While Christopher Luxon considers new taxes to fund infrastructure, here's what's happening to the money Kiwis actually earn: total wages and salaries hit $22.5 billion in 2024, up from $21.8 billion the year before. (Source: Stats NZ (LEED), taxable-income-sources)

Sounds good, right? Record highs. More money flowing through the economy. Except there's a problem: those are nominal figures. They don't account for the fact that your dollar buys a hell of a lot less than it did in 2019.

Since 2019, New Zealand has seen inflation of roughly 20-25%. That means the 'growth' in wages isn't growth at all — it's erosion disguised as progress. A worker earning the same nominal wage as five years ago has effectively taken a 20% pay cut.

The numbers tell the story. Back in 2020, total wages sat at $21.0 billion. Fast-forward to 2024, and we're at $22.5 billion — a 7.2% increase in nominal terms. But adjust for inflation, and we've gone backwards by around 13-18%. The 'record high' is a mirage.

This matters because it explains the squeeze everyone's feeling but the headlines aren't capturing. Your grocery bill is up. Your power bill is up. Your rent is up. And your payslip? It might show a bigger number than it did in 2020, but it buys you less food, less electricity, less housing.

The government is talking about bed taxes and infrastructure funding. Fair enough. But the real fiscal crisis is happening in household budgets, where wages that look fine on paper are failing to cover the basics. When total wages grow by 7% but the cost of living grows by 25%, you don't have an economy in recovery — you have an economy where workers are subsidising everything else with their declining purchasing power.

Here's the other thing the data shows: we're not bouncing back. The 2021 figure was $20.6 billion — lower than 2020, even in nominal terms. We dipped, then clawed our way back up, but never fast enough to outrun inflation. Every year since 2020 has been a game of catch-up, and we're still losing.

So yes, wages hit a record high. But records don't pay the rent. Purchasing power does. And right now, most Kiwi workers have less of it than they did five years ago, no matter what the headline number says.