Finance Minister Nicola Willis says the Government won’t repeat the mistakes of past austerity, despite Treasury downgrading its economic and fiscal forecasts for Budget 2024.
Willis gave her first pre-budget speech, to the Hutt Valley Chamber of Commerce, on Thursday and outlined the Coalition’s approach to the budget.
She said it was the first time in 14 years that the first of these speeches had been held outside of Central Wellington — a deliberate signal that this budget would be a “break from the past”.
It has also been 14 years since the last adjustment to income tax brackets. This budget will change that, despite difficult economic circumstances.
Willis said she was facing “significant downgrades” to the country’s economic growth forecasts.
“You only have to look at the government’s monthly financial statements to see the impact: core Crown revenue has been lower than expected with the corporate tax take significantly lower in recent months,” she said.
Figures released by Treasury on Tuesday showed revenue was $1.6 billion, or roughly 1.6%, below forecast in the nine months ended March.
This means the Government will likely face a deeper deficit than had been expected when it was first elected and first formed its policies in opposition.
Willis said while the forecasts haven’t been finalised yet, each update from Treasury has been worse than the one before it.
“Sadly, I’ve learned to dread what comes out of the forecasters’ mouths when they come into my office. Given this, I certainly don’t expect any windfalls before Budget day”.
Willis said it wouldn’t be a “big-spending” Budget, knowing that Crown finances could get worse before they get better, but she wouldn’t “overreact” to worsening forecasts either.
It will not be “an austerity Budget, of the sort suggested by a few commentators seemingly enthusiastic to see the mistakes of history repeated”.
“Our Government knows how devastating it would be if we were to give up on overdue tax relief, to drastically cut-back on investment and public services, and to downsize our ambitions for growing New Zealand’s economy”.
She reiterated money would be invested in key public services, tax bracket adjustments would make 83% of New Zealanders better off, and that the 7.5% savings target had been reached.
Green Party co-leader, Chloe Swarbrick said Willis was reheating austerity politics and chasing trickle-down economics.
Tax cuts were only “crumbs” that come with fewer public services and higher costs for public transport and prescriptions.
“The Reserve Bank told us in their Financial Stability report that the Government’s tax cuts for landlords will only increase house prices. It’s a $2.9 billion receipt of where their priorities are," Swarbrick said.
At the other end of the political spectrum, the Taxpayers’ Union thought the tax cuts, likely to be about $25 per week, were inadequate for working people.
“Anything less than $49 a week is simply a partial reset, keeping taxes much higher than they were 14 years ago while the Government pockets the rest,” it said in a statement.
Social investment fund
Willis announced she would establish a Social Investment Agency which will help the Government assess the impact of its spending using data and analytics.
The idea behind social investment is to use financial sector-type analysis on social programs to redirect money towards programs achieving the best long-term outcomes.
A Social Investment Fund will be set up, for the new agency to manage, which will be able to directly fund private services that are working with vulnerable New Zealanders from 2025.
This fund will allow the agency to assess which community or charities are having the greatest impact on particular social problems and provide them with direct funding.
This new agency will replace the Social Wellbeing Agency, which itself was a rebranded and repurposed version of a previous National Party program.
It will have $50.5 million in new funding and existing staff will be transferred to the stand-alone entity.
42 Comments
Wasnt it 100% of NZERS better off , or resign?
No, just tax cuts or resign. A pity it wasn't part of the first 100 days garbage.
Hmm, i remember arguing that people using public transport , or with many prescriptions would be worst off under Nationals cuts, so they would have to resign , but maybe I've muddled things up .
People who use public transport worse off. Road transport donors better off.
the coming "independent" decision on ongoing funding for the Te Huia train by Waka Kotahi will be interesting.
Should never have been started, subsidies cost around $1000/passenger pa
Virtue signalling dogma
$1000 per passenger pa, for the 500 odd passengers per day the service can handle.
Meanwhile we spend $20,000 p.a. per person in superannuation "subsidies" to nearly 50,000 over the age of 65 still in employment being paid $100k+ per year.
Any changes to that would likely only affect under 50s. Is that what you want?
I want people to see the bigger picture when they start squabbling about the cost to provide lunches in schools or subsidized public transport.
And yes, as someone who will be affected by that type of change (assuming my circumstances don't change) then I think it's fiscally irresponsible to dish out money like we do to old people regardless of need. It's a nice to have that we cannot afford at the moment.
I wouldn't lose sleep if I couldn't double dip by working and claiming a benefit for reaching the age of 65.
Dan , if you earn over $70k already it's $16k cost net of tax ; over $180k it's $14k net of tax.
Ignoring the productivity beneft of the over 65s still working the pension increases their income and so the tax take possible more if it pushes them into a higher bracket and they have more money to spend and maintain employemtn whilst donating Gst, not a bad result.
@kiwikidsnz Curious as to how you came to that figure?
From a quick google it seems to be performing better than the Auckland rail network on a per passenger/kilometer subsidy basis ($0.73 vs $1).
Also worth noting is the 5-year operating budget for running Te Huia at $23.5m is what it cost to build 1 km of the Waikato expressway.
I'm more worried about the $$ that's about to be pointlessly dumped in RoNS than a railway that's achieving its targets (they are at the farebox recovery target the NZTA set them)
How does Te Huia's subsidy compare to roads? | RNZ News
Two-year review shows Te Huia on track | Waikato Regional Council
Living in North Waikato half way between Auckland and Hamilton I find the express way a lot better value as I am able to access it. Hardly anyone living in Hamilton or Auckland commutes between these two cities, they work where they live. Residents of Tuakau, Mercer and Pokeno commute everyday, the railway passes through these towns but they can't get on the train. If the train stopped in the towns where people want to use it, it would be full every day.
Also: I find it amusing that politicians think going to the Hutt Valley is getting out of Wellington. To the rest of the Country its all the same place. This could be the reason why Politicians in Wellington don't understand that North Waikato residents mainly work in Auckland, but AT don't consider their needs. Why are new developments in Paerata and Drury getting stations before older towns like Tuakau?
Meeting in Pokeno on Sunday to discuss stations for Pokeno , Tuakau and Te Kauwhata. 2.15 at Pokeno hall.
I love Interest.co.nz. I post a rant about lack of joined up thinking in transport policy and immediately a meeting is arranged to discuss the issue:). Let’s hope for some progress this time.
Beetlejuice, beetlejuice, beetlejuice
Pity you didn't ask for higher speeds as well.
Might be the right time to ask the Chinese for higher speed rail, 300km/h with stops every fifteen to twenty minutes apart sounds right to me.
Ril distance is 131 k,m , so the subsidy per passenger kilometre is 64 cents. however , maybe the 113 k.m is the average trip lenght.
The more people use it the lower the subsidy per passenger goes. They have 18 carriages avaliable.
$ 120000 per vehicle for the waikato expressway . If we divide that by 50 years its $ 2400. Average occupancy 1.2 so $ 2000 per passenger.
A fair few passengers probably go on to pay well north of $1000 more in tax as a result of being able to work in Auckland. And the equations will only improve with more rail.
Are the train networks of Japan and Taiwan virtue signalling dogma?
Cue Anakin Skywalker meme: I'll be able to buy more than a block of cheese with it? Right?
establish a Social Investment Agency which will help the Government assess the impact of its spending using data and analytics
Shouldn't that be the responsibility of every department and ministry seeking funding for provision of public services? Why isn't the Treasury doing this already?
Changing the name of a existing agency , you mean . $ 50 m cost.
"...Shouldn't that be the responsibility of every department and ministry seeking funding for provision of public services? Why isn't the Treasury doing this already..."
Yes they should. No they don't.
I wholeheartedly agree.
Are there any countries in the world where central or local government departments run analytics and report up on KPI performance AND value for budget (in a meaningful and consistent way). Somehow I doubt it because their whole game is built around building mini empires, minimising their workload, maximising their salaries and managing up to confuse the ministers... who eventually accept the game and give up too. Unlike private business they don't worry about corporate revenue.. just increasing their budget from our tax payments which thus need to get ever larger..
In the uk they had a great tv series that explains it all in detail... it's called 'yes minister' and is well worth the watch.. and whilst laughing at the newbie PM and his ministers on the telly (he reminds me a bit of MrLuxon with all his grandiose ideas when he first gets elected) realise that it perfectly describes our reality.
One can imagine how funny the current department manager have found it to sell luxon and co the idea to make them all more efficient by creating yet another department to manage them and report on them.. soon (when the pm realizes he has been had... we will need have another department to report on the new department and maybe an executive report to explain why neither department saved any money .... and so on. Lol)
It's a back office job, they're supposed to be cut.
Make your mind up, do you want a doctor/policeman/nurse or an analyst to work out the optimum allocation of doctor/police/nurse resources.
'Shouldn't that be the responsibility of every department and ministry seeking funding for provision of public services?'
No, that would be a back office job. Back office jobs are getting cut remember.
Funding is to be allocated based on feels, hot takes and culture war narratives.
This is why slash and burn budgets don't typically end well, you end up implementing austerity budgets into a recession because you don't have an economic plan that accounts for cyclical factors.
What Nicola "O for Austerity" Willis needs is a way to get money into consumers grubby little mitts in the next budget. Her tax proposals so far have been insufficient to achieve that because it's too heavily weighted towards taxcuts for dwellings.
Similarly her colleagues could help her out by immediately passing laws rezoning and upzoning land for development to stimulate construction.
I'm fascinated by your confident assertsion before you even know the effects before the details of the budget even less the effect it produces. As you clearly have a crystal ball calibrated for accuracy please share this weeks winning lotto number with me for a 50% share of the winnings
I am pleased to hear that she understands austerity is just the nail in the coffin when the economy is performing badly. The last thing we need is an austerity budget. The govt. should be investing in infrastructure, and pronto.
NZ First will block any super means testing.......
Perhaps they should rename to boomers 1st
National policies from 2008-2017 reheated with a little bit of new tech to help.
ABSURD.
Willis talks with a forked tongue.
The National Party makes me ill. Neoliberal lite B.S.
$3bn in tax cuts for landlords doesnt nothing to increase housing supply & rips of the rest of NZ.
Beneficiaries benefits indexed lower and yet they face the full cost of the cost of living crisis (large food, rates/rent increases)
Access to disability benefits tightened. PT fares up (PT is mainly used by the poor)
Public servants thrown on the unemployment scrap heap (rather than natural attrition and introducing and holding nominal wages constant).
There is no doubt that when the tax cuts come through those earning the most will receive the biggest tax cuts.
Where are:
a) the comprehensive capital gains tax
b) inheritance tax
Oh, I forgot. National is the party of the rich, not of all NZers.
Just a question. Why are you so keen to pay more tax? Do you believe the government can spend it better than you? All the evidence suggests they can't.
I agree that government spending does need to be robust.
All central and local government spending should go through cost benefit assessment. This way the optimum tax level can be determined.
However, we do have massive social and environmental deficits in NZ, which suggests that the tax levels, and/or allocation of tax revenue is not optimal.
But, also we do not have a fair tax system. No comprehensive capital gains, no inheritance tax, tax bias towards property. So where tax is collected from is also an issue.
UK & US both have CGT and IHT and their economies are in bad shape and their debt same so the real problem is Leadship or lack of - Biden/Sunak both are lousy leaders and Biden probably a treasonous president in tow to the Chinese.
The US economy is full of loopholes for the rich.
To understand the problems in the UK see
https://www.youtube.com/@garyseconomics
I always wonder about this weird neoliberal focus on tax policy whereas what is really needed in NZ is a proactive industrial policy and a proactive building sector policy. But that smacks too much of long term planning and strategy to be acceptable these days.
Planning and strategy are going to have to come back into fashion. It will not be enough for the current govt to have austerity-lite budgets for the next three years to maintain office. If centrists in the govt don't make a plan to renew industry, infrastructure and building then the left will return along with wealth taxes and also with awful short sighted decision making processes.
National policy makers need to understand that conserving the status quo will need proactive measures to rebuild R & D spending and set up new pathways for the aspirations of those that wish to grow their lives.
The Forbes and Coates govt that was pre the 1935 Labour govt made some tentative steps to reshape govt mostly because Gordon Coates had some ideas about renewing and improving the social welfare system and the economy but more than likely was held back by the conservative elements of that coalition. They ended up doing too little, Labour won in a landslide and went on to keep and expand many of Coates's innovations along with changing the tax structure.
National needs to learn the lessons of history and not repeat the mistakes of the past.
Conservatives need to understand that the restrictions that are throttling the life out of our economy need to be released urgently and money needs to be spent to renew the productive economy, if the structures that ensure the staying power of our democracy are to be retained.
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