Workers on the average wage will have an extra $15.66 in their pocket each week from Wednesday, when a raft of changes including tax cuts, increases to benefits and superannuation, and a boost to the minimum wage take effect.
From April 1, nearly $2 billion in extra cash will start to flow into taxpayers' pockets as a result of the tax cuts and a 3.4% increase in benefits and superannuation and student allowances.
The minimum wage will also go up by 50c to $12.50 an hour, although critics say the real benefit is minimal - when adjusted for inflation the real gain in income from a year ago is just $3.78 a week.
A hike in Accident Compensation levies will make a small dent in the extra money, but overall the changes leave full-time workers on the minimum wage $24.30 better off a week.
Earners on the average wage of $48,500 will get an extra $15.66 a week and those earning $100,000 will benefit by $18.46.
The tax cuts package is worth just over $1 billion over the next year and will benefit 1.4 to 1.5 million people, according to Treasury estimates.
The tax cuts are a key part of the Government's plan to combat the recession and the message is clear - spend it for the short-term good of the country, or pay off debt for the longer-term good.
Finance Minister Bill English said people could spend it as they chose, but spending it would help "cushion" the country.
"People who have got high levels of debt need to reduce their debt and as a rule, New Zealanders have too much debt.
''But for those who have lower levels of debt, if they spend it, it helps the economy."
However, the shaky jobs market appears to be putting people off spending.
Figures out yesterday confirmed the fourth consecutive quarter of negative growth and showed household spending overall was flat in the last quarter of 2008.
Spending on goods - such as cars, appliances and furniture, food and beverages - was down, despite the injection to incomes from tax cuts last October, drops in interest rates and drops in petrol prices.
Mr English said people did have more money in their pockets, but he believed fears about their job security were driving them to save or pay debt, rather than spend it.
The structure of future tax cuts has been criticised for delivering greater benefits to those on high incomes who are less likely to spend it.
There have also been calls for National not to go ahead with the cuts as it struggles with falling government revenue and tries to control its own spending and keep debt under control.
When asked about future tax cuts - which Prime Minister John Key has refused to confirm will go ahead as planned - Mr English said any changes were considerations for this year's budget and would not comment further.
However, he said May's budget would show it was the effects of the global recession that were having the biggest impact on government revenue - not this year's tax cuts.
"The April 1 tax cuts are important for two reasons: they put cash in peoples' pockets and - along with low interest rates - are cushioning us from a deeper recession.
"They're also important in the long run, because as we come out of this recession, we need an economy where there are better incentives to get ahead and rewards for hard work."
