Analysis: Many names were thrown around for what to call this year’s Budget. Nicola Willis initially called it the Growth Budget, before a week out pivoting to a more colloquial term – the “no BS Budget”.
In case anyone was wondering what ‘BS’ means, it certainly didn’t mean Big Spending for the Government.
A big goal to hit surplus by 2029 hasn’t come without its challenges, including that a potential future natural disaster could throw that goal out the window.
Large pledges for cancer drugs, defence, abuse in care payments and health infrastructure all had to be paid for.
The answer came in the form of $12.8 billion of savings from cancelling 33 pay equity claims.
Or as ACT leader David Seymour put it, Brooke van Velden had saved the Budget.
While journalists and economists digested the details inside the Beehive, hundreds of protesters took to Parliament’s forecourt to make their voices known in opposition.
One worker told 1News: “Let’s take it off the lowest-paid people and give it to the richest – who cares? Well, that’s what they say.”
Plans to invest $200m in new gas fields has riled up Greenpeace. (Source: 1News)
For the past two weeks, journalists had been repeatedly asking the Government how much was saved from making the pay equity changes and how much they would allocate under the new system.
We got the first number yesterday in the form of that $12.8 billion, but the other remains unknown.
Willis said she will leave a contingency fund for claims under the new system, but won’t say how much the Government has set aside.
She said Treasury didn’t advise against releasing it as it will affect the bargaining process.
When it first passed in 2020, Treasury advised it would cost $3.7 billion over four years. It has obviously blown out a considerable amount since then.
Labour leader Chris Hipkins has committed to reversing the changes if elected next year, but stopped short of saying that he would restore the claims process to what it was.
He did, however, commit to 1News that secondary school teachers who are set to not be covered under the Government’s changes would be able to make a claim under a reversed system that his government would create.
Meanwhile, every Budget delivers a surprise and you’d be looking hard to find an economist or commentator who would have predicted that the Government would target teens on the couch.
Nearly 9000 are set to be no longer eligible for the unemployment benefit as a result of a new parental “assessment test”.
In short, if you’re a parent who can afford to help your unemployed kids out, then the Ministry of Social Development (MSD) won’t be giving them any money.
Willis said: “I think parents are going to welcome that policy because I have met with the parents of young people who say to me, ‘What am I meant to do to get my son off the couch playing PlayStation all day when the Government just gives him a welfare check?””
When asked what she thought of Willis’ comments, Greens co-leader Marama Davidson said, “It proves that this Government – with their full hearts, their full chests – are really happy to be cruel and mean to people who are already having a hard time.”
There was, however, relief for business.
The opportunity to deduct 20% of a new asset’s value for that year’s taxable income was met with appreciation by the economists in the lockup that I spoke to.
Treasury and Inland Revenue estimate that the initiative will increase GDP by 1%.
However the policy change doesn’t come cheap – $6.6 billion will cover the change over five years.
Willis said this is a Budget of “trade-offs” – the question to be asked is, is this boost for businesses worthy at the cost of cutting 33 pay equity claims? You decide.
Then comes the KiwiSaver changes.
There was resounding supported in Parliament for getting 16- and 17-year-olds into it to start saving earlier.
But the bipartisan element stops there.
It was long speculated that Nicola Willis could swing the axe on the Government’s KiwiSaver contributions and, while it wasn’t a full massacre, they will be cut in half to $260 a year.
Labour claimed that the Government will “steal $66,000 from 18-year-olds”.
National said this claim is totally false.
Expect plenty more back and forth on this over the coming weeks and months.
After all, the election is now just a year and a half away.
