Finance Minister Nicola Willis has delivered on her promise to lower taxes while also reducing spending relative to what Labour had planned prior to the election.
But many of those gathered in the Beehive lockup had a similar summary: it was a bit underwhelming. There were few surprises in the thick wad of undecorated documents.
Tax cuts were delivered almost exactly as promised during the election campaign. The only change was the Working For Families abatement threshold won’t be lifted in 2026 anymore.
There will also be a slight delay to the start date, which will now be the end of July. From August onwards, working New Zealanders will have a little more cash in their pockets.
Economists at BNZ calculated the biggest beneficiaries of this policy—those earning about $60,000—would get an effective wage increase of about 1.8%, or just over $25 per week.
Veteran economic columnist Brian Fallow quipped it was “not so much a tax cut, as a tax scratch” which would not fix the underlying, ongoing problem of fiscal drag.
Besides the $3.7 billion tax package, most funding increases went towards cost pressures in core public services and already announced policies.
Treasury’s economic forecast downgrades were sober reading but were still more optimistic than other institutions have predicted, including the Reserve Bank.
Fiscal hawks were unhappy that a conservative Government will be spending more than Grant Robertson did in 2019, while those on the left were displeased with the size of the cuts.
The always-provocative Taxpayers Union called it “The Mother of all Disappointments” riffing off Ruth Richardson’s infamous 1991 budget, which they would like to see repeated.
Tax cuts only compensated for half of inflation since 2011, spending would remain higher than under Robertson, and the operating surplus had been pushed back a year, they said.
The Public Service Association, meanwhile, said the Government had decided tax cuts for landlords and higher income earners were more of a priority than quality public services.
Billions of dollars a year were being taken out of the services “which underpin a thriving economy and support the health and wellbeing of New Zealanders”.
There was some modest praise. Federated Farmers said it was pleased to see the “non-negotiable” funding items, such as for biosecurity, hadn’t been cut.
"Just like the average farmer’s budget, the Government doesn’t have a lot of spare cash laying around to spend on nice-to-haves and optional extras," president Wayne Langford wrote.
Zero-budgets
Perhaps the biggest surprise was that Willis opted for even smaller operating allowances than she had promised in the National Party’s fiscal plan.
She added $3.2 billion of new spending in Budget 2024 but will only add $2.4 billion in each subsequent one. This effectively means running zero-budgets in the next few years.
Treasury warned annual cost pressures would completely absorb these spending limits and any new initiatives would have to be funded by shifting money from something else.
Craig Renney, the chief economist at the Council of Trade Unions, said the future operating allowances meant the Government was planning on making cuts in budgets “year after year”.
Independent economist Cameron Bagrie said Budget 2024, with all its cuts and controversies, would look relatively relaxed compared to the next ones.
But with New Zealand stuck in a structural deficit, the Coalition Government will have to be frugal if it wants to halt growth in public debt and deliver a surplus.
Martin Foo, an analyst at S&P Global Ratings, said the annual budget attempted to balance election promises against the practicalities of a slowing economy.
“To achieve debt stabilisation, discipline on the expenditure side of the ledger will be crucial, in our view,” he said.
Public debt levels didn’t pose a risk to the country’s AAA local currency credit rating, and were likely to stabilise at around 35% of gross domestic product. S&P Ratings uses its own net debt measure.
Other ways forward
Labour’s finance spokesperson Barbara Edmonds said her approach to tackling the structural deficit would’ve been to find policies that boosted productivity.
“What we're not seeing enough from the government is around building the productive side of the economy,” she said.
She has previously said the party was aware spending needed to be reduced and that Robertson’s savings initiative was a good first pass at the problem.
“We wouldn't have done tax cuts, because it just wasn't worth it in the current economic environment,” Edmonds said.
Labour leader Chris Hipkins said any small benefit New Zealanders received from the income tax cuts would be consumed by other costs which would go up.
Not the least of these are interest rates, which he believes will be held higher for longer due to income and property taxes boosting inflation.
While the tax cuts are more than fiscally neutral over the forecast period, some economists worry they will be inflationary when they first arrive — right at the most frustrating moment.
The central bank is most concerned about short-term inflation and is simultaneously worried about the economy getting too weak in the longer-term.
Stephen Toplis, head of research at BNZ, said the fiscal impulse for the year ahead had risen to +0.3% from the -2.4% that had been estimated previously.
“We think that, on balance, the fiscal position will make the Reserve Bank more nervous. It’s not the tax cuts per se but the fact that the fiscal impulse is larger,” he said in a note.
Toplis also said some of the Treasury's forecasts may be too optimistic. Unemployment could go higher than 5.3% and the Official Cash Rate, currently 5.5%, was unlikely to settle lower than 3%.
If the economy proves to be less resilient than expected, the Government may struggle to achieve its fiscal goals despite tight spending plans.
“Typically, governments underestimate the slump in corporate tax that occurs during downturns. We think that there is a very real risk that this mistake is repeated,” he said.
Hold the line
Budget 2024 plans for core Crown expenses to grow just 0.8% in each of the next four years, adjusted for inflation, and to be cut deeply on a per capita basis.
Willis’ fiscal plan and Treasury’s forecasts suggest that core Crown expenses would be equal to 31% of the country’s total economic output by 2028.
That would still be larger than any budget in the six years prior to the pandemic and net core Crown debt would only have been reduced by 1.3 percentage points.
Eric Crampton, an economist at the NZ Initiative, said it was politically and practically difficult to unwind spending increases that had occurred in recent years.
For example, Labour significantly lifted benefits. Suddenly reversing those types of increases would cause material hardship for households reliant on that income.
Instead, the Coalition was planning to put future increases on a much slower track and allow the size of the economy to catch up with overall spending levels.
This was the approach Bill English used to recover from the Global Financial Crisis and the Christchurch earthquakes, and deliver a surplus after just six years.
Some commentators say these years of zero-budgets were responsible for a rundown in public services and were only achieved by racking up today’s infrastructure deficit.
Regardless, Crampton said using the same strategy now may be less effective as NZ’s productivity and economic growth rates are weaker than they were a decade ago.
Just “holding the line” on spending might not be enough to actually achieve the forecast surplus in 2028, particularly if new costs keep cropping up.
He pointed to a fiscal cliff in the police budget as an example. The department has been given $120 million to cover “critical cost pressures” in the coming year but not in subsequent years.
This was not unlike Labour’s pre-election forecasts which showed a hypothetical path to surplus that looked improbable if you delved into the details, he said.
It would be easier for the Government to achieve its fiscal goals if it delivered on housing reform, actually boosted productivity, and went big on social investment.
*Additional reporting by Eric Frykberg
175 Comments
Really, "everybody disappointed" , what do you expect, the productivity of this country is too low for our standard of living. We are a primary producer, we have always been a primary producer, our standard of living is dependent on exporting something the world wants, and thats food. Not sure why there is so much imported food in our supermarkets. probably lack of tariffs, or our inability to add value to our own produce.
The national government initiated the building of Great bike rides all over the country, NZers went out and bought e bikes to ride them, have a think about it, the cost of the e bikes would have been many times the cost of the trails, the cost to the country of importing all these e bikes might be an unintended consequence, but it is a cost, which we as a country need to pay for. If health and fitness was the objective, then non e bikes would have been the original assumption.
Importing E bikes, with health and environmental benefits, is bad, yet large cars and double cab uses are ok.
Way more older people are getting more exercise because ebikes are allowing them to cycle reasonable distances. I was talking to a 80 yo yesterday, who has done 13k on his bike, and uses it for pest control and track maintenance.
Yes - plenty of people are using ebikes and bikes in place of cars - which is green and healthy and thus saves on healthcare costs and better for climate targets. Leads to less fossil fuel imports.
Also - the trails (i believe) are there to encourage tourism. Come to NZ, rent a bike, cycle the length of the country. Cycling is a huge attraction for wealthy people worldwide.
NZ is attractive for 'outdoorsy people' and building up our 'outdoorsy attractions' actually leads to industries growing around them - for example in the new water sport of wing foiling (surfing, winging, paddle boarding etc) we actually have 2 homegrown hydro-wing manufacturers that lead the world, have a board designer and manufacturer and more (partly due to our location attracting the right people and partly americ cup benefits).... . I suspect we have a few home grows assemblers of ebikes too - which is value add and maybe we even have or encourage the development of bike tech components components
Its actually one of the best investments of any government (assuming we can afford to maintain the trails for less than the income from the tourists.... but way better to maintain that than roads in the mid to long term).
Like the space launching industry, we need to build on this and have more such developments. See also in the mount the new 'destination' skatepark.... its packed. and another thing adventurous visitors from overseas will add to their list of places to visit and reasons to come.
If these figures are related to GDP then that’s all just money exchanged with each other. I’d be surprised if there are a million foreign visitors coming to ride our cycle trails each year. What we need to raise our standard of living, or at least pay for it is foreign exchange earnings. And yes we are a primary producing country, always seems to be glossed over. Oh, accept in the Covid lockdowns when it suddenly became very important in a stalled economy.
Ask any bike shop that services them. Usually the top gear cog is shagged when they need work as the oldies leave them in top gear at all times using max battery and minimal physical input. Not saying this is necessarily a bad thing, but I had to laugh when I was told this upon getting my own [road bike non-ebike] fixed up.
The irony is that current home, school and residential burning for heating is far worse for asthmatic kids then transport. As travel factors in a much smaller percentage of their time and we have better measures for emissions monitoring & reduction on vehicles with a licensing system. Yet here any yokel can start a wood and trash fire and say it was clean burning while the neighbours are having to call the ambulance. Common in our cities. Sadly though most families with asthma know the ambulance services are not likely to show or turn up within an hour and so the best measure for emergency services is to drive your dying loved one to the hospital yourself or face them actually dying.
If we only had enough money to support change the greatest thing for kids with asthma is not to focus on transport (which accounts for the smallest amount of time around) or individual emissions (smokers & vapers in wide open spaces) but house & school emissions e.g. switch from coal & wood boilers to using power HVAC systems for heating or even electric heaters in homes. People are much more able to change seats in restaurants then they can change schools or housing to get away from the smoke so it is far more important that air quality in residential areas is regularly measured, monitored and that there are limits so more toxic fires and burning is reduced. Just doing that much requires such a significant amount of capital that tradeoffs in other initiatives do have to be made.
Currently our more sustainable green council is actually canning its air quality monitoring program instead. As I mentioned above everything is the reverse with green branding & focus on the wrong things, less accessible transport is encouraged and access is removed instead of added. It is especially odd as we need air quality monitoring for all types of air pollution and particulates, so cutting the monitoring means air pollution will naturally rise unchecked (less people warned & or fined for high toxic pollution e.g. deciding to burn wet treated wood, waste & furniture). But hey the council included lots of green branding sustainable pictures and hundreds of millions spent removing housing access for the cycle lane so most low income families here cannot live in that area or travel to the university & polytech anymore. Hence we need smarter sustainability where we want the social initiatives required by the Paris agreement in tandem with emissions targets. You cannot have emissions targets without the social initiatives otherwise you cause much greater social harm.
The other interesting part of these studies is they often exclude families who are disabled or poor from the outset. The studies rarely review the costs and who is actually bearing those costs and what the social cost of policies are. This is by and large because none of those doing the studies have disabilities and so they are completely ignorant of the great social cost losing access to housing, losing access to jobs and losing access to medical services, with those with disabilities also having greater medical vulnerability. We saw many of these harms played out during covid outbreak with death rates often more then 6 times higher. The risks of poor indoor ventilation & filtering (including of outside air coming in) also increases the risk of harm.
So while ablebodied only health studies are all glowing it is also excluding those most affected medically, who are most likely to die in any scenario, who also bear the greatest social costs & user pays costs with the poorest levels of income at the same time. When disabled people die here it can be recorded as natural death with no investigation or coroners report (no matter if they were blind since birth had no other medical conditions and suddenly died in their sleep you would never find out why). If anything until their studies willingly include the 25% of the population most affected then we can rarely say these health effect studies are actually relevant to make key judgements on when trying to align with both the Paris agreement and the UNCRPD.
Have you ridden any of those trails? Or done any deep dive on the environmental, fiscal and phsyical health benefit this industry has brought New Zealand. They're amazing, packed with tourists, lots of local businesses such as guides, accommodation, rentals, repair, cafes, tours etc. Those businesses loads of GST and create other tax revenue as equipment is rented again and again, money goes into areas that had been in decline.
Just because NZ isn't a hub for manufacturing bicycles, that doesn't mean the services sector from that ecosystem doesn't benefit the economy, and people's health, massively.
Have you seen the ACC numbers for e bikes, there are too many non cyclists getting on e bikes and getting injured. Yes there are places for e bikes, like hauling children to school up a hill, or a regular commute, but most of these expensive e bikes sit in the shed and come out once or twice a year.
Read what I wrote, accidents by non cyclists, people who dont know how to ride, I suggest you ride the Dustan trail and see the mess and its always a heli evacuation.
Yes cars may cost ACC more per accident, but per capita of actual non cyclists on e bikes , they are accidents waiting to happen,
Funnily enough given the number of trips taken it is far safer then cycling. You see the proportion of the population in vehicle transport & logistics and the number of trips taken far outweighs cycling on a factor of more then 100:1 which means you would need more then 100 serious accidents to be as bad as a cycling one. Currently cycling is far worse as well with significant injuries that include more long term TBI damage that ACC poorly covers (and often we don't have enough money or specialists for). But don't worry because we are really into rugby as well so long term brain damage is just a factor for many in NZ that we have come to accept. It really shows.
I did a deep dive review into ACCs accident and injury stats especially around serious cases like TBI, it is not pleasant reading when you see the added harm (lose of jobs, relationships, housing etc). There is more to consider and helmets are not going to stop a TBI which can occur even at incredibly slow speeds with stationary objects. After supporting many cyclists post serious injury, (some who did some really stupid stuff to be injured like crossing 4 lanes of busy traffic sideways to ride straight into the side of a stationary vehicle), what got me was they will have little memory of the crash & causes and risks so in many ways it is almost better for the return (less PTSD, and less comprehension of what went wrong), but having to also lose memory of key details and functional mental & memory ability is not the greatest trade off (especially when that prevents learning from mistakes or developing a more informed risk awareness & better avoidance).
The helmets did the job and stopped them dying but some people just were not even aware of common road rules and were trying to Darwin themselves. Like a few people I have seen walk into the path of a bus intentionally to jwalk, directly in front of it and expecting it to stop in time, then the terrible aftermath when it does not. Especially since there was nothing anyone except the person choosing that risk could do. The driver literally could not stop with that momentum even at lower speeds and a person walking into a slow or stationary immovable object can still kill themselves if they fall wrong.
Actually most accidents are caused by the cyclist and no other vehicles are involved. You seem to be unaware of even simple ankle & tail bone injuries from losing traction. But I am sure to you it must be all those cars on the mountain biking trail that is 1m wide eh.
80% of claims relating to cycling is recreational/sporting related. However you appear to be conflating that with safe travel on our roads.
They are two different stats. I know you hate cycling (not sure why) but if you're going to use stats at least use them correctly.
Wow you seem to not only not know basic Stats NZ information, ACC accident data, and basic online shopping information, you are completely incapable of google search or even basic thinking processes. That is not sad, that is a sign you have missed basic education and a cause for intervention. And they let you outside of the facility by yourself and expect you to find your way back home?
The other interesting part of these studies is they often exclude families who are disabled or poor from the outset. The studies rarely review the costs and who is actually bearing those costs and what the social cost of policies are. This is by and large because none of those doing the studies have disabilities and so they are completely ignorant of the great social cost losing access to housing, losing access to jobs and losing access to medical services, with those with disabilities also having greater medical vulnerability. We saw many of these harms played out during covid outbreak with death rates often more then 6 times higher. The risks of poor indoor ventilation & filtering (including of outside air coming in) also increases the risk of harm.
So while ablebodied only health studies are all glowing it is also excluding those most affected medically, who are most likely to die in any scenario, who also bear the greatest social costs & user pays costs with the poorest levels of income at the same time. When disabled people die here it can be recorded as natural death with no investigation or coroners report (no matter if they were blind since birth had no other medical conditions and suddenly died in their sleep you would never find out why). If anything until their studies willingly include the 25% of the population most affected then we can rarely say these health effect studies are actually relevant to make key judgements on when trying to align with both the Paris agreement and the UNCRPD.
$184 Million on E-bikes/scooter/etc vs $6.8 Billion on passenger cars. But yeah sure it's e-bikes blowing our trade deficit. Do you apply this same level of critical thinking to roads and oil imports? What a dumbass take.
Multiply that $184M by five to cover the bulk of e bike imports, sure there were plenty before 2019, but it took off about then, and you are talking almost 1 billion dollars. Yes we import a lot of cars , vans and trucks, but a lot of that is for work or getting to work , e bikes are almost all recreation imports, nor productive imports, which goes back to my first statement.
The data is right there, my guy. The total value of electric mobility imports is $432 million since January 2020. There are economic benefits from cycling as well; we have hundreds of businesses focused on cycling, which outsizes the import cost.
God forbid people pursue recreational activities.
And why this focus on E-Bikes? What about PlayStations, cameras, skiing equipment, computer gaming companies, sports cars, fuel to power boats and cars for recreational activities? If you are going to be this pedantic, you need to look at other imports. Blaming the trade deficit on E-Bikes is a bizarre take when the largest problems are oil and vehicle imports. At least E-Bikes are powered by our electricity that's produced here, and unlike fuel imports, they have lasting value.
Actually here is a clue electric mobility is primarily electric mobility vehicles which is far larger as a single vehicle costs 15x more then an electric bike. We currently have an ageing population with a much larger demand for electric mobility vehicles then ever before as transport options are otherwise more restricted nowadays then they ever were previously. Think powerchairs, mobility vehicles, wheelchairs with powered elements etc.
Normally a underspec power chair or mobility scooter costs anywhere from 20-30k (secondhand) our one cost 26k and it was a budget cheap version that cannot go into most parks or on rough surfaces (road or pavement only and predominantly can only be used around a house). A decent one that makes going into parks ok could be around 35-50k (secondhand).
I can get a new electric bike for 2-5k. Yeah a bit of a difference eh
Oh then there is the mobility scooter devices that enable being used in wet weather and standing (to access doors, windows, desks, shelves and work benchtops around workspaces, markets, public places etc). You would be looking at over 50k for one of those and at that point it is fantasy land for any kiwis. To have access to a bus, or public place or workplace when it is raining. That's just crazy luxury eh.
Wow you seem to not only not know basic Stats NZ information, ACC accident data, and basic online shopping information, you are completely incapable of google search or even basic thinking processes. And they let you outside of the facility by yourself and expect you to find your way back home?
If over 99% of trips are taken by vehicle and less then 1% by cycling and compare the transportable loads with materials costs for carriage then mate you are quite insane. If you think you can transport a tonne of feed with a scooter in a single trip to a farm then you truly are without basic maths and science education. Also if you think you can get trades to transport the materials & equipment for your plumbing and electricity in you home and office by bike you are just showing complete ignorance. If all scooters and bikes were gone cyclists could walk and most trade in NZ would continue on without skipping a beat. Here is the difference between a luxury choice and a essential need. People need transport but they do not need cycling. People need access to services medical facilities and trades, they do not involve cycling, people need food, food production does not need cycling. Only ignorant able bodied people think they are completely unable to walk and must have cycling because they never ever had no choice in transport they always had a luxury of all choice, they feel their choice should be imposed on those without the choice and yet choose to impose the highest costs that remove access to others. If anything try not cycling for a few months, imagine if you actually walked and caught a bus. It would be far healthier and an improvement socially, with far less risk as well. There is no reason your choices should remove someone else's only form of access and remove the access for business, trade and food provision. If cycling was gone tomorrow it would be a far better improvement for everyone and safer in many parks and tourist spaces as well. The interesting thing is this luxury of choice is not necessary for anything else except its own promotion. Which does not make it very beneficial for most the nation. Hence less then 1% of trips cycling.
I agree, but why are our supermarkets full of frozen vegetables from Europe, and frozen fruit from China. If you stop at one of those fruit ice cream places around the country, I know the berries will be from china, there are one or two places where they grow the fruit out the back,, but even those guys need to supplement what they grow with imported fruit.
Because they can produce them at a lower price than our producers. Part environment, part regulatory, part technology and capital. If we could produce them to sell at a lower price and adequate volume, we would. But we don't. We're better at making milk (powder) than they are.
An aside, but the trick of globalisation that allows for your own market to be undercut by countries with less standards than you boggles my mind.
An extreme example, but you ban child labour in your country. The manufacture is moved to a country that allows child labour, then the goods are imported back to your country, undercutting your own ability to manufacture goods. In essence, this is exactly what has happened to manufacturing in the west outside of heavily protected industries.
Consistency would say that importation should be entirely banned unless they met your level of standards. Otherwise it's quite literally out of sight out of mind.
Bacon is a prime example of this. Since the outlawing of farrowing crates, NZ pig farmers costs increased through loss of more piglets getting squashed by the mothers (anyone who has seen Clarkson's farm S3 can see the reality of this), so we now import vast volumes of pork from all over the place like Denmark, Poland, Spain etc where such regulations don't exist. Animal welfare see it as an NZ win, however we still eat the same, if not more bacon (basing assertion on increased population).
I think you're confusing Sow Stalls and Farrowing Crates.
The ongoing use of farrowing crates was deemed unlawful in a 2020 High Court ruling, and the government agreed to phase out their use by 2025.
Of course we can't do much about how farmers overseas abuse their animals, but we can, and should, uphold decent standards in New Zealand.
Farrowing crates are an abomination. The incarcerated pigs - beautiful, sensitive, intelligent animals - can’t take more than a step backwards or forwards, and can’t turn around. Expressing natural behaviours like nest building, foraging, or interacting with their piglets and other pigs are impossible.
The obvious answer is to ban importation of goods that aren't manufactured to the same standard as required in NZ, whether that be slave labour, animal mistreatment or environmental destruction.
The budget was USELESS as is National. They have no desire to fix this country. $3bn tax cuts for landlords - simply absurd.
We don't export enough, and the current account continues to go through the floor.
Why don't we export enough. Because the tax system makes us uselessly bid up the price of land (which will eventually fall). The most wasteful use of capital possible.
We need a comprehensive capital gain tax, gift tax, inheritance tax balanced by lower income and business taxes so that people will put their scare capital into productive enterprises not more investment properties.
We need a population strategy aimed at maximising wellbeing per capita, not one that overruns the housing and other infrastructure supply.
Indeed given that buying investment properties for renting out is such a factor in our culture and the main form of many people's investment plans we really would need to have significant blocks and restrictions on buying investment properties in the first place yet we allow any person or company currently to buy (it is trivial to get around the foreign buyer bans).
The government cannot enact laws that push for massive divestment in housing & cause more competition to reduce rents because that would be the end of whichever party was in power considering it is so tightly tied to the entire country's retirement wealth portfolio. They have the baby boom generation to look out for after all who are just reaching retirement age. Hence not even the most far sided in the opposition suggest that either. Because what truly would enable affordable rents is something so distasteful to all political parties they would need to have rock solid ethics and balls of titanium to enact and none of them actually want rent decreases to affordable levels. All parties have a key responsibility to retain the survival of the party over and above the actions that would benefit society. The ethics are so far our of whack and it is also because the rewards for being in government are so great anything that could upset their next paycheck must be diminished and deprioritized. None of them are willing to consider living costs in benefits either so there is always going to be massive rise in inequity.
The budget also funds NZ social housing to allow rents to be 30% of income (affordable by international standards) but NZ govt does not own all housing and no budget can control the rents a landlord charges.
We already have no available social housing places and a demand that would take decades longer to build to cover. Social housing sets rent to around 30% of the income being taken, the measure touted as affordable but is often far from (as it never accounts for the cost of living for other goods increasing at rates larger then income increases). So building more social housing currently would not decrease the rents for most of the public one bit as it would take years for even current waitlists to drop much.
Rent controls on the wider private market would not be able to be enacted at all because of the massive shift (see NZ investment culture) and so all private rentals increase (very rarely decreases) regardless of what any government does. Even with the upcoming depreciation benefits most landlords will not reduce rent and no government can force them to without significant change. Such a change would make any party in that government unelectable for more then years and certainly the rest of the MPs careers.
Forcing a radical shift in the housing investment market would be significant and make a great difference for the better of all sectors of society and it would make it better for businesses, business investment and productivity as well. Alas most people vote with their wallets and most people have retirement investments tied to housing now (both directly and indirectly).
"The "tax cuts for landlords" canard
People who may or may not know better aren't telling it straight when it comes to interest deductibility."
https://thebluereview.substack.com/p/the-tax-cuts-for-landlords-canard?…
Nah, I was referring to a lack of capital gains, residential (not commercial, ie "business") lending rates, favoured DTI, negative gearing and continued government handouts. Since we're all for "aligning with business practices" and all.
There is a clear case for interest deductibility if landhoarding was treated as a business in all other ways, but it clearly is not.
To your last point, I think that is the big issue ... landlording is treated as a business some of the time - it needs to be all of the time.
I'm not a PI/LL and I agree with bringing back interest deductibility but then every aspect should be treated as a business including taxing the fundamental money making nature of the business model (which is clearly capital gains).
"Rents would have had to double to cover no deductibility."
They couldn't. Tenants couldn't afford them. (Rents have been shown to be more related to what tenants can afford to pay rather than the cost + margin metrics many claim.)
Critical thinking is fun, isn't it nktokyo?
Younger generations should watch whats happening to retirees and the level of 'safe' savings required for even an adquate retirement now. the rate the west (and nz) is going there wont be much in the way of superannuation.
i understand that we will need to cut budgets for the next 2-3 years after this too - i see superanuation fund payments being cut for sure and the owness going into mandatory kiwisaver.
Couldn't agree more. I particularly like the restraint built into the next few years. Whilst I was uncomfortable with bracket adjustments this year - potential inflationary impact - at least that means the government must find further "wasteful spending" to cut in coming years.
As someone with cancer, I took particular interest in the 'unequivocal' pledge to fund 13 new cancer drugs, the cost to be met from the reintroduced prescription charge. Nicola Willis says she 'regrets' not having been able to keep this promise.
How then was it possible to find the money-possibly some $2.90bn-to meet the pledge to landlords? Today, thousands of Kiwis who would benefit from the drugs-I am not one of them-are left to wonder what the value of a political pledge is worth. Some will die soon while others and their families continue to suffer, but that's just tough. They need to harden up and rejoice in the good fortune of landlords.
Sadly insurance companies deny cover to many people and they are allowed to deny cancer cover to people based on genetics even if they only had conditions that had no influence on cancer at all. This does affect many low socioeconomic groups but even with high wages and steady work over 160k they can still be denied access and accounts with insurance companies even for life insurance (because apparently their medical condition can cause a plane to crash or volcano to erupt in the insurers eyes).
Now you know insurance companies do openly discriminate and deny access to many in the population the next steps would be say to provide either laws like in the US where they cannot discriminate or alternate means of insurance cover (like they also have in the US for those without income to pay premiums).
This to me was the most disappointing aspect of the budget. A very specific promise was made, and that very specific promise was broken (and I'm fortunate enough - right now at least - not to be in a position where either myself or my family are depending on said promise being made good).
Putting on my tin foil hat, I wonder if the government will somehow find the money hiding under the cushions if/when a shot of good news is needed.
The money is there and the drugs will be delivered- i suspect many in the next 12 months, the government however will not want to let onto big pharma - that they intend to buy these drugs as it will put them in a poor negotiation position. Pharmac received $1.77B more yesterday - there was no detail though on what it will be spent on.
It should also be noted 2 new cancer drugs were introduced to NZ in Feb - so partial delivery is underway
- ribociclib (branded as Kisqali) for people with HR-positive, HER2-negative locally advanced or metastatic breast cancer.
- midostaurin (branded as Rydapt) for people with de novo acute myeloid leukaemia (AML) that is FLT3 mutation positive.
If you don't get a good price when you advertise your intentions, you shouldn't advertise your intentions.
Giving cancer patients hope, and then cruelly taking that away is not a clever move.
Throwing big numbers around about Pharmac spending is meaningless without proper context. Is their funding increasing per capita in inflation adjusted terms or not?
ikimpaul,
Pharmac did NOT receive $1,77bn more. The money will simply allow it to continue existing funding. The labour government should have increased funding on a long-term basis but didn't and thus, this 'extra' cash only maintains the status quo. Now, by announcing this funding on a 4 year basis, this government is doing exactly the same thing.
It was terrible politics to make this promise. However it is even worse politics to break it.
Making the promise was stupid. It was taking the hands out of the experts and making drug funding a political thing. It sets a bad precedent that essentially says - if you have the right lobby group - we'll look out for you. Never mind if it means we dont have the money to fund drug x instead which could save ten times more lives.
It also opens up another avenue to bring in corruption, which the coalition govt are already flirting with in a few areas.
However to be seen to build up hope and expectations among people that are very unwell to only walk away and dump all over them is even worse.
Who are the people advising National? Are they wanting them to be a one term government?
That was their promise - yes we'll bring back the prescription charge, but it will pay for this. Now we're all still paying the charge - for what? To go towards landlords instead?
Maybe the Landlords deserve deductibility because it's a standard business accounting practice, so I get that.
These cancer drugs were budgeted to cost $280m over 4 years. Yet $1b per year goes to 50k super annuitants earning over $100k p.a. At least we know where to lay the blame for each and every death going forward attributed to lack of access to these drugs.
“Typically, governments underestimate the slump in corporate tax that occurs during downturns. We think that there is a very real risk that this mistake is repeated,” he said.
I think they are seriously underestimating how long the slump will drag on for. The BEFU predictions are for the economy to pick up in the later half of this year, driven mostly by falling interest rates. Only problem is that the RBNZ isn't planning on dropping the OCR until Aug 2025. So if inflation sticks around and we keep the OCR high, then the growth that they are planning on won't eventuate until late next year. A full year after the govt is planning on.
I think they know this - they are hardly going to announce the massive austerity required in 6 months time on the day they deliver their award winning tax cuts.
My financial and business strategyis based on significant further erosion of NZ economy over the next 2 years. There will be massive cuts to local and national government spending oand significant further reduction in house prices and prices for many types of businesses and assets, together with further unemployment and rise in crime etc.
We simply lived over our means for way too long. And have to pay the piper/
Our short term future will involved a generation of smart kids leaving for Oz, and significantly educed standard of living in NZ. Maybe by 2030 we will start to see shoots from new businesses and a changing economy
if you want to get ahead you will need to be involved in some form of export business... thats the only place money will go.
As Jfoe said the other day, the RBNZ's three point plan for a rate drop is all checked off now. They can move past the deny, deny, deny stage into the cut stage. Although how quickly that will start to drive real growth in the NZ economy, I am not sure. It would be nice if we had a better plan that just make the cost of credit lower
- Build up FX reserves for potential intervention
- Get DTI in place to prevent the housing market taking off
- Convince the markets that the OCR will not change until 2025
Yup. (In response to my comment that there's a MPS coming from the RBNZ a few days (10th July) after the DTIs come into effect.)
"It would be nice if we had a better plan that just make the cost of credit lower."
Now we have both LVRs and DTIs in place - I think many are not fully understanding why reducing the cost of credit lower may be just the tonic NZ Inc needs. (November 2023 was the right time, though.) The RBNZ can use both the LVR and DTI to re-direct credit to where it should have been going for the last 30+ years.
This isn't saying NZ Inc has what needs yet though. Government must overhaul the tax system to a) promote a better spread of tax collection and b) address why NZ Inc isn't investing enough Capital in productivity. Anyone see this government doing this? No? Me neither.
Wrong. What a load of nonsense!
We don't need to tighten to build a real economy.
What we need is a) any and all credit expansion to focus the productive side of the economy (and not grow ever larger buying even more expensive houses), and b) a tax system overhaul that focuses on the productive side of the economy (rather than owning ever more expensive land and houses).
PDK and I agree on lots of issues. And I sometimes agree with you. None of us can see who gives a post the thumbs up.
PDK is convinced we're on a growth path to destruction. Whereas I believe we can continue to grow our share of the pie without destruction that PDK sees as inevitable.
If you re-read my post - the one that PDK responds with 'bollocks' - I don't actually say what PDK thinks I said. Take one example - renewal energy. We can happily grow our economy - while benefiting the globe - by developing renewable sources of energy to replace the energy that comes from fossil fuels; and by doing so we'll eventually undercut economies that have failed to make this transition. Further, PDK doesn't respond to my suggestions about reforming our economy as he goes off on a tangent instead. Nothing unusual there. Mention 'growth' and PDK comes in thick and heavy. We're used to it.
"Our real interest rate is only 1.5%, it's the minimum requirement to preserve a currency's value."
Say what ?!!!?
Please explain how you got to 1.5% !!!
Then explain - "it's the minimum requirement to preserve a currency's value" ... Sounds like voodoo economic theory to me. But I might be wrong (lol).
Why do we have such an austere budget? Look to the Labour and green parties, who completely bungled the covid response. They closed the country, spent a king’s ransom on an experimental product that arguably killed more people than it saved, and left a deeply divided and financially crippled country. The MSM, Labour and Green political parties, and post-modernist academia need to take a good hard look at themselves and their ideologies.
There’s a particular illiberal zeal for orthodoxy that seems characteristic the Labour and Green parties now. It became obvious when they tried to trespass Winston Peters from parliament for the horrific crime of speaking to protestors outside parliament. With such a rigidly narrow Overton window, it was of course impossible for National or Act politicians to say what they thought. We know seymour was quietly advocating for a pro-choice policy. I doubt the country would have been closed under the current government.
spent a king’s ransom on an experimental product that arguably killed more people than it saved, and left a deeply divided and financially crippled country.
What experimental product was that? Are you talking about one of the covid vaccines? Got some data to back up your assertion?
And you need to quantify how we are finanically crippled. Our debt at the end of the pandemic was far less than other western countries in relative turns.
New Zealand was praised by plenty of people overseas for our response to the pandemic - you sound like just another fake news spreader spouting the same mistruths that Billy T-K, Brian Tamake, Kelvyn Alp and Hannah Spierer out.
Labour weren't perfect and I didn't vote for them at any point, but they were better than the UK and USA for starters.
Got some data to back up your assertion?
Sure, but I caveat this by reiterating that I used the word “arguably”. Other people might consider other evidence and argue the opposite point of view. But this is the evidence which I consider to be the most significant.
1. Pfizer's own clinical trial involving approximately 46,000 people was unblinded after 6 months. At that time point, 14 people had died in the control group, while 15 died in the vaccine group. This Pfizer RCT is the highest quality evidence that will ever exist for this product. By comparison, all subsequent observational studies and/or cohort studies are inferior to the point of meaningless in terms of quality.
2. The aforementioned clinical trial was strongly criticised for irregularities in favour the Pfizer product. The whistle-blowers concerns were deemed so serious that they were published by the British Medical Journal.
3. Professor John Gibson from the university of Waikato demonstrated that if you use a correct baseline for expected deaths, (ie. one that accounts for the number of people actually in New Zealand at the time) then the excess deaths were quite low until around September 2021 whereupon they crept up and remained high.
I believe this data tells a compelling story. The high quality data from the Pfizer trial data gives a close-up micro view, and the excess deaths give a zoomed-out macro view. Both views are consistent. But hey, that's just my interpretation.
I'm not sure how so many people on here have glossed over this point. There was a whole article on it yesterday. This budget and next forecast budget both higher than 5 out of 6 of labours budgets. The only budget deficit greater was 2020 covid. Much of it seems to be embedded though, benefit (mainly super) and wage increases will not come undone.
I'm curious, what do you mean by left-leaning media? The only left-leaning media I'm aware of is something like the spinoff. Otherwise media inevitably skews to the right due to being run for-profit and also by older, wealthier people.
There seems to be an oddly believed narrative that somehow, against all odds, the media skews against powerful and vested interests. It makes little logical sense as anything other than a victim play for people who get exposed.
yeah - i am really excited for my $20 a week.
When house prices have dropped $100k or so, inflation is 10% or so, council rates are going stratospheric and the public services are awful.
my $20 will go towards upgrading my brand of baked beans... when we can afford dinner of course.
"Woohoo.. I'm supposed to get $20 from the gov every week"
Quite a few ... who have structured their affairs better - will get near the maximum of $42.50 per week. (Trusts and companies, being separate tax entities, have a role to play for many who can think ahead and pay accountants and lawyers.)
Yep and if you take on dependents from other family members for a period you can further increase the amount claimed but then abdicate much of the responsibility. However in many cases it is enough just to have the accountants and lawyers set up the trusts and companies, along with some offshore accounts. I have seen many beneficiaries over 65 who have housing they rent out, business property they own & multiple forms of income and yet claim to be so poor as to need council housing. They also claim to be so disabled at 65 they need a parking card while being so able bodied they can work in physically strenuous roles for long periods. So lying and getting around loopholes to claim benefits they otherwise would not be entitled to seems a bit of path of the course.
Sadly I have seen many beneficiaries over 65 with multiple investment properties in their portfolio able to claim more income & asset tested benefits like the accommodation supplement. Much like Luxon you just need to create a scam where you get paid to rent back to yourself & hide asset ownership behind trusts, family members, and companies. A few even used the casino to wash dodgy acquired money
If you are buying investment properties you can structure ownership to claim more benefits, yet why would you (the truth is most people really don't care as much about our housing crisis & to act more ethically and not invest in housing in the first place).
Matthew Hooton isn't impressed at all. Starts with the statement, "In dollar terms, Willis is the biggest-spending Finance Minister in the history of New Zealand.", and it's pretty much all downhill from there. (Robertson will be disappointed to have been surpassed. lol)
https://www.nzherald.co.nz/business/budget-2024-debt-set-to-explode-und…
Public transport could have been a good one to keep on given the long term behavioural changes it would assist with (getting better, more convenient public transport and getting younger generations used to using it more often). Instead we will resort back to roads and private vehicles which we know only reaches another bottleneck over time once population and number of private vehicles on the roads both increase.
I'm sort of in the same boat as you. My family's tax cut comes out at $45 p/w. It's actually a decent bit of cash in some respects, and then nothing from a different perspective. I'd rather the clowns on the left and the jokers on the right could instead work for the long-term benefit of NZ by doing things like building better infrastructure, or investing in better public services, but the previous government proved they can't do it and the current government won't do it.
I'd gladly forgo that $45 p/w if it meant even one meaningful improvement to one "problem" area, e.g. all of the money being spent on hiring more police and resourcing them to actual go out on the beat and keep cities safer and more pleasant feeling ... just that alone would be worth more to me than the ability to spend $45 a week extra elsewhere.
But that won't happen. Neither side of the political spectrum is capable of making even something like that happen. I've given up on them completely.
So, what's a man to do? I'm not insane enough to donate my slice to the Labour party (as per that bizarre email they sent out) so I may as well take my $45 and enjoy a few fluffy and slice combos at the local cafe with my toddler, or use it to pay our entire weekly fuel bill.
I'm now firmly in a position where I may as well enjoy polishing the brash on the Titanic before the ship finally capsizes.
Finished the first slice of modelling what the RBNZ is likely to think of the budget (still some back testing to go though)... But not good. NZ Inc is going to go backwards, for longer ... BFL. Still the wrong thing for the RBNZ to be doing. Like I said ... November 2023 was the right time.
When your expectations are low it is actually hard to be disappointed. This was not a disappointing budget. It was highly expected and predictable.
Unlike many odds takers there were few gambling opportunities here and that is probably for the better for people to allow planning.
Only those would did not read the statements & back office dept news would be surprised.
It is funny seeing yet more evidence of most people being in it for themselves at any cost and not society as a whole. But hey it is difficult for many to have perspective and to judge things with less cognitive bias clouding their vision.
"I am personally ecstatic that finally we start to live within our means as a country ."
Really?
Did you read the part in the budget where the government is borrowing even more money to pay for tax cuts?
Please do explain why you believe that is NZ "living within our means"?
We can wait ...
NACTNZF - I guess they have to cut the police numbers, don't want them investigating the dodgy donations for laws / fast track consents.
Good to see the massive borrowing that continues under National being used for the right things (tax breaks for landlords) and cuts to useless things (police). Tough on crime, sorry I mean tough on crime busters.
Disgrace.
https://www.stuff.co.nz/nz-news/350296573/police-staff-cuts-are-additio…
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