The rising cost of living in the return of inflation is hitting Kiwi's hard. Inflation currently sits at a 32 year high of 7.2%. Video / NZ Herald
OPINION:
I’m hearing from Kiwis that it’s harder than ever to make ends meet.
Money comes in and it just as quickly goes out.
Whether it’s the farmers I chatted to at Field Days in Feilding this weekend or the office workers I’ve met out bucket-collecting for charity in Central Auckland, money is tight.
Every week, dipping into your pockets for a different payment. One day it’s the mortgage repayment, the next day it’s the rates bill, electricity bill, internet bill, water bill, cellphone repayments, home insurance bill, car insurance, Netflix, and credit card bill… there’s another you’ve probably forgotten, but it’ll arrive all the same.
What were routine payments a few years ago now feels harder.
Repairs to the deck have been put on the back burner for another summer, too. That holiday to Fiji, now the borders are back open, is off the cards.
People don’t need statistics to tell them what they experience every day, but they show what we know to be true. Inflation increased by 7.2 per cent in the past year, but the average wage after tax grew by just 6.2 per cent. One of the reasons why wages after tax didn’t keep up with inflation in 2022 is because the Government is taxing more.
The Food Price Index alone shows the largest annual increase in food prices in 34 years. The humble cabbage increased a whopping 61 per cent, and kiwifruit even more.
I’m hearing from Kiwis that it’s harder than ever to make ends meet. Photo / 123rf
Inflation is too much money chasing after too few goods.
There needs to be a reduction in Government spending or Kiwis will continue to bear the brunt of price rises. That’s what Act has been calling on the Government to do ever since we coined the term “cost of living crisis” back in 2021.
The Government’s argument against this is normally along the lines of ‘but we can’t cut funding because that will mean fewer frontline services, fewer teachers, fewer police, fewer nurses’. This is wrong: $7.2 billion worth of savings without a single cut to frontline services are laid out in Act’s Alternative Budget. But here are just a few examples of why the Government’s argument is so wrong.
MBIE had 520 managers being paid $70.9 million when Labour took office. Fast-forward to November 2022, and there were 930 managers paid $138.5mm. Their excuse for all these new managers? “The Covid-19 response and management of 32 Managed Isolation and Quarantine (MIQ) facilities contributed to increased staffing levels.” MIQ wound down a year ago - the bureaucrats are still lapping up their salaries from the taxpayer trough, though.
In the same time period, Oranga Tamariki increased the number of managers it employs from 54 to 84, with an average salary of over $200,000. While these managers were creating it, community social workers on the frontline had to threaten strike action last year for pay equity.
Kāinga Ora blows them all out of the water, though. They hired an additional 275 managers between June 2020 and November 2022. Managerial salaries have gone from $58,351,708 in 2020 to $103,695,178 annually in 2022. The average salary is around $175,000.
That’s an awful lot of taxpayer money for an organisation that is competing in the market against private developers and first-home buyers, bidding up the price of land and homes while selling off its own. These increases occurred at the same time Kiwi families and small businesses were having to cut costs to put food on the table and keep the lights on.
I have no doubt that other departments have been doing the exact same thing. This is why inflation is showing no sign of letting up - the Government is spending beyond its means.
This is why Act is proposing to zero-base Government. How many of these extra managers are even performing a public service? Many of them are likely zombie bureaucrats who just carry on collecting a pay cheque.
Even just taking the number of bureaucrats back to 2017 levels would save over $1.2b. Fewer administrators who make work for themselves competing with the private sector (e.g. Kāinga Ora) or dreaming up new bureaucracy to make life harder for workers (e.g. the Ministry of Education).
That’s just the start. We need to cut wasteful spending, and there’s plenty of it to go.
It is getting harder to make ends meet. As households tighten their belts in the face of mortgage and rent increases, it’s time for the Government to do the same.
Brooke van Velden is the deputy leader of the Act Party.
