It’s likely that many of you reading this column fall into what we call the “squeezed middle” of New Zealand. This essentially represents a total household income of around $110,000, made up of middle income earners with a family of two-and-a-bit children(!) on average.
At a time when we’re seeing record high rents, escalating petrol prices and eye-watering costs at the supermarket, Kiwis are now being told to brace ourselves for more pain to come with the average household expected to be $150 per week worse off by the end of the year. Inflation is also pushing everyone into higher tax brackets. Despite this, at time of writing we’re expecting a big Beehive splash out with a record new spend of $6 billion in this year’s Budget.
Unfortunately, there isn’t any much relief for the squeezed middle in prospect. Recent increases to the minimum wage and benefit payments don’t generally apply to this group, so changes like these tend not to make life much better for them. The uber-wealthy are still smooth-sailing, of course, typically being able to structure their affairs in the most tax-efficient way. They possibly won’t even have noticed that we have a cost of living crisis. But for those of you in the squeezed middle it’s all too real and the message from Wellington seems to be that you’ll simply have to struggle on.
On my side of the aisle, we’re saying that’s not good enough. National would adjust the tax brackets for inflation so that Kiwis can keep more of what they earn and receive some desperately needed relief in their pockets. Our initial tax response would put $1,600 back into the average household budget per year and superannuitants would benefit too, with a retired couple receiving around an additional $520. In case you’re wondering, we wouldn’t cut essential services like health, education or the police to deliver these tax cuts, but rather ensure the funding we do invest actually delivers real outcomes for New Zealanders, including the long-suffering and oft-forgotten squeezed middle.
