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New Zealand voters search for relief from ‘shocking’ living costs as election looms | Cost of living crisis

A weekly treat of takeaway dinner became fortnightly, then monthly. Trips to the movies were cut. So were dentist appointments – and salads.

Over the past six months, Anum Najif, 35, has found every supermarket visit “more difficult than the one before”. Power bills are “shocking”. Rent, she adds, “is that kind of topic where I really don’t know what to do or how to manage it any more”.

With inflation at three-decade highs, and after a long stretch of interest rate hikes, the rising cost of living has become one of the central matters on which New Zealand’s October election will be decided. Angst about food, housing and fuel prices have prompted, in part, slumping poll results for governing Labour – and a scramble among political parties to persuade voters that they could provide relief.

The two major parties have bolstered their traditional positions: Labour promising to fund cost-easing measures – for example, on fruit and vegetables – while centre-right National favours tax cuts for what it calls the “squeezed middle”.

Middle class under pressure

Living costs have become a central issue, analysts say, because they’re vexing a different group of people than they did before. Najif, a mother of two from Lower Hutt – who works an office job supplemented by consulting projects – is typical of the voter that parties are battling to impress: those who are struggling to make ends meet on salaries that once were sufficient.

“Inflation is always a terrible problem particularly for people who are poor,” says Shamubeel Eaqub, an Auckland-based economist. “But over the last couple of years, it’s affected a much larger group of people who previously would have been middle class and are now having to make cuts.”

New Zealand prime minister Chris Hipkins
New Zealand prime minister Chris Hipkins. Pre-election polling shows voters seem ready to punish Labour for the rising cost of living. Photograph: Ben Mckay/EPA

In this month’s Guardian Essential New Zealand political poll, 90% of those surveyed ranked reducing living costs as a somewhat or very important matter – rating it more highly than any other issue. More than half said they were “struggling” or “in seriously difficulty” paying their bills.

Middle-class households, Eaqub says, were typically saving about NZ$100-$150 ($59-$88; £47-71) each week before inflation and interest rate increases. Now, many are facing shortfalls.

“We’re dipping into our savings most weeks at the supermarket checkout,” says Richard Bell, 30, a public servant who lives in Wellington with his wife – a teacher, who is on parental leave – and their three-month-old daughter.

Living costs for the average New Zealand household increased by 7.2% in the 12 months to June, according to Stats NZ. Rises in the past year have been the largest recorded since the late 1980s. The rate of inflation is easing, the agency said this month, but latest figures included a 10.6% increase in grocery food prices, driven by a 5.4% jump in fruit and vegetable costs (a smaller rise than the 21.2% increase recorded in June).

“We’re definitely eating less vegetables,” says Bell. “Now when I go to the supermarket, I’m thinking about whether we really need capsicum in the stir-fry.”

Mortgage stress deepens crisis

While living cost crises are confounding countries around the world, New Zealand’s situation has some distinct features: before the latest inflationary episode, goods such as groceries were already more expensive than in neighbouring Australia, due in part to a supermarket duopoly and the country’s reliance on global supply chains.

After a housing boom that peaked in 2021 – with runaway prices and low interest rates – many New Zealanders found themselves with precariously large mortgages when rates started to climb, and the cost of houses dipped.

The average value of houses was 7.2 times the average income in June, CoreLogic said, with mortgage payments taking a 49% chunk of household income. Both figures were lower than their peaks – but are still unmanageable for many, analysts like Eaqub say. Meanwhile, New Zealand’s median weekly rent reached a new record of NZ$620 in June, according to figures from the commerce site TradeMe.

A view of Queenstown Hill in New Zealand
New Zealand is in the grip of a housing affordability crisis. Photograph: James Allan/The Guardian

Bell, a former youth worker, doubled his income when he moved into the public sector, and he worries about how families with less are coping.

The head of Wellington City Mission, Murray Edridge, told Newshub in May that the demand for its services had tripled. It is “the toughest year that most people have ever seen,” Edridge said.

This week, Labour and National tussled over how quickly the situation was likely to improve. A pre-election economic and fiscal update from the Treasury that defied the worst forecasts was presented by Labour as evidence that pressures were easing: inflation – now at 6%, higher than in comparable countries – is due to return to its target band of 1-3% by the end of next year.

“We have turned that corner,” said Grant Robertson, the finance minister, adding that wage growth would outstrip declining inflation.

But National’s leader, Christopher Luxon, claimed that the figures forecast a “slow, anaemic” plod out of the country’s technical recession.

Meanwhile, making ends meet is still getting harder, says Najif.

“I get paid on Tuesday and I’ll make sure I have enough bread and milk to last me for two weeks because by the start of next week, I’ll be grasping at pennies to get through,” she says.

Her grocery list has changed: apples and bananas are the only fruits she can afford, and muesli bars are gone; the busy sole parent now home-makes every item in her children’s lunch. Red meat for dinner is rare.

Najif has been told her children, aged 10 and 12, need braces, but that’s not an option, she says. The children receive dental checkups at school, but for Najif herself the dentist is “a no-go zone” due to cost. In the past six months, she says, half a dozen friends have moved to Australia, drawn by higher wages and lower rent and food prices.

Pre-election polling has shown voters seem ready to punish Labour – which has governed New Zealand since 2017 – for the current woes. The party has pledged a package of measures, including removing taxes from fresh fruits and vegetables and expanding free dental care to include people aged under 30, adding to other policies announced this year – such as removing charges for prescription medicines.

National, the centre-right opposition, is concentrating on tax cuts. The party would also reduce costs for landlords and employers and cut government spending.

The left-leaning Green party and Te Pāti Māori promised radical tax reforms – funded by a wealth tax – while the libertarian Act party favours abolishing tariffs and regulations to address living costs.

Stock image of fruit at a supermarket
New Zealanders already faced higher prices than some comparable countries for goods such as food. Composite: Ellen Smith/The Guardian

Eaqub, the economist, is critical of the parties’ cost of living platforms. “You’re not going to be able to solve a global inflation problem with local solutions,” he said.

“Do we have a competitive economy, competitive markets, and a competition authority that’s really strong and powerful?

“The answer is we don’t, but that stuff is not sexy and it’s not a vote-winner.”

https://www.theguardian.com/world/2023/sep/16/new-zealand-election-issues-debate-cost-of-living New Zealand voters search for relief from ‘shocking’ living costs as election looms | Cost of living crisis

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