The Cost of Living

The Methodist Alliance working group campaigning to increase benefit levels and abatement thresholds has created a resource that is thought-provoking and will enable you to have a deeper understanding of the issues relating to income security, debt to government and wealth distribution in Aotearoa New Zealand.

You can download a digital copy here. I encourage you to read it, to use it and to share it.

When I was growing up there was much less inequality than there is today. This was because the Social Security Act 1938 ensured that everyone had a right to a reasonable standard of living and this was done through universal welfare benefits. The concept of universal benefits removed the humiliation of receiving charity and handouts. At that time, Aotearoa recognised and supported the concept that sharing wealth and prosperity across society was necessary as it benefited everyone.

Economic and social policies in the 1980s and 1990s changed the fabric of our society and increased inequality. State support was narrowly targeted, benefits were cut, state houses were sold, supports for home ownership were removed, wage bargaining was weakened, lowering wages and increasing workforce casualisation, and many state services were privatised. Investment in health, education and infrastructure was reduced. The negative impact of these policy choices disproportionately impacted vulnerable New Zealanders. Those on higher incomes were able to amass wealth and assets through lower personal and corporate tax rates and the abolition of inheritance tax.

Today, there is a significant difference between the minimum adult wage,[1] the living wage,[2] and the average ordinary hourly earnings.[3]

Hourly wage rate

Minimum adult wage[4]

$22.70 per hour

Living wage[5]

$26.00 per hour

Average ordinary hourly earnings[6]

$37.86 per hour

However, if you are receiving social security, these hourly rates are much lower

Hourly social security rate[7]

Jobseeker - single person without children[8]

$ 9.66 per hour

Jobseeker- sole parent with children[9]

$13.76 per hour

Youth payment - single 16 or 17 year old[10]

$ 8.34 per hour

NZ Superannuation - single living alone[11]

$14.47 per hour

The minimum adult wage is 60 percent of the average ordinary hourly earnings, however, the benefit rates are 22 – 38 percent of this. When the abatement threshold (the amount you can earn before your benefit is cut) was first introduced in 1986, it amounted to 15 hours per week of the minimum adult wage. Today this has dropped to just seven hours of the minimum adult wage.

As a wealthy country, we have enough wealth and resources to ensure that everyone can live with dignity and afford the basic necessities of life. We encourage you to be well informed about what policies the political parties have regarding social security and tax. The resource contains a range of questions for you to reflect on and to assist you in framing questions that are particular to your community to ask candidates in any meetings leading up to the general election.

If you would like more information about how you join the campaign workgroup, please contact me. 03 375 0512 | 027 561 9164 | Carol@MethodistAlliance.org.nz

[1] The minimum adult wage is set by government and reviewed annually

[2] The living wage is independently calculated and provides whānau with the basic necessities of life

[3] The average ordinary hourly earnings is calculated by StatsNZ using the quarterly employment survey

[4] https://www.employment.govt.nz/hours-and-wages/pay/minimum-wage/minimum-wage-rates/

[5] https://www.livingwage.org.nz/

[6] https://www.stats.govt.nz/news/hourly-earnings-rise-7-4-percent/#:~:text=Average%20ordinary%20hourly%20earnings%2C%20as,of%20%242.61%20or%207.4%20percent.

[7] Gross weekly rates used and divided by 40 hours

[8] https://www.workandincome.govt.nz/products/benefit-rates/benefit-rates-april-2023.html

[9] Ibid

[10] Ibid

[11] Ibid