Economists say annual inflation has hit a 31-year high meaning households are seeing their real incomes erode, as wage growth cannot keep up with the rapidly rising cost of living.
Can Parliament stand by and see families go backward, struggling to keep afloat after two hard years of Covid struggles? What needs to be done?
Stuart Smith
National MP
Kaikoura
Inflation sky-rocketing to nearly six per cent in 2021 is going to make life even harder than it already is for New Zealanders.
The last two years have been hell on earth for the vast majority of Kiwis, and the inflationary pressure that has arrived on top of the lockdowns and the closed borders will mean we are far worse off economically, and the back pocket of every New Zealander is going to get lighter.
Inflation has not been this high for 30 years. To put that into context, 38 per cent of New Zealanders are under the age of 30 and hence have not seen inflation at this level in their lifetimes.
Of little surprise to many, just under 50 per cent of those aged under 30 do not own their own home, and median rents have increased $125 per week under Jacinda Ardern’s watch. With these numbers, how can we say that we are improving the lives of young New Zealanders when inflation and rental increases are depriving their ability to save and eventually own a home?
Making matters worse, wage growth is stunted at 2.4 per cent. So as inflation drives up the cost of our weekly meals and our petrol, our wages are not increasing at the same rate. The inability of Grant Robertson to take control of inflation means that the purchasing power New Zealander’s have is going to diminish significantly.
A core contributor to rising inflation is Government spending and while some of that spending has been vital to recover from the lockdowns, much of it has not.
Grant Robertson needs to seriously rethink how the Crown is spending taxpayer money if we are to calm inflation. Spending has been 40 per cent higher throughout his time as Finance Minister than it was under his National predecessors, and this year he is planning to raise that to a staggering 68 per cent more at $128 billion, with $6 billion in new spending.
The fact is that much of the additional spending has nothing to do with recovering from the pandemic and all it does is stoke inflation along, and force the hand of the Reserve Bank to increase interest rates higher than would otherwise be necessary.
When the borders start to reopen we will lose our best and brightest to Australia because inflation there is half what it is here. That means those moving to Australia will be able to earn an hour’s New Zealand wage in just 44 minutes.
In 2008 we were losing a rugby stadium of people to Australia each year and I fear we are heading back to those times and the only people coming the other way will be 501 deportees.
Ultimately, inflation hits everyone, but it hits the least well off Kiwis the most. Parents will have to start making tough decisions at the supermarket, workers will only be able to fill their tank to half, and young people are getting pushed further and further away from a first home.
We cannot continue to see these financial pressures when this country has been through so much anguish over the last two years.