Isn’t this just penalising hard working people?

It depends what you mean by hard working. If the definition of hard working includes owning a house that appreciates in value while you do little to nothing then yes. If the definition of hard working covers people working long hours at minimum wage jobs then absolutely not. The working poor (low paid fully or partially employed) benefit most from these changes, combined with the changes referred to in TOP’s Kiwi Dividend policy.