A raft of new rules, tax requirements and benefit allowances came into force on April 1., writes Catherine McGregor in this excerpt from The Bulletin, The Spinoff’s morning news round-up. To receive The Bulletin in full each weekday, sign up here.
Minimum wage up, but not by much
Of all the changes that came into effect on Monday, the minimum wage increase may be the most controversial. The minimum wage rose from $22.70 to $23.15. That’s a 2% increase, exactly half what the Ministry of Business, Innovation and Employment recommended in its annual review. Workplace relations minister Brooke van Velden says the lower rate will “give our lowest paid workers more money in their pockets, without hindering job growth or imposing unreasonable costs on businesses.” This year’s smaller increase is a rebalancing after years of overly generous rises under the Labour government, she says. Including this year’s rise, the minimum wage has increased 44% since 2018 – around 18 percentage points more than the consumer price index (CPI) for the lowest-income quintile increased during that time, according to Infometrics economist Gareth Kiernan.
Low wage earners going backwards, says Labour
The message from Labour is that the “measly” increase to the minimum wage will send lower-paid workers backwards in real terms. The party’s statement on the subject echoed a tweet thread by CTU economist Craig Renney arguing that the income of a minimum wage worker on full-time hours will fall behind the rate of inflation, even accounting for National’s proposed tax cuts. “They are still $12.15 a week worse off – or $632 a year. And that’s before the loss of things like low-cost public transport or free prescriptions.” Benefits including jobseeker allowance, family tax credit, Best Start tax credit, student allowance and NZ Super all increase as well this week. The change to how main benefits are calculated – from indexed to average wage growth under Labour, to indexed to the CPI now – has been criticised by those on the left who say it’ll leave beneficiaries worse off in the long run. Social development and employment minister Louise Upston defended the move on Q+A, saying the CPI is “directly linked to the real costs that [beneficiaries] face”.
More April 1 changes
A number of other changes came into effect on April 1. With the start of the new tax year, residential property investors will be able to claim 80% of their mortgage interest expenses. While it’s good news for landlords, CoreLogic economist Kelvin Davidson tells RNZ the best tenants can realistically hope for is slower growth in rents. “Maybe some landlords might pass through cost savings to tenants, but there’s just bigger forces at work,” he says. “The research says rents are driven more by supply and demand, and by tenants’ wages, than they are landlords’ costs.” Other changes coming into effect this week are the so-called “app tax” which requires service providers on apps such as Airbnb and Uber to pay GST on all income, pharmacists being permitted to administer vaccines to children under five, and EV users now being obliged to pay road user charges.
How Australia looks after low-wage earners
In Australia, the minimum wage is currently A$23.23, with a new, yet-to-be-determined rate coming into effect on July 1. While the federal government recommends changes to the minimum wage, the rate itself is set by the Fair Work Commission, Australia’s national workplace tribunal. The Labor government is recommending the commission increase the minimum wage in line with inflation – which is around 4%, or an extra A$36 a week before tax. Over the weekend, Stuff’s Federico Magrin reported on another reason for low-wage-earning New Zealanders to eye a move across the ditch: penalty rates. These were scrapped in NZ in the years following 1991’s Employment Contracts Act, but in Australia they’re alive and well. Under most workplace agreements, Saturday workers still earn time-and-a-half, while those who work on Sunday must be paid double time.