Cash boosts to provide relief from July 1 - will you benefit?

flailing budgets. Today on the Front Page will be joined by Infometrics Chief executive Brad Olsen to discuss the ongoing struggle with the cost of living and how these changes

might help. But first let's go through what those changes exactly are new and expect parents are the big winners with the maximum weekly rate for paid parental leave will increase from seven hundred and twelve dollars seventeen to seven hundred and fifty four dollars eighty seven gross per week, and families will be able to receive early childhood education tax credits up to seventy five dollars a week. Some relief is on the way for residents in the country's

biggest city. The Auckland regional fuel tax scheme that has been in place since the first of July twenty eighteen, is due to end after five years. From July first, the extra tax of eleven point five cents per liter on petro and diesel will be gone. That means the driver of a Toyota high Lux will save around nine dollars twenty every time they fill up, while a Toyota Corolla driver will save around five dollars seventy five. Those

with residential investment properties are also due to benefit. The government has reduced the bright line test to two years for all properties after the previous government increased it to ten years. The change means people who sell residential investment property within two years of purchasing it will have to pay tax on any gains received. If you sell it after three years, though you won't be taxed. The Earthquake Commission's Disputes Resolution Scheme will also begin on July first.

This is an independent process for people who want to dispute the outcome of a natural hazard insurance claim. Bad news for hikers. From July first, great walk, hut and campsite prices will increase by eighteen percent, except for Paparoa, which will increase by six percent. July first also marks the start of the ratings year for many councils, when

homeowners can expect rates increases to come into effect. Many of these are still to be ratified at the time of recording, but in Auckland councilors endorsed a six point eight percent increase this year, while water and wastewater prices will increase by seven point two percent. In Wellington they're looking at a sixteen point four percent increase for the next year, while christ Church City Council is looking at a nine point nine to five percent increase. So how

will this impact the cost of living? We're joined now by Infometrics Chief executive and economist Brad Olson. Brad looking at the changes for ECE and parental leave for instance. How important is it to provide support for parents at times like this?

and similar to make sure they get paid need. But it does also provide an opportunity for them to get some of that funding, some of that money so they can afford some of those higher costs. Increasing the likes of parental leave and the payment levels for that also important because life is getting more expensive. We don't want to be overly or unduly penalizing people who are becoming parents.

We know that it's difficult enough to raise a kid financially, and we know that fewer and fewer people are doing it and having fewer kids over time. That creates sort of a demographic shift, and so we've got to provide every support we can to those who are adding to the future population and ensuring that not only are they adding to society, but they're also adding to the future workforce.

having kids. It's also that to afford a house you might have to have both parents who are working again. That is and is as conducive to having kids as it was before. But there's so many other things out there, you know, the likes of the climate that's changing, the risk of geopolitical unrest and what have you, and everyone's increasingly busier over time. So there's a lot of different reasons.

But it also means that although it's difficult and often not the right thing to do to try and incentivize people to have kids, you equally don't want to disincentivize and create a barrier to do it. So those sorts of policies payp rental, leave, the likes of early childhood support, they are important to at least provide some support through the households at a time when costs are high.

having fewer kids per person. Some people aren't having any kids at all, and so you know, you want a replacement rate of two point one kids on average, and you're getting I think it's something like one point six on the latest figures. Parts of the world are seeing even lower numbers. So we do have to be I think conscious about it. And it does suggest that, yeah, we need to think about innovation over time, the likes of you know, using AI and technology. It's not going

to place everything. But unless we do something about it, unless we ensure that we've got you know, the up and coming generation who are well equipped with skills, we could find ourselves where people need to work sort of three jobs to try and go through all the work that we've got at the moment, because we simply won't have a growing population of workers, will have a growing population of retirees.

failure or for less success than before. But we've got to sort of support more broadly what's happening out there the economy. I think, you know, the work that the government's done around the likes of the independent to earn a tax credit and ensuring that sort of lowest middle income group who might not have that wider family or not have working for families tax credits for example, that they are supported.

can sell it without definitely having to pay tax. There'll be a question I think out there for a lot of people who might want to move houses a bit quicker over sure I might be able to do it without incurring a tax fee, Do I still make enough money and is that still an option for me? We've seen that property investors haven't been as active in the

market in the last wee while. Alongside the fact that you're going to have the changes to the brightline test coming through, you've also, of course already seen some of the changes through from interested auctibility and the Reserve bankers

introducing debt to income limits. As we go through the year and into next year, all of that probably suggests that there's maybe a bit of an upside for house sales and housing activity, but not a huge amount, just because there's a bit of a natural cap with those higher interest rates, with all the other movements in the market, and the pressure that households are under, and the fact that look, even with interested auctibility, even if you're not

having to pay tax from brightline, you're still if you're an investor having to pour a couple hundred dollars a week into a new investment property, you're not making many capital gains. So it's not a game changer. It might shift things at the margin.

are taking on board. Over time, it will also mean in general terms that you're starting to get a bit more affordability for buyers coming through. Let's be clear, it's still very expensive out there for people that are still spending a high proportion of their income in the sort of probably high forty percent still to service a first

year mortgage if they're buying. But with a lot more people selling houses at the moment, and still not that many buyers available just because they can't get a mortgage given the high interest rates as easily, it means that the smaller pool of buyers that are out there, they have a lot more choice, They've got a lot more ability to bargain and drive those prices down. Like you've been saying, house prices have been falling because there's more competition.

I think that's a good thing, but it also suggests that over time we've still just need to build more houses to increase supply. And I actually pretty heartened that the Housing Minister christ Bishop has said actually he does want house prices to fall. Often we don't have politicians being quite as straight up as they need to be. He's put a pretty clear line in the sand they need to go down.

But it's also because we've underinvested and we've underpaid effectively over time for our infrastructure. That means that you know, we've seen some pretty big cost increases in recent years. We've seen quite clearly the last couple of weeks why we need to have more money going into infrastructure. That's what's driving those rates increases. We did some of our asisidinfmetrics earlier this year showing that the cost of building a bridge is up thirty eight percent over the last

three years. Putting in water pipes and roads and similar up about twenty seven thirty percent over the last couple of years. It's those big increases. It's costing more, we're needing to do more infrastructure. That's meaning those rates rises are up. So there is a difficult balance here for the community. On one hand, it is a struggle to pay for and it's difficult to figure out how you

get that money. Equally, don't get it and you could see a number of our critical network infrastructure pieces fall down around our ears. That's not an outcome anyone wants.

high and still causing some big pressure for households. It's also that that four percent comes on top of of course bigger increases the last couple of years, So we might be seeing less intense pressure now, but there is still that build up effect that households are being hit with. I think the encouragement that we're seeing at the moment is that some of those much more volatile cost increases that had been a lot larger have now settled back. The likes of food price inflation at its lowest in

five years on the most recent numbers. That's encouraging because it suggests that again you're not sort of getting both barrels from every single direction when it comes to household cost pressures. But there are still a number of thorny, sticky arts of inflation, the likes of rents, the likes of energy costs, the likes of insurance, and also local

government rates are still at a much higher clip. They're still keeping that pressure on and so for households they might not be seeing as fast as an increase, but in general prices are still going up and that makes life increasingly difficult. Inflation is still too high. It's four percent, but the bands meant to be one to three percent, and once inflation gets into the artery of the economy, it's,

as we're discovering, very hard to get out. The one silver lining is that wages are also continuing to remain at a growing pace. That means that a lot of households are probably able to match things up. But then you bring in on top of that the interest rate increases. That's the challenge for a lot of households is how they pay for all of those high costs across the board. It is challenging for a lot of people.

couple of years now because it is so important. So yeah, it's definitely something we notice. It is interesting though, that some studies do show and this is one of the reasons that we have a two percent inflation target rather than a zero percent inflation target. Humans we notice price increases a lot more than we notice decreases. You know, you'll talk to people out the increasing price of cheese in that when you know you're over at someone's house.

You don't often say, oh, geez, I noticed all these things going down in price, because we take them and we lock them in as a wind. But we mow and then winge a lot about the increases totally fairly. But we notice them a lot more because of that.

you know, what they can buy. What is interesting is that we've still seen that sort of shift where households are increasingly looking for how they make their dollar go as far as possible. Are they still buying more expensive cuts of steak or are they going to that sort of cheaper mince option. There does seem to be a

bit of a shift towards that cheaper option. Quite understandably, I think for a lot of households, though, they're also thinking about, you know, the nutrition that they're trying to get in, but trying to balance that out against the cost. So increasingly we are seeing produce that is coming back into line with more normal seasonal prices rather than some of the really insane higher prices you saw in recent years.

That's a good news story a balance though for our primary sector, you've seen some cheaper cuts of meat coming through in recent times. You go back a couple of months, lamb was quite a bit cheaper. Great if you're trying to put together some lamb chops for the family, But of course the person on the farm who's selling the lamb not making quite as much money, and so that's a bit of pressure on the other side of the economic equation.

pretty good position. They might save some of that money, particularly if they're sort of worried about the future or they already have done it. A fair bit of spending overall. We're expecting that, of course, compared to any other time or normal times, the likes of those tax cuts will be increasing spending relatively speaking, it's just because those higher

interest rates. Overall spending is still going to be dragged down because of how much that hit households in So it'll provide a little bit of extra relief at a time when the pressure is still on and so that pain is still going to be felt.