How new financial year rules will hit your pay, benefits and household costs

The financial year is coming to an end. It means we'll see a whole bunch of policies and adjustments from April 1st. Everything from crayfish, catch limits, and far-mac funding to changes to the living and minimum wage.

The financial year is coming to an end. It means we'll see a whole bunch of policies and adjustments from April 1st. Everything from crayfish, catch limits, and far-mac funding to changes to the living and minimum wages.

Superinootents, working families, students, and beneficiaries are among those who will receive additional support.

On the law in order front, the government's crackdown on drug drivers is set to ramp up, and power bills are expected to increase after the Commerce Commission agreed to let local lines companies charge households and businesses more a couple of years ago.

Today on the front page, NZ Herald Business Editor at Large, Liam Dan is with us to break down what changes are in the works and what it might mean for you and our economy.

So, Liam, a whole bunch of changes to benefits today. Can you run me through a few of them?

Yeah, classic April 1. The stuff that's been announced over the past year or a few months from the government comes into force. Some of the big ones that are going to get noticed are benefits rising.

So, superinootents are going to see some increases. I think something like married couple would qualify for about $50 a fortnight.

You've got changes to the family tax credit. So, that sees eligible families with one child receive an extra $400 a year.

Families with two children, maybe $720 and three children, $1,050. So, if you've got three kids, it's about $20 a week.

Student allowances, if you're lucky enough to get a student allowance, that's $22 a fortnight and beneficiaries, I guess the way this government is, it's never keen to promote the increases in the benefits.

But a single person over 25 on the job seeker support would get $22 extra a fortnight, a couple with children would receive an extra $40 a fortnight on top of the family tax credit.

Those are some quite big changes for those people that they affect. This is going to be a theme of what we talk about today, but you can bet that's being eaten up by inflation and oil costs right now.

Well, this is something that happens every year, right? Is the government actually, you know, has to do this? Can they take credit for it?

I think in a weird sort of way, they're probably kind of taking credit for not doing as much as they have in the past.

They're doing the bare minimum. Yeah. So, yeah, the government kind of does this every year. The other one that is in there that's a sort of an annual thing is a change to the minimum wage.

So, and so the minimum wage goes up by 2% to 23.95 an hour. That's not a huge increase to a percent. It's below inflation.

So, in a way, I think in terms of this government and Nicola Willis, the finance minister trying to present themselves as very fiscally responsible and not having money to spend, yeah, the credit they're taking is for not splashing out.

And so, this is actually a tighter end of what's been sort of allocated over the past several years. And, yeah, is going to be below the cost of living increases that most people in this bracket are facing.

Well, I saw that when workplace relations minister Brut van Velden actually announced the change to the adult minimum wage. She said, and I quote, the increase aims to help minimum wage workers keep up with the cost of living with inflation projected to remain relatively stable at around 2% from June 2026.

She made this announcement in December. We all know things have changed a little bit since then.

And things are relatively unstable until June 2026. I mean, with this kind of announcement, why does this government make these decisions say like six months out from the minimum wage increase?

It's the budget, the way the creation of law works, you know, it's quite a complicated process. So they will announce a policy plan, then it gets worked through into the sort of legal framework, a legislative framework, and it can take a long time.

It's traditional that April 1, that's where we have April Fools, because that's the day that all new law changes came through. And I guess the joke is that we think politicians are idiots or something like that.

But, you know, so traditionally, you know, it's been a day of pranks and all that sort of stuff, but also traditionally the day that primarily historically tax has changed.

It's the new financial year for a lot of people. Traditionally, it was, it's changed a little bit over time. So, yeah, there's that. I mean, I think that was pretty optimistic to suggest that a 2% increase to the minimum wage was going to keep up with inflation even prior to the around conflict.

We were sitting at about, we were sitting at 3.1. And I think the thing is that that sort of core inflation might be more subdued, you know, like internationally affairs might prior to the war have been looking okay and various things can help reduce that CPI inflation.

But the really, the really tough ones for people on lower wages or lower incomes are that, you know, we've seen food keep rising by about things about 4.6% in the last year. So food, you got to have that.

Let's put oil petrol to one side because that's just an absolute nightmare anyway. But then electricity prices have continued to rise.

And so some of those really basic things that people can't avoid have risen by a lot more than 2 or 3%. And the people who are the poorest, they're the ones who have to spend most of their income on just that survival stuff.

So if you're earning a really great salary, you know, CEO, you know, think about CEOs earning their million dollars and things they can afford to drive whatever because the increase in petrol prices just such a tiny percentage increase based on, you know, relative to their total income.

Well, it's funny you mentioned electricity because power bills are going up from today as well. But we've known about this for a week, but while they.

Yeah, that's this is the regulated part of the power price we pay. So while there's always a lot of focus on the spot prices and whether the lakes are full and how much demand and usage there is.

There is quite a cost component to just moving the energy around the country. And that's where transport comes in and they sort of have that those prices increases are regulated.

So, you know, I think even the Commerce Commission looked at that and said, look, we just have to live with that because that is required for maintenance, for building new distribution line, you know, lines for distributing the power.

And, of course, the, you know, the transpire people inflation just flows through everything. So if they're having to pay workers more or the cost of getting out there to fix a pylon or something has increased that that is part of it.

So this is a, yeah, this is a fully regulated power increase one increase to electricity that we just can't avoid unfortunately.

Yeah, because it went up $10 from April last year and $5 this year and then $5 a year until 2029 and that's to cover all the lines and stuff.

I think we just have to live with it, yeah.

Yeah. Well, the first step in the increase in Kiwi Saver contribution rates takes effect today for all people who don't opt out. Tell me why I shouldn't opt out, Liam.

Yeah, this is a bit more exciting because this to me is sort of more about the long term economic goals that New Zealand has of essentially getting Kiwi's saving more money, having more money at retirement.

And also having more money and more capital in these New Zealand based funds, which can actually be used to do things to invest in infrastructure and all that sort of stuff.

So yeah, like I think Australia's six and six, I think is 12%.

It's getting up to 13.

So they're increasing as well. We are currently, you know, three and three. And so this is a move towards four and four. So they're saying, well, the default rate rises to 3.5.

Now it's tough timing, right? Because it does take that, well, you know, that half a percent out of your pay packet, but you're keeping it is going into a fund.

Which is also, you know, I suppose, worryingly going backwards because of the global turmoil, but if you were thinking, the important way to think about that though is it's now cheaper to buy shares than it was, you know, a month ago.

So actually, you know, the really smart.

Eternal optimistically.

No, no, well, that the smart investors will be looking for bargains right now. And so you have to think long term, but there is that issue that the smart investors probably do have all that.

They have all their cost of living expenses covered. So they can afford to think long term. And so that's the big dilemma. It's a dilemma on a personal level on the household level around saving.

It's a dilemma on a national level for our country because, you know, you could, you sort of lurch from crisis to crisis and paycheck to paycheck.

Or do you just somehow, you got to break the cycle and force yourself to save more so that you get away from lurching from crisis to crisis.

So this is a good step in the, in the right direction. And so of course, if you, you're giving up half a half a percent of pay, but you're getting your employer then has to match that.

So actually, you're gaining, you know, a full percent of your wage or your salary on top of your, your Kiwi savers say, you know, contributions.

That's got to be good. That's, you know, I can't do the math right now. But, you know, someone would, you look at their calculators like unsorted dot organ things and over the span of a worker's life.

That's, that's huge. That's, you know, tens of thousands of dollars extra going to be in your account at the end of end of your working life.

Our government has decided to go for a moderate increase. It is a modest increase, but it's looking at the costs that businesses will be needing to stomach to pay employees more.

We want to acknowledge that employees as well as business have been doing it particularly tough this year.

We want more younger people into more jobs, but we also know young people have been bearing the brunt of new unemployment statistics.

How do we get more young people in jobs? We build business confidence. We allow more businesses to hire someone, but once you start attacking the minimum wage and putting it up and up and up and up, it's really going to change business confidence.

I saw that when the change was announced, though, Treasury said it expected 80% of the employer cost to be met by lower than expected pay rises.

Is that just being quite cynical?

Well, I suppose it's realistic. If you're working for a relatively small business with, you know, just a handful of staff, you don't want them to go to the wall.

They've got to actually be able to, you know, and if they're facing all sorts of costs, then yeah, like you could end up wearing it through a slightly lower pay rise, hopefully a bit of a bit of give and take.

Maybe it's not the full 0.5, you know, it's sort of shared a little, but, you know, basically it's about sort of making that leap because the way salaries work is that once you're, you know, once you've adapted to what your salary is, you don't.

Think about it, like Kiwi Savers, like income tax, you just don't think about it, you get what you get in your pay packet, but so much better than income tax, which, you know, we could say income tax is great because it's for building schools and roads.

But Kiwi Saver is in your balance, it's your account and it's going to be your money eventually or it is there is your money if you ever get into terrible trouble.

And, you know, that sort of thing, or if you could want to use it for a first home, so I think it would be wrong to think of this as having money taken off you.

And if in any way, shape or form, you can afford it, do it.

I appreciate there may be some people who are just struggling and doing it so tough right now that it's pretty hard.

But, you know, it's about breaking that cycle of, you know, getting out of that position where you're living week to week.

Well, 3.5% actually seems, I mean, they could have well done 4 or 4.5, right? Why did they land at 3.5?

Well, I think they're trying to move in a direction, so doing it in increments makes it less painful, but they want to move to 4 and 4.

And then there's, I don't think it's plugged in yet, but there is talk from both major parties of trying to keep going and get up to that 6 and 6, which is closer to Australia over time.

So, you know, I wouldn't be surprised if we see more legislation increasing those contributions over the next 10 years.

And again, it's just the government's sort of the political parties have to hold their nerve as well and not think, oh, this is too tough for employers and people right now, it's going to be unpopular because we have whatever crisis it is.

And, you know, it won't be this crisis in a few years, it'll be something else.

Well, that's presumably why we're still at about 3.5, right? Because of consecutive crises and the government not wanting to rock the boat.

It's also, we have a more generous, like, national super than Australia, for example, in some respects, like they means test, we don't, everybody gets it in New Zealand.

And so, we've tended to rely more on that national super. I mean, all the parties that I'm aware of apart from New Zealand first seem to understand that we can't afford this long term.

And, you know, something will have to change, whether it's putting up the retirement age or means testing the pension.

And so, you know, you can bet that is going to change in the next 10 years or so.

And so, as a counter to that, we want to have New Zealanders with a really good buffer in their Kiwi Saver accounts.

So, you mentioned the adult minimum wage rate increasing by 2% to $23.95 an hour.

Also, the living wage has increased to 29.90 up from 28.95, that's a 3.28% increase.

Tell me, living wage employers have until September 1st to implement these increases. But what is the living wage who makes it up and who buys into it?

Yeah, it's a conceptual thing in a way. It's like, it's kind of like, so it is accredited by the government.

You join the living wage scheme or concept or whatever, and you get your accredited as a living wage employer.

So, there, before you, in order to remain accredited, you have to have to meet these changes.

But you don't have to be a living wage employer. The minimum wage is the minimum wage.

So, in a way, this is kind of like, I'm not going to say that I'm not going to say it, but virtual signaling.

I mean, you know, it's saying we're...

It's like a blue tick, it's like a rainbow tick.

Yeah, yeah, a rainbow tick.

Or getting official health tick on your food product or something like that.

The government's monitoring it.

It is a way for, you know, the upside for employers is it says we're a good employer.

I come and work for us, you know, we look after our people.

And there's a number of big organizations and big corporates that do subscribe to the living wage mantra.

And, yeah, so they will, they'll lift that.

You know, it's pretty good. It's pretty good if you're a kid living at home and you work for one of those places part time.

I've got to say, I know some people know some kids working for bunnings. They get a living wage.

Yeah, so...

Well, and the living wage as well just takes into account it seems in the rise of inflation.

A lot of companies that are looking at the bottom line do not.

Yeah, I mean, I guess, you know, companies will make that choice about what the benefits are for them in terms of morale for workers, for attracting new staff.

All that sort of stuff, I suppose there's some, some sense of ethical choice in there as well.

But, yes, and other companies really, either they just cannot, they think they can't afford it.

Or they are employ, employing a lot of, like I say, a lot of kids and things.

So, you know, you've got your KFC workers and your McDonald's workers and things, starting out on minimum wage.

Tell me about crypto tax. So, there are major changes to New Zealand's crypto tax regime coming in from today,

which will make it effectively impossible for investors to avoid declaring their activity.

So, if I'm out here with my crypto wallet, buying things and stuff, does the government not be able to see what I'm buying?

Well, no, that's the whole point of crypto. So, I'm not claiming to be an expert on this either.

I guess this is based on what's been done as an OECD framework.

So, you know, we're picking up on an international framework, which says it makes it impossible.

I'm just a little bit skeptical about that because the crypto world is all about using this blockchain to avoid detection.

Yeah, I mean, if they're confident enough to say it's impossible, then probably it's very difficult to avoid.

And also, you know, unless you're a really sort of nefarious kind of obscure crypto going under the radar,

the big ones, the bitcoins and the Ethereum and all that sort of stuff, want to be acknowledged and, you know, be above ground and legitimate in countries they're trading.

And so, I imagine that that's part of it.

And so, yeah, just to make it less of a black market type operation.

So, you know, in their search for legitimacy, cryptocurrency is trying to get away from the idea that it's basically just for, you know, illegal activity and stuff outside the eyes of government.

So, I think it's probably a choice to come into the tent by some of the major crypto players.

And yeah, it's been worked out by the OECD.

It's an international thing and hopefully it works in New Zealand too.

Electricity bills are rising nationwide.

Line charges are increasing again from today.

Average households will see a bill increasing by about $5 more every month.

There's no single price increase.

What households will actually see on their power bill will vary a lot depending on where you live, what plan you're on, and what retailer you're with.

As some householders will see a small increase, some will see a large increase.

Some are going to be hit by an extra $20 a month times that by 12.

And see if you can afford that right now.

And also from today, Liam, there'll be new border clearance levies for all commercial shipments entering or leaving New Zealand.

It might mean shopping in New Zealand on online platforms like Teemo or something may become a bit more expensive.

And why is that?

Yeah, well, the official reason for it is just that we were more and more of this happening.

So the logistics of handling all this stuff and processing it by customs is getting harder and it becomes a bigger operation.

And so this is to cover the costs.

Okay, fair enough.

A potential upside, though, and I guess local retailers, bricks and mortar retailers or people within New Zealand are very, you know, aware that of the sort of loss of income to the likes of Teemo, Amazon, and so on.

But if it actually balances things a little bit, I don't think it's, it's not specifically aimed at doing that.

But it may just help balance up some of the pricing differential people might look a bit more closely at a local competitor or just going down to their local shops.

But I guess, you know, it's just we see the larger, larger chunk of retail is going through these international operations.

And it's not, you know, it's hard to, it can be quite hard to see and pick up how much is happening as well.

If it's not being accounted for by, you know, customs at the border, we don't see it in the electronic cards transaction data.

So we don't see, you know, there's a big chunk of stuff.

We're not seeing how much Kiwis are spending.

And it's money that leaves the country, you know, one way or the other.

And it's handled inside and you know, help boost our retail sector and all that sort of stuff.

Yeah. And I suppose Teemo is the one that we talk about the most when it comes to these border changes because it looks like goods worth $1,000 or less will attract charges of $2.21 for air freight.

$2.9 for sea freight, while inward international mail will be $1.28 per kilo.

Basically, if you're buying a $2 potato peeler from Teemo, because it's $2, it's now got doubling in price.

Yes. And look, if someone in an office somewhere has to process something related to that, even if it's just pushing a button, just the sheer volume of it, you can understand why there's a cost aspect.

Yeah, I don't think it's designed to be especially punitive towards what they call low, you know, it's sort of low value exports.

It's aimed at individuals buying and stuff directly, rather than people buying goods to on sale in New Zealand.

And lastly, Liam, I understand that the government's coming up with an announcement to alleviate cost of living pressures.

And lastly, giving cat owners $50 a week to spend it locally in their local pet stop or animates. What do you think of that?

I'm just looking at the time. You know there's a thing.

Is there April Fool's face to finish at 12.

Oh, well, yeah. It sounds quite good. I mean, as a cat owner, yeah, yeah.

Why not? Well, I mean, when it's probably like if you're talking about economic incentives, more cats, there's a native birds thing.

It's very controversial. Thanks for joining us, Liam.

Cheers.

That's it for this episode of The Front Page.

You can read more about today's stories and extensive news coverage at NZherald.co.nz.

The Front Page is hosted and produced by me, Chelsea Daniels.

Kane Dickie is our studio operator, Richard Martin, our producer and editor, and our executive producer is Jane Yee.

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