going to be something helpful for households."
But Council of Trade Unions economist Craig Rennie says the way National's gone about it is best for those already well off, and could even add to inflation.
"Unfortunately the way National's chosen to move those tax brackets around loads the benefits of those tax changes onto higher income earners, so Mr Luxon or anybody on the higher tax bracket would receive 10 times the benefit of someone on the minimum wage.
"If you're gonna try and address inflation and address the cost of living crisis through a tax bracket change, you would seek to move the bottom brackets and you may well move the top brackets around to compensate for that so you weren't cutting spending on essential services."
Christopher Luxon Photo: RNZ / Angus Dreaver
After years of dysfunction and a roll call of leaders, National seems to be getting its act together and voters are once again looking to it as a credible alternative.
With that comes scrutiny: they will need to show they can deliver what's easily promised in opposition. One legacy of the Key-English government was degraded insfrastructure and services in many areas, and voters will want to know tax cuts won't come at the expense of still badly needed investment.
Labour, faced with falling poll numbers, will be watching every move, ever ready to pounce when they spy a fiscal hole.
But for now, there is a cost of living crisis and many will be looking for more from a government already stretched on debt and spending.
In today's Focus on Politics podcast, the highest inflation in decades and National's tax plan have Labour feeling the pinch. Political Editor Jane Patterson counts the cost for both parties.
Listen free to Focus on Politics on Apple Podcasts, on Spotify, on iHeart Radio or wherever you get your podcasts.
