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The Government has extended its cost of living support - the official announcement, just prior to an expected rise in the June CPI data due on Monday

Public Policy / news
The Government has extended its cost of living support - the official announcement, just prior to an expected rise in the June CPI data due on Monday
rising cost of living
Image sourced from Shutterstock.com

This is an announcement from the Government at 4pm today (Sunday, July 17,2022).


  • Petrol excise duty cut by 25 cents a litre for more than five months until 31 January 2023
  • Road User Charges reduced by the equivalent until 31 January 2023
  • Half price public transport fares extended until 31 January 2023
  • Treasury estimates combined impacts of policy will reduce headline inflation by 0.5 percentage points in the June 2022 quarter.

The Government is providing significant additional cost of living support and is fighting inflation by extending the reductions to fuel excise duty, road user charges and half-price public transport by more than five months until the end of January next year.

The cut to fuel excise reduces the cost of filling up a 40 litre tank of petrol by over $11, and for a 60 litre tank, over $17 and half price public transport sees an average person who pays two $5 fares a day save $25 a week.

“We know that inflation is rising across the world, and cost of living pressures are making it tough for New Zealand right now. High fuel prices, particularly driven by the impact of the Russian invasion of Ukraine, are a global problem affecting households and businesses in New Zealand,” Grant Robertson said. 

“That is why we moved in March to cut fuel excise tax by 25 cents a litre and road user charges by equivalent levels, along with halving public transport fares.

“At the time of the Budget we extended those reductions, and are now extending them again by more than five months until January 31 because we want Kiwis to have some certainty over the coming months in the face of volatile prices at the pump.

“The Treasury’s estimate is that the combined impacts of this policy will reduce headline inflation by 0.5 percentage points in the June 2022 quarter. Even though many commentators are forecasting that inflation will peak in the June quarter, it is likely to stay for some time at levels higher than we have seen in recent years.

“There’s no easy fix for the cost of living, but we’re taking a range of actions to ease the pressure on families. In the case of today’s announcement we know that the rising price of fuel has a direct effect on inflation, and making these changes is a targeted approach to a root cause of the cost of living pressure being faced by Kiwi households.

“We also have the first cost of living payment going out in two weeks’ time. This payment will support an estimated 2.1 million people aged 18 and over for a three month period,” Grant Robertson said.

“The global fuel price crisis is not leaving many untouched so we’re pleased we’re doing what we can to ease pressure on motorists,” Megan Woods said.

Transport Minister Michael Wood said since half price fares were introduced on April 1, public transport use has increased in the three largest centres, Auckland, Wellington and Christchurch.

“We know this makes a real difference for people feeling cost of living pressures, particularly lower income households. Because half price public transport will now be available for all New Zealanders until the end of January, the Community Connect scheme will now start on February 1 next year.

“This will also give more time for local authorities to put in place the systems required to efficiently administer the Community Connect scheme that will give those who have Community Service Cards free public transport.

“Extending the reductions to fuel excise duty and road user charges will also help to reduce the fuel burden on the road transport sector, and in doing so keeping the cost of food and essential goods lower,” Michael Wood said.

Extending the fuel excise and RUC reductions until the end of January is estimated to cost $589 million. This is money that goes directly to the National Land Transport Fund to pay for building and maintaining roads, and funding public transport, walking and cycling initiatives. The cost to extend half price public transport is an estimated $63.1 million.

“In the end of financial year wash up we have identified funding that we can re-prioritise to meet these costs and top up the National Land Transport Fund, in particular from lower than forecast write-offs from the Small Business Cashflow Loan Scheme, and money remaining in the COVID Support Payment allocation,” Grant Robertson said.

Cost of living support to date:

  • Fuel excise reduction of 25 cents per litre until January 31
  • Equivalent reduction in Road User Charges
  • Half price public transport until January 31, and permanently for Community Service Card holders from February 1
  • Temporary cost of living payment of ~$27 per week for people over 18 earning less than $70,000 who do not receive the Winter Energy Payment.
  • Increases to Working for Families, Superannuation, student allowance and main benefits from April 1
  • Working with the supermarket sector so Kiwis are getting a fair price at the checkout
  • Parental leave payments boosted by up to $40 a week
  • Winter Energy Payment providing more than one million New Zealanders with up to $80 extra a month to help with power bills through the colder months
  • Free school lunches for more than 211,000 children
  • Minimum wage increases since 2017 mean fulltime minimum wage workers now earn an extra $218 a week
  • GP visits are cheaper more for than half a million people, including free doctors’ visits for all children under 14
  • Best Start payment providing an extra $65 a week for parents of newborns

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93 Comments

The cynic in me thinks....

That the NZ Government announces this TODAY because they know that the CPI announced tomorrow is going to BE BAD!!!

Very very Bad ( over expectations )

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25

It seems not. Robbo repeatedly stated that the mystery “they” predict both CPI inflation and fuel prices are at/near their peak. So it’s all good Team of 5 Million.

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2

and you believe them? he he he :)

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12

"near their peak" isn't falling, it's what you might say to make people feel better about how high it currently is.

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5

Predictions? I’m picking 8%

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4

7.9%

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5

6.9

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0

6.7%

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0

Nooyice 

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0

7.3

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3

Wish I was wrong, but there you go

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4

Well, if the Reserve Bank had been effective in setting monetary policy we wouldn't be seeing Government try to clean up their mess would we?

First they give Government issues by deploying excessive stimulus ("Path of least regrets") which sent the housing market to the moon just as Government where trying to deploy measures to cool it and now they've lost control of inflation completely ("Transitory inflation"). As an institution the Reserve Bank is really letting New Zealand down. We desperately need monetary police to at least support fiscal policy but right now they are still running stimulatory rates.

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5

Watched it and well……..that’s 20 minutes of my life I’m not getting back. Usual Labour BS, talk at length about what an absolutely fantastic job they are doing, how NZ is doing so much better than other countries, throw in a few more hand outs, avoid the curly questions and boom, thanks for coming. You rock NZ!

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33

Is the only reason they aren't making this a permanent thing so that every few months we can be reminded to be grateful for the scraps we are being thrown? 

It's never going to be rescinded surely, at least not while polling is so close and scary inflation numbers loom. 

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28

All reminiscent of - Let them eat cake - Marie Antoinette 1794 - lets hope the result is the same.

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11

Here’s a fun fact - my great great great grandmother was in the court of Marie Antoinette and managed to escape the guillotine, found her way to London, married a Swiss man on her way

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7

Nice!

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0

Dec 2020, Labour declares that New Zealand has declared a "climate emergency".

Here we are in July 2022 extending fuel subsidies (at nearly 10x the rate of the public transport subsidy), which were rushed in back in March.

If this is how they respond to an "emergency", I hate to think how they are tackling standard run-of-the-mill problems, like governing.

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31

If Jacinda was half the communicator that she is often lauded to be, she would be selling this as an opportunity for NZ to reduce reliance on imported fuels and transitioning to a greener economy. But she isn’t. Because she isn’t a good salesperson and Labour have run out of real solutions.

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16

Let's go with the luxon solution of mass immigration instead.

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11

Don't you give her an excuse to spend our money like there is no tomorrow.
Forget Green economy. Lets survive today.
 

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4

What was she doing at Blackrock recently?

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1

Kazadi,tell us what you think ahe was doing?

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1

I haven't done the maths, but what would the cost of making public transport free during this period be versus the current fuel tax cut?

You don't have to be Einstein to know this move is politics first and foremost - and cutting fuel tax for a bigger number of people will be more popular than a more targeted support - but from a logical perspective (and being in-keeping with the climate emergency theme) would it not make more sense to make public transport free?

This would presumably benefit many lower income earners more than a fuel duty cut anyway, and those who drive would then benefit from reduced congestion on the roads ... all while benefitting the environment more. 

As it stands, the guy who pulled up next to me yesterday in his $250k Audi RS6 is getting to guzzle mucho gas with the support of the taxpayer. 

 

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5

Dumb thoughts,last time I checked,not many goods and service  businesses use public transport to move goods...fuel costs flow through everything we buy or use,hence,some cuts for public transport,some for fuel and RUC's that affect EVERYONE...

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6

A targeted solution then would be reducing the taxes on fleets only, which are usually on corporate fuel cards. The fuel companies could easily discount business customers in order to reduce inflation because of transportation costs.

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1

Not many votes from Corporates.

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2

Sounds an admin nightmare,lots of sole trader small businesses that don't have corporate cards or business accts.

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2

It’s really not hard to get one. If they can’t get one then they probably aren’t at a scale to contribute towards inflation anyway.

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1

KISS

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1

Simple solutions in complex systems produce unintended consequences, which is kind of how we arrived at this point…

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2

Free public transport would cost roughly $300m per year, or 2% of the annual non-means tested superannuation spend.  

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3

I wish the media would challenge the inflation because of Russian invasion assertion more. Sure, it hasn’t helped, but it’s not the reason we’re in this mess right now.

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24

The Russians make a great scapegoat. Imagine how bad the real numbers are without this support. Most of this is going to have to stay in place at least untill the next election and Labour are now praying for inflation to drop.

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19

Carlos,I think every government in the world,left or right is praying for inflation to drop.

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2

Not the really smart ones. Inflation in Israel is running at 2.5% currently as Aljazera reports yesterday.

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5

There are always exceptions... of similar societies,Oz,Britain,USA & Canada,we are comparable.

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3

If that’s the case, Ardern and co are superfluous to needs. Let’s get rid of them and farm out management to one of those countries. We can’t afford this lot. Worst PM and Government in living memory. 

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7

RP,what a stupid arguement for a sovereign nation.

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2

I reckon our govt is praying to the Tree God . In fairness just as productive as any other prayer. 

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3

Don't tell Luxon that paashaas...he has connections with his imaginary friend...

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5

The greatest Labour Prime Minister, Savage, had an imaginary friend too. He was brought up a Catholic and died a Catholic. But during his political years, he was a rationalist. The jokes about Christian faith are unnecessary (in fact, it would invite condemnation if similar jokes were directed towards, say, Tikanga Maori or Islam). I say that as a non-white, non-Christian; so, let’s play the ball, not the man?

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5

We know a lot more about science and the natural world now, Heck, DNA hadn't even been discovered in Savage's time. To hold these beliefs at this point in history shows a lack of critical thinking in my opinion. I really don't want any adult who has an imaginary friend calling the shots for the country.

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2

Us Catholics are pragmatic,we can sin and do all sorts of things during the week,go to confession and start again...unlike the evangelical Upper Room Church which started in Tennessee USA which Luxon belongs to and we know how impartial the American Christian right is in politics.

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0

Esen,So  the NZ Labour govenment is responsible for the global fuel & supply chain costs rises...Prime Minister Ardern is good,but not that good.

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3

I didn’t say that. There are Governments of both red and blue stripes struggling. For example, the Conservatives in the UK are getting hammered too. My point was that Ardern and Robertson, like other politicians, like to blame Russia when these issues were building well before the Ukraine conflict. I’m just asking the media to call them out on that.

At the same time, just because other countries are going through similar issues doesn’t mean that those same issues were inevitable in NZ.

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11

Yep the conservatives do like to get hammered. 

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3

As far as I can remember this is the longest time before an Election that campaigning has started.

Let's see how many votes $589million plus $63.1 million buys

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14

Labour can try and milk this for all it's worth now. Look what we did for you and if National get it they will reverse it all and hit you in the pocket. Brilliant.

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3

Hmmm,me thinks Seymour & Luxon may have already started campaigning with all the promises of reversing Labour policies...

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3

What policies have them promised to reverse - 3 waters perhpas?

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1

3 waters,mortgage deduction,brightline and just about everything according to ACT.

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3

Don't forget the $55M PIJF

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6

Much more than $55m now.

Handouts on offer to those that agree to push the Labour narrative.

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9

Damned if they do...damned if they don't....

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5

You are correct. There seems to be a lot of people here who think shutting down the world for two years should have had no effect.

 

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4

We lose a rugby match and everyone wants the coaches head on a platter. Robbo and Orr mismanage the country resulting in a 7% decrease in everyone's wages...Yet they swan on to the next cocktail party at taxpayers expense.

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21

The problem is that the other guy is even worse. National have even admitted that their response to inflation will be to spend less. Just what we need, even less investment, we are still trying to catch up from their last stint in power. 

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9

I just did a trip up to Northland. Kaitaia and Kaikohe are like villages of the damned. Five years of Labour has been nothing but failure. You can do your whataboutism but swathes of NZ are third world poor while the left elites in Wellington dine at the taxpayer trough. Worst PM and Government in living memory #anyonebutArdern 

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20

RP,latest preferred PM poll...41% Ardern,22% Luxon...

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3

Rex go have a beer! What’s your solution cowboy? 

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6

Worst keyboard warrior in living memory. 

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8

This will help with CPI inflation, quite a lot. 
my money is definitely on inflation being down to 3% by May 2023.

This, along with the house price collapse, will enable the RBNZ to cut the OCR by middle of next year, perhaps 2 or 3 times before the election.

There ya go.

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4

Optimistic.

This debt cycle has a longer time frame than just a few months me thinks.

Plus. Everyone seems intent to blame it on rising energy costs.

What you think petrol will magically get cheaper at source just case labour throws out some crumbs?

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0

Run for the hills… communist state is upon us!

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2

Mr Smith,maybe you should go and spend some time in a real communist state...then you might layoff the hyperbole.

If this was China or Russia,you might be getting a knock on the door after posting anti government opinion...

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2

You have first hand experience with communism?

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1

Yes,have you?

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2

If I was authoritarian for a day I would: 

- restore the fuel tax

- make all public transport free

- change the income tax thresholds so that lower income households that are dependent on car use are assisted (and the thresholds are long overdue for a rest anyway)

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2

I would link the taxbands to inflation and recalc them every year. I would also move  them 50% immediately....but you wont hear a word about this in the election lead up. The lapdog media will alsom ever bring it up.

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2

If you made public transport free in tauranga we still cant use it. It take 60 mins from a major residential hub to the city by bus due to the crap scheduling and routes.. it takes 25 mins by car.

Imagine if they made it all free and its still so crap hardly anyone used it in some places.. would be somewhat embarrasing?

Ps in spain they have made a lot of pub transport free.

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9

Well, maybe if it was free it would be used more and the schedule might be more regular?

Tauranga's transport system is a nightmare, even worse than Auckland's, and that's saying something...

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2

Whilst traffic in Tauranga isn't flash,having spent the last weekend in Auckland  you could not pay me to move back.

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2

No offence but if your 25 min out from the Tauranga CBD in a car your out in the wop wops and it's a wonder there is a bus service.

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0

I think public transport is already considerably cheaper than using a car for everyone, including (and especially for) the poorest of the land (as transport will be a much higher % of their income). Making it even cheaper, is unlikely to have an effect.

Where you would get to your destination quicker using PT, the PT is by far the preferred method of transport. But if you would spend 2 to 4 times more travelling, you have to have absolutely no other options. That may include cutting the money you spend on healthy food, before you ditch your crap, but fast and convenient car.

Fast, reliable PT will be a nightmare in NZ. Given that a city like ChC has 400k of people living in a 1200 KM area , while in Tehran $8.5m live in 720 KM (I am not even going after South and East Asia), even Manchester has 550k people living in area of 116KM. 

Assuming the objective of your response was to reduce people using cars and buying expensive fuel, i doubt that you would have achieved any of that. The experiment so far is the proof. You basically saying that the doze is not enough. If free PT does not work, then we can surely start paying people to get on the bus :) 

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1

Preempting that the CPI announcement will show RBNZ has fallen even further behind on inflation?

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1

Inflation coming in white hot tommorow.

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3

And that's just the official figure.  As with the States, actual experienced inflation could be double....

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0

What a mess. Unbelievably high housing costs (not included in CPI), out of control inflation, a supermarket duopoly, health system in tatters, our taxes not being reset with inflation so they are up in real terms.

And we get a few months discount on fuel tax increase and $30 a week for two months tax back. 

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11

Yep, our country is a shambles, and has been going in that direction for quite some time.

But while house prices were booming, and giving that opiate for the people, many were happy and happy to turn a blind eye to the underlying issues, right?

Bloody awful short termism and self interest in the governance of this country over the past 30 years, whether the blue mob is in charge or the red mob. 

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10

Following in the footsteps of Sri Lanka

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2

Commodity prices have been falling, including crude oil. Important to remember that Chinese demand is falling dramatically. Other countries are better placed than NZ to deal with inflation in the near term. At the end of the day, NZ is its own worst enemy because of the bubble economics mentality. That realization can't come sooner enough. Unfortunately, if the leaders don't admit to it, the sheeple will not pay any attention. 

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2

The sheeple might only pay attention once the whole bubble has come collapsing down.

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1

All these extra handouts are increasing inflation, how can the government not see this?

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3

Yes and No.

In fiscal terms it’s not helping, so yes.

But in terms of CPI inflation, it will likely suppress inflation, so no.

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0

I assume you mean the fuel tax cuts. But what about the cost of living payments?

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1

All these policies are adding to inflation by raising demand in the economy. The government sees this, but it's not the government's job to control inflation so they can readily blame the RB.  The government is just doing what its constituents want. The real question is: why does nobody in the media understand Econ 101 and pick this up...

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1

50 million dollar media fund... 

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3

Woop,Woop, conspiracy theory alert.

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1

The fuel tax cuts and half price public transport. 
The cost of living payments are pretty tokenistic, they won’t fuel much demand in the economy. For most who receive them they will just take a bit of the cost of living pain away.

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0

I'm puzzled why nobody seems to be picking up that policies to lower petrol taxes and raise benefit payments *generate* inflation (by raising aggregate demand). They are doing exactly the opposite of what is intended. Journalists, wake up?

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0

Government has extended fuel tax cut as must have preview to inflation data / number as a result are in a rush to announce it on weekend - Sunday.

The number could be more than 7.1%.

Dole and throwing feebees .....more to come next year being election year and politicians....power...... corruption......

 

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2

Is this the framework under which we're going to glide into a Carbon Zero economy?

Or is that somebody else's problem to solve in the future?

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