'I just don't know where it's gone': How Kiwis are cutting back to make ends meet as cost of living soars

Friday, 25 March 2022

New Zealanders tighten their belts as increasing grocery, petrol and housing costs create a perfect storm.

Catastrophic. Dire. Disastrous.

There’s no pulling punches in talk around the rising cost of living in Aotearoa.

Putting food on the table, filling your car, keeping a roof over your head – life has become a struggle for many Kiwis.

And those bearing the brunt of this perfect storm of rising living costs, a pandemic and a war in Europe? Many of them are working in our hospitals, our supermarkets, our care homes – the critical workers who held the country together on the frontline during Covid lockdowns.

* Wellington - through the City Mission - gives more than 7500 toys to kids this Christmas

* Call for $22.75 minimum wage to reward essential workers

Economist Shamubeel Eaqub says places like Wellington are not going to thrive if we don’t have all parts of society being able to participate in life.

First, some numbers might help paint a picture: Annual food prices rose 6.8 percent in February compared with the same time last year - the biggest annual increase in more than ten years, according to Stats NZ. The Russian invasion of Ukraine sent petrol prices soaring above $3 a litre. Housing costs are “through the roof”. The ASB has worked out all the increases will add $150 per week, on average, to household living costs this year.

People who never considered themselves to be at risk or vulnerable are having to use food charities to feed their families.

The past few years have highlighted that there are people we describe as critical workers but that we pay an absolute minimum, says economist Shamubeel Eaqub.

While we have relied on them to keep us going, feed us and look after us when we are sick, their incomes are still low while their living costs have increased – particularly things you can’t avoid – food and housing and fuel, he says.

“Those are things everyone needs and when you have very limited headroom in your budget it’s very hard to absorb.”

We say that we think those workers are important but in reality we don’t value them, says Eaqub, of Sense Partners.

“There’s a difference between the talk and the action.

“We have seen this in our care workers – aged care in particular – who, through Covid, had to work exceptionally hard. Are they earning a lot more as a result of exceptional care they provided through that very challenging period? The answer is no.

Jon Duffy, Consumer NZ chief executive, says it’s a real concern when people on fixed incomes can’t meet their basic needs.

“We are still trying to screw over our nurses who are literally holding together our health system. There is this big disconnect.”

Eaqub feels for the renters. The increase in house prices and the reduction of interest rates have really benefited the half of New Zealanders who own homes but not the other half that rents, he says.

And the cost of housing in Wellington has gone through the roof, he adds.

“There are places where there used to be refuges for blue collar workers, essential workers in Wellington. But not any more. Who is going to fight their corner? Which district? Which mayor? Which local government? Because our central government isn’t at the moment.

“Places like Wellington are not going to thrive if we don’t have all parts of society living close by being able to participate in life.”

There are a lot of people who wouldn’t have considered themselves vulnerable who are now finding it tough to make ends meet, according to Consumer NZ.

People are economising at the supermarket, so they can fill the car up at today’s price knowing it’s going to go up tomorrow, essentially hedging, says Consumer’s chief executive Jon Duffy.

Wellington City Missioner Murray Edridge says the rising cost of living for the people he serves is “catastrophic”.

“Something has to give. When you have retirees not turning the heater on through winter because they can’t afford the power bill, that is a real concern for us as a society.”

A Consumer NZ survey last year revealed Kiwis were going into debt just to get the essentials. It was more commonplace for people to use credit as a buffer. Nearly half of New Zealanders reported they now have debt they’re unable to manage.

The rising cost of living in Aotearoa is “dire”. That’s Arthur Grimes, senior fellow at Motu Research and professor in public policy at Victoria University’s School of Government.

He lays blame at the front door of the Reserve Bank and its monetary policy stance of the past few years.

There’s no reason why a country should have to have a six per cent inflation rate, he says.

“For people on limited means, benefits, low wages or those whose wages are not going up at 6 per cent or more, they are going backwards pretty fast.”

For many New Zealanders, the rising cost of living is an inconvenience – our money just doesn’t go as far as it used to.

For people who are living day to day, or even hour to hour, who don’t have any capacity to respond to the extras – the dentist, a visit to the doctor, something for the kids’ schooling – this is the difference between just surviving and not surviving at all, says Wellington City Missioner Murray Edridge.

“The cost of living changes we are seeing, particularly in food and household goods, is enormous for people. It’s catastrophic. It’s a disaster!

“I really worry about the impact on people who are not surviving or just getting by – those people spending upwards of 60-70 per cent of their household income on housing.”

City Mission usually provides 80 families a week with groceries. Since Omicron took hold that has ballooned.

On just one day – March 11 – they supported 84 families – that’s 250 parcels of food in one day. This is a snapshot of a worsening situation, says Edridge.

On top of support from supermarkets, corporates and donations, the City Mission is spending $4000 a day on procuring food to supply their social supermarket in Newtown.

Edridge says they are seeing people who have never been near the City Mission before and never thought they would have to be knocking on its doors.

Hannah Pilcher is an early childhood teacher, but the high cost of food and rent combined with a low salary means she can barely save for her life goals, she says.

“There are people who have lost their job or lost hours because of Covid. There are those for whom life has just got too hard to make ends meet. The situation is very real.”

There’s a lot of whakamā (shame) in the fact you can’t provide for your family, he says.

“People are making horrible choices: ‘do I pay the power bill or do I feed the kids today?’

People are approaching support services for the first time, many of whom have had their hours reduced because of hours where Covid has attacked income as well as outgoings, says Jake Lilley, senior policy advisor at Fincap, an organisation supporting New Zealand’s free financial mentoring services.

Their phone line MoneyTalks, which guides people to mentors and other services like food banks, has had three times the number calls since June 2021.

People who have accessed support for the first time have been shocked at how difficult the systems are to navigate and realise they have had some prejudice against people who have had to work through the benefit system, says Lilley.

Hannah Pilcher, 24, early childhood teacher

Hannah Pilcher loves the “sweet little moments” of teaching just as much as its big challenges and rewards.

But the high cost of living in Wellington, combined with the low salary she receives, threatens the dreams she has for her life – forcing her to question how long she can last in her chosen career.

Pilcher, 24, teaches children between the ages of six months to 5 years-old at Capital Kids Co-operative. She earns $53,544.00.

In Wellington, that means she is living week-to-week, with barely any chance to save, she says.

Richard Warwick is putting some of his favoured items back on the shelf, as he becomes increasingly concerned about the rising cost of living.

Rent in a decent-ish flat is $500 per fortnight, petrol up to $150 a fortnight, and food, which she has the most control over, is between $80 to $100 per week for herself.

“I’m constantly dipping in and out of my savings if I have something I need to fork out for - whether that be a friend’s birthday, or a car repair, something will have to give the following week.”

While she would like to get a haircut, or enjoy the capital’s restaurants once in a while, she often can’t justify these things to herself.

But it’s the sense of insecurity clouding the future that pervades daily life.

Like a lot of young people, she wants to travel overseas, hoping to own a home and have a family one day.

“Buying a house is not even something I dwell on, it’s too depressing to think about how far out of reach that is, especially if I stay in the work I’m doing.

“And if I get a house, does that mean I will have to delay having children? They are expensive too…it would be nice to have a sense of security in the future, but I don’t think a lot of people feel that at the moment.” – Ellen O’Dwyer

Richard Warwick, 58, sales representative for a firm supplying fresh produce to supermarkets and restaurants

Smoked salmon and cheese are increasingly off the menu for Richard Warwick.

The impact of the rising cost of living is obvious on many of the food items he prefers.

Having recently paid off the mortgage and having a company car is a big plus but Warwick says he has noticed that everything from salmon to insurance, and the cost of electricity, is rising.

The Petone resident suffered a brain bleed at 16, which left him partly paralysed. He had to undergo years of physiotherapy to get back on his feet and he is now health conscious.

Sean Mintey, recycling collector for Waste Management, is struggling with the rising costs of petrol and groceries.

He and his wife, Antoinette, prefer to eat healthy food and Warwick, who does the shopping, has previously been happy to pay a premium for quality.

'We like to eat salmon with avocado and lettuce in summer.'

Although he acknowledges that not everyone can afford salmon, he says that seeing it go from $13 to $18, has had him putting it back on the shelf.

His favourite cheese has also gone up significantly and rather than go for premium brands, he is increasingly buying store brands.

'I am picking up things and I am putting them down, and thinking 'I am not prepared to pay that'.'

Having seen cabbages sell for $9, he says he feels for low income families and understands why they cannot afford to eat fruit and vegetables.

Mykie Sagar (Ngati Toa) is a practice nurse with Ora Toa Health Services in Porirua. She lives near Takapuwahia Marae with her husband and 14-year-old son. Her son's school, Mana College, offers free lunches but has been closed for a fortnight due to Covid-19 which she says is putting more pressure on food bills.

'I can see why people buy $5 pizzas out of the freezer.'

Talk of the cost of living rising $150 a week, for households, concerns him and Warwick is worried about the impact it could have on his five adult children. – Nicholas Boyack

Sean Mintey, 49, recycling collector at Waste Management

Sean Mintey collects commercial plastic recycling for Waste Management. Every morning at 2am he drives to Seaview to pick up his recycling truck, before going wherever he needs to collect recycling, ending up in the city about 12pm. He is a critical worker and has worked during all lockdowns. “I get in and try to do my job, no matter what.”

Mintey’s life is getting tougher with prices on the rise.

He rents a home in Petone, but said his landlord has been pretty good about not putting the rent up. Groceries, petrol, and power prices affected him the most.

“The cost of living has gone crazy,” he said. “Forty bucks used to be half a tank of petrol, now it’s not even a quarter.”

He said he understood why imported products would be more expensive with Covid closing borders, but was outraged that the price of products made in New Zealand like butter were also on the rise. “We’re paying more than people overseas for New Zealand-made food,” he said.

“We have no control over it. I watch inflation going up thinking: damn. You get used to it because there’s nothing else you can do.” – Erin Gourley

Mykie Sagar, 37, registered nurse at Ora Toa

Truckie, Pat Milo, says his family has had to cut back on luxuries like cigarettes. He's also more conscious of using his car, electing most of the time to walk to the supermarket.

After two years of lockdowns, Porirua nurse Mykie Sagar thought she’d be better off.

“I thought with all the extra work we’ve had that I would have a small fortune somewhere. But I don't, I just don't know where it's gone.”

Sagar works as a practice nurse for Ora Toa Health Services, the primary health organisation attached to her iwi, Ngāti Toa.

Despite picking up a few extra shifts a month, the extra cash isn’t making it into a rainy day fund, she said.

“I can pre-plan all my bills and still have what I have left over, but there's a lot of things that pop up during Covid. It seems like we’ve been needing rainy day funds more than usual.”

Sagar lives near Takapūwāhia Marae with her 14-year-old Wangi Sagar and husband, Taff Ngātai. Wangi normally gets free lunches through Mana College, but the school had been closed on and off throughout the Omicron outbreak, and he's a growing boy.

“I’m paying for a 14-year-old to eat at home and entertain him, which is also very expensive.”

In an effort to spread out the costs, the wider whānau has started thinking as a unit, Sagar said.

Wellington paramedic Seerah Allison outside a petrol station.

Her mum manages a welfare cupboard - which covers off grocery staples like milk products, cleaning products, rice and flour which is bought in bulk.

“Because I'm the nurse I do the health side, so I make sure we have your liquid paracetamol and just little things like that, so if they were to get under the weather we can manage it at home and wait for a doctor instead of going to after-hours. So just trying to eliminate double handling of things at the moment.” – Rachel Thomas

Pat Milo, 43, Driver for Efficient Moving & Storage

Pat Milo has worked as a truck driver for over 20 years and says times are tougher then they’ve ever been.

Living with his wife and two adult sons in Wainuiomata, he says family’s grocery bill is where they are feeling the pinch the most. Their weekly shop has reached $400 to $500 – two years ago that was at least $100 less.

“It's gone through the roof.”

Everyone in the household works, and he says they’ve managed to maintain a relatively comfortable lifestyle. Despite this, the family has had to cut back on luxuries.

“I’ve had to cut down on smoking. I used to be a pack a day [smoker]. I’ve started smoking rollies – a pouch will last me nearly a week. I don’t drink as much as I used to, either.”

He says things appear to be tight everywhere, with delivery volumes decreasing in recent times. While they might be doing fewer hours, he and his colleagues are still going home each week with a full pay packet, which he is grateful for.

Recent petrol hikes have also had an impact on how he gets his groceries – Milo now often walks to the supermarket.

“I’m more conscious of when I use the car because it’s so expensive. I’d say I’m travelling less.” – Matt Tso

Serah Allison, 44, Paramedic for Wellington Free Ambulance

Serah Allison has worked for Wellington Free Ambulance for more than 20 years and has worked during the lockdowns.

She said while supermarket prices and petrol costs are skyrocketing, housing costs worry her the most.

“Housing costs are massively increasing,” she said.

“Trying to buy a house and rent a house in Wellington is just phenomenally expensive.”

She believed the housing costs crisis could be resolved by taxing those with high incomes, such as a capital gains tax. – Justin Wong