National’s coalition agreement with New Zealand First committed to “moderate increases to the minimum wage every year” while the Act Party campaigned on freezing the minimum wage. Cabinet's decision to increase the minimum wage less than inflation effectively lowers the base rate in inflation adjusted terms. “I believe such a rate is appropriate given the current economic conditions and the historically large increases to the minimum wage (relative to inflation) that have distorted relativities”. In a 2023 review of the minimum wage, which informed the Cabinet decision, MBIE said the wage “would likely” need to be at $23.60 or higher to “approximately maintain the current real-value of the minimum wage”. Van Velden said a new minimum wage would be set every year but “not necessarily at the rate of inflation”.
