Fees-free education keeping cost of living down for high-spending households, Stats NZ data shows

New data from Statistics NZ reveals that the highest spending households in New Zealand saw the lowest level of inflation in the September quarter photo / Photograph by Kenny Rodger

The Government's fees-free tertiary education policy is helping to keep the cost of living down for the highest-spending households in the country.

New data from Statistics NZ reveals that the highest-spending households in New Zealand saw the lowest level of inflation in the September quarter.

In other words, their cost of living increased the least when compared to other household demographics – including low income.

One of the factors behind this was the decrease in tertiary education costs resulting from the Government's fees-free first-year policy, Statistics NZ said.

"[This] policy was reflected most in the highest-spending households, who saw the lowest annual inflation (up 1.9 per cent)," Statistics NZ said in a statement.

ACT Leader David Seymour said the data showed the policy primarily benefited those who didn't need government assistance.

"It is a transfer of wealth from hardworking Kiwis to a group of well-off students who would have gone to university anyway and who will earn much more over their working lives," he said.

The Government launched the policy last year. Education Minister Chris Hipkins said at the time he expected 80,000 people to benefit from it.

A spokesperson for the Minister said the Statistics NZ release did not provide sufficient detail to draw conclusions about the distributional impact of fees-free support.

Households with tertiary students tended to have higher expenditures because the parents generally earned more than parents with younger children as they were later in their careers, and the households were also more likely to have multiple income earners," the spokesperson said.

Petrol price impact

Stats NZ consumer prices manager Geraldine Duoba said the biggest contributor to annual inflation for all households in the year to September 2018 was higher petrol prices.

"Middle-spending New Zealanders were hit hardest by rising petrol prices, while the higher-spending households and superannuitants weren't as affected," Duoba said.

According to Ministry of Business, Innovation and Employment figures, between October 2017 and September this year, petrol prices have risen by 39 cents per litre.

The Government has been critical of petrol companies and high margins, and the Commerce Amendment Bill which passed this week will allow a probe into prices.

National Leader Simon Bridges said the rising cost of living, largely due to higher petrol costs and local government rates, was hurting those who could least afford it.

The Statistics NZ data also showed superannuitants faced the highest inflation in the September 2018 quarter (up 1.2 per cent), largely driven by a 5.6 per cent rise in rates.

Of the different household groups measured by Statistics NZ, superannuitants were hit hardest by rates rises, while beneficiaries were affected least.

"As a proportion of their expenditure, superannuitants spend four times as much on local authority rates as beneficiaries," Duoba said.