WEBVTT - What April 1 cash boosts and power bill increases mean for your wallet

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<v Speaker 1>Kyota. I'm Chelsea Daniels and this is the Front Page,

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<v Speaker 1>a daily podcast presented by the New Zealand Herald. The

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<v Speaker 1>financial year is coming to an end and that means

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<v Speaker 1>from next Tuesday a lot of kiwis will be getting

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<v Speaker 1>more money in their wallets. April first is when the

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<v Speaker 1>annual General Adjustment takes place, when benefits and minimum wage

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<v Speaker 1>increases to account for wage growth or inflation. While benefits

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<v Speaker 1>are getting a two point two two percent rise and

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<v Speaker 1>Super and the Veteran's Pension gets a three point five

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<v Speaker 1>to one percent increase, minimum wage is only going up

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<v Speaker 1>by one point five percent As people continue to feel

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<v Speaker 1>the sting of the cost of living crisis. What impact

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<v Speaker 1>will these changes have and how well is our economy

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<v Speaker 1>performing at the moment? To talk us through it all

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<v Speaker 1>today on the Front Page where joined by Enzad Herald

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<v Speaker 1>Business Editor at Large Liam Dan. Liam, let's start with

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<v Speaker 1>the minimum wage. It's going up one point five percent

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<v Speaker 1>to twenty three dollars fifty. That's not in line with

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<v Speaker 1>inflation and instead in line with the NZ first National

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<v Speaker 1>Coalition agreement to moderate those increases. What sort of impact

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<v Speaker 1>is this lower increase than usual going to have? It

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<v Speaker 1>was two percent last year and it impacts between eighty

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<v Speaker 1>and one hundred and forty five thousand workers.

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<v Speaker 2>Hey yeah, I mean it's a very deliberate thing to

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<v Speaker 2>take it up by lower than the rate of inflation,

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<v Speaker 2>because I guess the argument is, you know, I've had

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<v Speaker 2>some big minimum wage increases during the labor government period.

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<v Speaker 2>The argument is, whether it's you believe it or not,

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<v Speaker 2>that in doing that, they've increased business costs and added

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<v Speaker 2>to inflation, and you get into kind of a a

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<v Speaker 2>spiral of inflation where so you know, you're going to

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<v Speaker 2>the cafe to get coffee, if the workers there, if

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<v Speaker 2>the wages have gone up significantly, then you're paying more

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<v Speaker 2>for the coffee. Just that increases inflation, so your wages

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<v Speaker 2>have to go up to cover the inflation. And so

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<v Speaker 2>they're trying to push back against that inflationary spiral. I mean,

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<v Speaker 2>there'll be listeners who will point out that that seems

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<v Speaker 2>a bit unfair. You know, we're looking at the people

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<v Speaker 2>who are earning the lowest amounts in the economy. But

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<v Speaker 2>it's in a different environment to when minimum wages were

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<v Speaker 2>going up previously. We've got basically unemployment is rising. There's

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<v Speaker 2>a shortage of jobs, and so you'd imagine what we're

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<v Speaker 2>starting to see wage growth more diminished across the board,

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<v Speaker 2>So people aren't getting the wage rises they would have

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<v Speaker 2>got because they just don't have the ability to switch

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<v Speaker 2>job the same way. So I guess that is in

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<v Speaker 2>line with a trend for lower wage growth, and the

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<v Speaker 2>hope would be that people are still able to by

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<v Speaker 2>beating the inflationary cycle, getting the economy going, people are

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<v Speaker 2>able to get better jobs and they're more higher paying

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<v Speaker 2>jobs out there, So that'd be the government's logic for that.

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<v Speaker 1>The other main increase is for the support for beneficiaries.

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<v Speaker 1>Raddle off some numbers for you here. Job seeker support

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<v Speaker 1>is going up roughly two point two two percent. For

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<v Speaker 1>sole parents, that's an increase of nine dollars to five

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<v Speaker 1>hundred and five dollars eighty For couples with children, that

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<v Speaker 1>increases seven dollars and six cents to three hundred and

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<v Speaker 1>twenty four dollars sixty one. For me bel over twenty

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<v Speaker 1>five without kids, those increases bring them to three hundred

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<v Speaker 1>and sixty one thirty one if single, and three hundred

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<v Speaker 1>and seven forty two if in a couple. For veterans

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<v Speaker 1>and those on super they're getting a three percent increase,

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<v Speaker 1>bringing it up to one thousand and seventy six dollars

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<v Speaker 1>and eighty four cents a fortnite and eight hundred and

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<v Speaker 1>twenty eight thirty four for those in couples. The government

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<v Speaker 1>has touted these increases as reflecting the cost of living,

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<v Speaker 1>but these happen every year, don't they.

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<v Speaker 2>Yeah. I mean, look, they're basically in line with inflation

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<v Speaker 2>and a little bit pets, a little bit more generous for superinuitants.

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<v Speaker 2>But yeah, again, you've got a government that's struggling with

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<v Speaker 2>balancing the books, doesn't have a lot of money, is

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<v Speaker 2>actually dealing with more people on benefits because of the

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<v Speaker 2>situation with unemployment, so they're looking at a much higher cost.

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<v Speaker 2>I think they obviously felt politically that the minimum they

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<v Speaker 2>could do would be to match inflation and not have

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<v Speaker 2>those beneficiaries going backwards, because they really are some of

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<v Speaker 2>the poorest people out there. But yeah, look, it's in

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<v Speaker 2>a very tough environment for the government. They just don't

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<v Speaker 2>have a lot of money to spend, unless, of course,

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<v Speaker 2>they were to sort of change their debt limits and

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<v Speaker 2>all that sort of thing. But politically there's a lot

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<v Speaker 2>of pushback against that, a lot of concern about the

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<v Speaker 2>level of national debt. So they've got these constraints they

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<v Speaker 2>I guess, you know, it's a center right government. It's

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<v Speaker 2>really trying to restrict the sort of relative value of

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<v Speaker 2>benefits relative to work. I mean, they're trying to create jobs.

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<v Speaker 2>They're trying to create incentives for people to find jobs.

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<v Speaker 2>The flaw in the argument is the rising unemployment. They

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<v Speaker 2>need to be creating jobs so that there are alternatives

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<v Speaker 2>there for people on benefits, and se to be several

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<v Speaker 2>months away from that.

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<v Speaker 1>People.

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<v Speaker 2>You know, the economists don't see unemployment peaking until the

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<v Speaker 2>second half of this year, or perhaps perhaps earlier, perhaps

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<v Speaker 2>in the middle of this year, and then hopefully we'll

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<v Speaker 2>see some employment creation and a more flexible job market,

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<v Speaker 2>and that will mean that people have more opportunity.

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<v Speaker 3>Our strong expectation is that those who are able to

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<v Speaker 3>work should work, and that more people who are working

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<v Speaker 3>and the fewer who are on welfare, the better for

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<v Speaker 3>them and their future, the better for their families, the

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<v Speaker 3>better for the economy, and the better for New Zealand.

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<v Speaker 3>We will do everything everything that we can to support

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<v Speaker 3>people off welfare and into work and ultimately a better

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<v Speaker 3>life for themselves and for their families. Under our government,

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<v Speaker 3>we are making clear our expectation that those who can

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<v Speaker 3>work should be taking all reasonable steps to find a job,

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<v Speaker 3>and those who do not will face consequences.

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<v Speaker 1>And politically as well. I guess they're not going to

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<v Speaker 1>be losing any of their voter base by keeping beneficiary

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<v Speaker 1>increase is at a minimum.

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<v Speaker 2>Hey, you'd imagine not a huge amount. I can't Politically,

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<v Speaker 2>I'm not sure what the split is for beneficiaries voting

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<v Speaker 2>for center right parties. But yeah, I mean there is

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<v Speaker 2>some politics to it. I mean it certainly they want

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<v Speaker 2>to be seen to be disincentivizing the benefits and encouraging

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<v Speaker 2>people to look for work, to get into work. That's

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<v Speaker 2>been a real mantra for the government. As I say,

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<v Speaker 2>just that slight flow in the problem that the unemployment

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<v Speaker 2>rate is rising, there are more people going on to

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<v Speaker 2>job seeker benefits because there isn't the employment being created

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<v Speaker 2>right now now. The government will argue I'm sure that

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<v Speaker 2>growth is coming, that we've seen the economy come out

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<v Speaker 2>of recession. The thing is, say this a lot. The

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<v Speaker 2>labor market tends to lag. It's one of the last

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<v Speaker 2>things to turn in an economic cycle. So, you know,

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<v Speaker 2>touch Wood hopeful that in the next few months will

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<v Speaker 2>see some progress there.

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<v Speaker 1>Power prices are also going up a lot. Actually from Tuesday,

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<v Speaker 1>the average household's bill will go up by ten dollars

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<v Speaker 1>a month this year, and then for the next four

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<v Speaker 1>years it'll go up by five dollars a month. What's

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<v Speaker 1>happening behind the scenes to necessitate this change.

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<v Speaker 2>Yeah, that's going to feel quite rough to a lot

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<v Speaker 2>of households. Well, there's a few different things. One is Transpower,

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<v Speaker 2>the lines company that looks after the national infrastructure grid,

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<v Speaker 2>has said that look at they've got to go up

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<v Speaker 2>by ten dollars a month, and so those charges will

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<v Speaker 2>be passed through to consumers via the power companies. So

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<v Speaker 2>that's part of it. But also some of the power

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<v Speaker 2>companies I've seen, for example, Mercury has said, you know,

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<v Speaker 2>because of other factors like needing to invest in more

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<v Speaker 2>power generation and invest in more you know, I guess

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<v Speaker 2>that means wind farms, solar, all that sort of stuff,

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<v Speaker 2>they need to put prices up. And also it's been

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<v Speaker 2>a relatively dry summer, so lakes are low, so the

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<v Speaker 2>wholesale prices are up a bit as well, so people

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<v Speaker 2>are going to I mean that's more more of a

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<v Speaker 2>gradual thing, but combined, people are going to feel that.

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<v Speaker 2>You know, people are still very sensitive about inflation. We

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<v Speaker 2>talked before about benefits going up by the inflation rate. Well,

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<v Speaker 2>you know, the inflation rate isn't just a uniform thing

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<v Speaker 2>that people experience. They experience it differently. And some people,

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<v Speaker 2>if they're paying a lot for power, and if they're

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<v Speaker 2>also facing increases for council rates and insurance bills, maybe

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<v Speaker 2>feeling like inflation is still a real problem and they're

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<v Speaker 2>really still feeling the cost of living crisis. The official

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<v Speaker 2>stats will tell you that it's back under control at

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<v Speaker 2>two point two percent an average two point two percent,

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<v Speaker 2>which is about where central banks want inflation to be.

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<v Speaker 2>But I think they really need to keep it down

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<v Speaker 2>there for a long time before people start to feel

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<v Speaker 2>like they've got through this sort of cost of living crunch.

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<v Speaker 2>I think generally people are feeling like there is still

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<v Speaker 2>a cost of living crisis out there.

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<v Speaker 1>The interest on student loan payments is also going.

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<v Speaker 2>Our pay Yeah. I don't think it's the interest so much,

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<v Speaker 2>it's the amount that you have to pay so while

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<v Speaker 2>you're in New Zealand, student loans are interest free. But

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<v Speaker 2>what they've got it done is there is an incremental

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<v Speaker 2>increase to the amount that you'll have to pay out

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<v Speaker 2>of your wages. So effectively they're saying to people that

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<v Speaker 2>you'll have to pay them back a little bit faster.

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<v Speaker 2>I don't think it's a lot. I think it was

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<v Speaker 2>like something like a dollar twenty a week or something.

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<v Speaker 2>But that's possibly you could say a good thing because

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<v Speaker 2>you know, okay, it's another squeeze on your wallet on

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<v Speaker 2>the weekly basis, but not by a huge amount. But

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<v Speaker 2>it does mean that you're actually paying off the principle

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<v Speaker 2>faster and getting that loan under control. So I guess

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<v Speaker 2>the government is keen to get the balances down, so

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<v Speaker 2>they haven't adjusted the thresholds that would sort of keep

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<v Speaker 2>the extra payments from going up. They've left it there

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<v Speaker 2>so that you are having to pay a little bit more.

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<v Speaker 2>But yeah, if it helps people get their loans paid

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<v Speaker 2>off quicker, then that's not such a bad thing.

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<v Speaker 1>And this one won't impact the average keyw but the

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<v Speaker 1>active investor plus visa is seeing some changes as well.

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<v Speaker 1>I believe what is that.

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<v Speaker 2>This is part of a policy by the government to

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<v Speaker 2>effectively attract more wealthy people into New Zealand with the

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<v Speaker 2>hope that they'll be investing in the productive end of

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<v Speaker 2>theonomy and creating the jobs which we talked about needing earlier.

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<v Speaker 2>So they've introduced two new investment categories, Growth and Balanced.

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<v Speaker 2>And so if you've got a minimum investment of five

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<v Speaker 2>million dollars and prepared to put that into what they

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<v Speaker 2>consider sort of highly productive parts of the economy, so

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<v Speaker 2>like tech startups and all that sort of thing, investing

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<v Speaker 2>in New Zealand business basically, then there is a visa

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<v Speaker 2>a immigration visa category available to you to come and

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<v Speaker 2>live in New Zealand. There's also a sort of a

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<v Speaker 2>balanced category for investors over a five year term. The

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<v Speaker 2>growth ones over a three year term, the balanced one

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<v Speaker 2>allows you to have a bit more sort of boring investment,

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<v Speaker 2>so that includes property and bonds and things, but you've

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<v Speaker 2>got to bring in ten million dollars. And I guess

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<v Speaker 2>this is part of a view that you know, we

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<v Speaker 2>need some more dynamic capital in this economy. You know,

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<v Speaker 2>we've got the banks that will lend for housing and

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<v Speaker 2>for some business stuff, but we don't have a large

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<v Speaker 2>amount of capital that it's going into startups and new business,

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<v Speaker 2>and often that into the economy is finding it harder

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<v Speaker 2>to get money to get up and running, to get

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<v Speaker 2>things going. And so yeah, I guess the government's hoping

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<v Speaker 2>that that will bring in these kind of wealthy individuals

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<v Speaker 2>and they will be able to push along our productivity

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<v Speaker 2>in the economy.

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<v Speaker 4>It is solid and the numbers do not lie. Not

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<v Speaker 4>only was it a positive number, but it was a

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<v Speaker 4>far bigger number than anyone was predicted. So let's take

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<v Speaker 4>the good news when it comes. Mike. There's always someone

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<v Speaker 4>who can think of a nancy negative way of looking

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<v Speaker 4>at it. But actually, this is an economy that has

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<v Speaker 4>been bouncing along the bottom for a very long time,

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<v Speaker 4>and now we are turning the corner. Let's celebrate that

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<v Speaker 4>it's set to continue. Let's have a positive mindset.

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<v Speaker 1>Liam. All these cash boosts and changes are welcome for

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<v Speaker 1>the economy, I'm sure, But how is it actually performing

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<v Speaker 1>at the moment. We were in recession a few cycles ago,

0:11:53.880 --> 0:11:57.720
<v Speaker 1>and I understand from the last data we just weeaked

0:11:57.760 --> 0:11:58.160
<v Speaker 1>out of it.

0:11:58.360 --> 0:12:00.720
<v Speaker 2>Oh it wasn't a bad it was the bad results.

0:12:00.720 --> 0:12:05.160
<v Speaker 2>There was zero point seven, So We definitely bounced out

0:12:05.200 --> 0:12:09.160
<v Speaker 2>of recession. We didn't bounce back to where we were previously,

0:12:09.240 --> 0:12:12.760
<v Speaker 2>because the two previous quarters saw the economy shrink by

0:12:12.800 --> 0:12:15.560
<v Speaker 2>about two point one percent. So we back up zero

0:12:15.640 --> 0:12:18.719
<v Speaker 2>point seven percent. We are hopefully on a path of

0:12:19.120 --> 0:12:22.800
<v Speaker 2>more sustained growth, so perhaps a few more quarters and

0:12:22.840 --> 0:12:24.880
<v Speaker 2>the economy will be as big as it was before

0:12:24.880 --> 0:12:26.960
<v Speaker 2>we went into recession. So it actually takes a while

0:12:27.040 --> 0:12:29.360
<v Speaker 2>to come back to that level. Yeah, so it's it's

0:12:29.600 --> 0:12:31.800
<v Speaker 2>still feels like a tough economy because you know, that

0:12:31.920 --> 0:12:33.760
<v Speaker 2>was a big recession. They were talking about it being

0:12:33.800 --> 0:12:37.520
<v Speaker 2>the biggest slump not counting the COVID crunch since since

0:12:37.640 --> 0:12:40.400
<v Speaker 2>nineteen ninety one, which was a really rough time. But

0:12:40.520 --> 0:12:43.280
<v Speaker 2>it is progress, so is it is a first step

0:12:43.320 --> 0:12:46.320
<v Speaker 2>on the path of recovery. So we have inflation under control,

0:12:46.520 --> 0:12:49.959
<v Speaker 2>hopefully again touchwood that doesn't flare up again. We've got

0:12:49.960 --> 0:12:53.160
<v Speaker 2>the economy out of recession. Really that the last piece

0:12:53.200 --> 0:12:55.960
<v Speaker 2>of the puzzle is probably jobs and to some extent,

0:12:56.040 --> 0:12:58.880
<v Speaker 2>confidence in the economy. So I think consumers in particular

0:12:58.880 --> 0:13:02.400
<v Speaker 2>are still feeling nervous about the state of the economy.

0:13:02.559 --> 0:13:05.360
<v Speaker 2>We've seen that in some consumer confidence surveys recently that

0:13:05.440 --> 0:13:07.800
<v Speaker 2>they just don't quite match where some of the other

0:13:08.200 --> 0:13:10.680
<v Speaker 2>more positive economic data is sitting. And I think that's

0:13:10.720 --> 0:13:15.040
<v Speaker 2>probably twofold one. That overhang of inflation. People still feeling

0:13:15.120 --> 0:13:18.200
<v Speaker 2>like even though the stats tell us inflation is under control,

0:13:18.440 --> 0:13:21.240
<v Speaker 2>it still feels like there is a cost of living issue.

0:13:21.240 --> 0:13:24.320
<v Speaker 2>And then it's that uncertainty around jobs. People aren't confident

0:13:24.320 --> 0:13:27.680
<v Speaker 2>about switching jobs. They may be worried about their own job,

0:13:28.160 --> 0:13:30.640
<v Speaker 2>and in fact some people are losing their jobs and

0:13:31.120 --> 0:13:34.559
<v Speaker 2>the numbers on job seeker is going up. So until

0:13:34.760 --> 0:13:38.280
<v Speaker 2>that piece comes into place, and I really, you know,

0:13:39.000 --> 0:13:41.240
<v Speaker 2>be hopeful that we see at peak and that some

0:13:41.280 --> 0:13:44.360
<v Speaker 2>of this positivity from growth coming back to the economy

0:13:44.400 --> 0:13:47.280
<v Speaker 2>flows through. So you know, it's a sort of cautiously

0:13:47.280 --> 0:13:49.160
<v Speaker 2>optimistic tone. Yeah, And of.

0:13:49.040 --> 0:13:52.600
<v Speaker 1>Course the ocr was cut further last month. What are

0:13:52.640 --> 0:13:56.120
<v Speaker 1>economists predicting in terms of more cuts at the moment,

0:13:56.240 --> 0:13:59.040
<v Speaker 1>especially now that Adrian Or is out as a Reserve

0:13:59.080 --> 0:13:59.680
<v Speaker 1>Bank governor.

0:14:00.080 --> 0:14:02.400
<v Speaker 2>Yeah, I mean it was interesting to see the governor go.

0:14:02.720 --> 0:14:04.920
<v Speaker 2>It was a big story, but I don't think it'll

0:14:05.000 --> 0:14:07.679
<v Speaker 2>change the outlook for the Reserve Bank in the near future.

0:14:07.720 --> 0:14:11.079
<v Speaker 2>They've sort of penciled in a twenty five basis point

0:14:11.120 --> 0:14:13.640
<v Speaker 2>cut next month and then another one in May, and

0:14:13.679 --> 0:14:15.680
<v Speaker 2>that might be where they pause, so you know, so

0:14:15.720 --> 0:14:18.719
<v Speaker 2>that's another fifty basis points to come out. But economists

0:14:18.760 --> 0:14:23.280
<v Speaker 2>are saying, well, it's not necessarily going to drop mortgage

0:14:23.360 --> 0:14:26.320
<v Speaker 2>rates that much further because they're already priced in.

0:14:26.760 --> 0:14:26.840
<v Speaker 3>There.

0:14:26.920 --> 0:14:31.600
<v Speaker 2>Some movement on international borrowing costs also also affecting things,

0:14:31.640 --> 0:14:33.720
<v Speaker 2>so in some ways, you know, it might be getting

0:14:33.720 --> 0:14:35.840
<v Speaker 2>to the point where some of the best mortgage rates

0:14:35.960 --> 0:14:37.760
<v Speaker 2>we're going to see for a while out there now

0:14:38.240 --> 0:14:41.520
<v Speaker 2>or very soon. And an interesting phenomenon economists have noticed

0:14:41.880 --> 0:14:44.920
<v Speaker 2>is that there is a really high percentage in historic

0:14:45.080 --> 0:14:48.600
<v Speaker 2>terms for New Zealand of people on either floating mortgage

0:14:48.680 --> 0:14:51.200
<v Speaker 2>rates or on really short term fixed rates because people

0:14:51.240 --> 0:14:53.920
<v Speaker 2>have been holding off fixing longer because they're hoping that

0:14:53.960 --> 0:14:56.160
<v Speaker 2>the rates will come down further. And that's probably made

0:14:56.160 --> 0:14:58.000
<v Speaker 2>sense for the last few months. That means that there's

0:14:58.000 --> 0:15:00.760
<v Speaker 2>actually a lot of people who aren't yet getting the

0:15:00.760 --> 0:15:03.240
<v Speaker 2>full benefit of the rates cuts. They're they're sort of

0:15:03.280 --> 0:15:05.880
<v Speaker 2>holding off locking in and to take the benefit. They

0:15:05.920 --> 0:15:07.760
<v Speaker 2>want to wait until they sort of get the best deal.

0:15:07.920 --> 0:15:10.320
<v Speaker 2>And I think it will become apparent to more people

0:15:10.320 --> 0:15:12.480
<v Speaker 2>that it's time to lock in fairly soon. I mean,

0:15:12.480 --> 0:15:14.200
<v Speaker 2>I don't want to pick it exactly, but you know,

0:15:14.480 --> 0:15:17.120
<v Speaker 2>we'll see a lot of people locking into those lower rates,

0:15:17.160 --> 0:15:20.640
<v Speaker 2>and so that's where money's going back into people's pockets,

0:15:20.760 --> 0:15:24.000
<v Speaker 2>and that's really going to help assist with the recovery.

0:15:24.080 --> 0:15:26.840
<v Speaker 2>So we haven't yet seen it boost house prices much,

0:15:26.840 --> 0:15:28.920
<v Speaker 2>for example, and then and that may be to do

0:15:29.000 --> 0:15:32.120
<v Speaker 2>with people holding off on booking in those lower rates.

0:15:32.160 --> 0:15:33.640
<v Speaker 2>But you know, some of the things we've talked about

0:15:33.680 --> 0:15:35.880
<v Speaker 2>for April one this year, certainly not as much money

0:15:35.880 --> 0:15:38.360
<v Speaker 2>coming back to people, some things like the power prices,

0:15:38.600 --> 0:15:41.120
<v Speaker 2>money coming out of people's pockets. But if we see

0:15:41.120 --> 0:15:44.600
<v Speaker 2>a large number of mortgage holders fixing on lower rates

0:15:44.720 --> 0:15:47.120
<v Speaker 2>over the next few months, then that's going to be

0:15:47.160 --> 0:15:49.920
<v Speaker 2>a lot more money coming into the households and that

0:15:50.000 --> 0:15:53.520
<v Speaker 2>should hopefully boost consumer confidence and add to the momentum

0:15:53.560 --> 0:15:56.720
<v Speaker 2>in the economy, which is just still pretty fragile at

0:15:56.720 --> 0:15:57.080
<v Speaker 2>the moment.

0:15:57.160 --> 0:16:04.120
<v Speaker 1>Thanks for joining us, Liam, Cheers. That's it for this

0:16:04.280 --> 0:16:07.400
<v Speaker 1>episode of the Front Page. You can read more about

0:16:07.440 --> 0:16:11.960
<v Speaker 1>today's stories and extensive news coverage at enzdherld dot co

0:16:12.280 --> 0:16:16.160
<v Speaker 1>dot MZ. The Front Page is produced by Ethan Sills

0:16:16.240 --> 0:16:20.200
<v Speaker 1>and Richard Martin, who is also a sound engineer. I'm

0:16:20.360 --> 0:16:24.640
<v Speaker 1>Chelsea Daniels. Subscribe to the Front Page on iHeartRadio or

0:16:24.720 --> 0:16:27.480
<v Speaker 1>where if you get your podcasts, and tune in on

0:16:27.680 --> 0:16:30.760
<v Speaker 1>Monday for another look behind the headlines.