Households hit by rising costs would be worse off under Labour, Prime Minister John Key said today in the wake of a budget that will see GST increase to 15 percent in October.Households also face higher power bills from the Emissions Trading Scheme (ETS),
Households hit by rising costs would be worse off under Labour, Prime Minister John Key said today in the wake of a budget that will see GST increase to 15 percent in October.
Households also face higher power bills from the Emissions Trading Scheme (ETS), on top of increased motor registration fees and higher ACC levies.
Labour MP Charles Chauvel said the ETS would add 5 percent to household power bills from July 1 which would put pressure on some families. He said that increase would be separate to power company hikes.
"This comes at a time of nil wage growth, continuing upwards pressure on those on fixed incomes and forecast inflation of nearly 6 percent."
Presbyterian Support federation chairman Jim Pearce said the GST increase would be a blow to struggling families.
"The Government says this budget is fair for everyone with income tax cuts and compensation for the GST rise for beneficiaries. In reality though those on low incomes have no choice about spending on the essentials like food which will attract higher costs.
"They are struggling now and will still be struggling. It is certainly not a move towards increased fairness for them."
At his post-Cabinet press conference today, Mr Key said the ETS would cost on average an additional $3 per week for households.
"I guess ultimately in terms of the ETS it's around about $3. I guess the question is, is that an appropriate price for a household to pay for the environment, for New Zealand to play its initial early part in trying to tackle climate change?
"To me that feels about right."
Mr Key said households could reduce costs by taking up the Government's home insulation scheme or improving car efficiency.
The economy and households would suffer from a negative impact on New Zealand trade if the Government ignored climate change, he said.
Overall people were better placed under National, he said.
"They are much better off under a National Government, they had a tax cut at the end of 2008 and in 2009. They have a substantial tax cut that will take place this year. We have been controlling inflation by doing a good job taking pressure out of the system. The long-term outlook for inflation is lower than under the previous Labour Government -- we've had 18 months without interest rate hikes. So I think the economic management that the Government is putting in place in the economy is seeing a faster recovery."
Mr Key said while Reserve Bank Governor Alan Bollard may increase interest rates this year that would not be because of the budget and Mr Bollard had said he would ignore any one-off spike caused by the GST increase.
"We saw a 29 percent increase in inflation under the previous Labour Government before there was any hint of a tax cut and the budget documents make it quite clear that the expectations are that incomes will rise at a faster rate than inflation. AKA, in real terms New Zealanders are better off."
