- By Parmjeet Parmar, Pakuranga-based ACT List MP
Taking a taxi recently, I got talking with the driver.
He told me about the business he used to run, before he had to close it permanently due to the impacts of Covid-19 restrictions.
Not long before the pandemic, he’d bought a house. He ended up in a position of real hardship, having to service a mortgage on a fraction of his previous income, while the cost of living and interest rates crept up.
The financial strain put pressure on his relationship as the couple picked at each other’s spending habits, to the point where they decided to separate.
Sadly, I know this isn’t the only such case. At a public meeting a real estate agent told me he is seeing a lot more properties coming up for sale due to relationship issues.
The cost of living has ranked as New Zealanders’ highest concern for a number of years now. The good news is that, while times are still tough, we are starting to see early signs of improvement.
Inflation, which was driven by Government spending blowouts during Covid both in New Zealand and internationally, has dropped to 3.3 percent. That’s almost back to the ‘normal’ range of 1-3 percent.
Lower inflation is the result of sensible spending sacrifices from New Zealand households. And with the change in Government, Wellington is doing its part to rein in its spending too.
Of course, lower inflation alone does not mean greater affordability, but it does mean the Reserve Bank has confidence to cut interest rates.
This month’s cut to the OCR has already translated to lower loan rates, and as mortgages come up for renewal families will have more money left to pay power bills, buy groceries, or spend with local retailers.
I’m optimistic we will see further interest rate cuts in the coming months and years. Renters will benefit too, because landlords facing lower interest costs means less pressure on rents.
The Government has even delivered modest income tax relief, though ACT argues we should do more to reduce spending on non-essential Government functions so households can keep more of what they earn.
Some of the impacts of Covid-19 and a cost-of-living crisis will be irreversible. But I hope readers will now have greater confidence in their financial future.
That means happier families, and, I hope, happier marriages.
