What I hope for from New Zealand Fiscal Budget 2019


Whilst the Government struggles to contain the effects of National’s claimed leakage of figures from today’s Fiscal Budget, I give my take on what should be in Budget 2019. This is not a complete list, but a priority one based on what I believe has been a significant and sustained under funding of programmes and support for the very young and the very old, the mentally unwell and those in the education system who are not in a position to fund their own expenses.

I am not expecting much, if anything new, for education today. I believe Minister of Education Chris Hipkins when he says that he cannot offer teachers all that they are asking for. A lot of the demands are things that are built up with time and need refining as they go – it is not a simple case of saying “here’s the money, it is all ready to go”.

The same goes for Defence. Earlier announcements might get a top up such as the P8 Poseidon patrol aircraft acquisition. However I am not expecting Minister of Defence Ron Mark to announce much if anything new.

Where I am expecting to see some additional support are:

  • Non monetary: Moves by Treasury to implement some of the recommendations made by the Tax Working Group in their review, which came out earlier this year. For the Government to improve its revenue, changes need to be implemented fairly rapidly
  • Non monetary: Investigation into Pigouvian tax being used to dissuade persistent polluters by taxing them if more than x is discharged per business year
  • Non monetary: Lower the range of housing prices for Kiwi Build houses – the current range is unrealistic
  • Mental health: the Government has announced it will accept nearly all of the recommendations that were made in the mental health inquiry, except – notably – the one for a suicide reduction target and one other; given the problems being had with mental health patients in hospitals, the explosion of problems among youth ranging from effects of bullying, societal pressure and domestic situations; support for mens mental health
  • Health: a top up for D.H.B.’s to help maintain services
  • Disability sector: frankly an abomination in terms of how it is being treated, where lip service is everything and solid accountable actions are nothing, a top up across the board for all such
  • Social Development: particularly those with school age children who might be struggling to afford the basics and may need assistance purchasing school materials, uniform parts or funding school trips; assistance for superrannuitants including perhaps further discounts on essentials
  • Tertiary Education: Introduction of a postgraduate allowance for all Honours, Masters and PhD students recognizing that it is impossible to expect such students to hold down full time work and complete qualifications that are time and energy intensive

Secondary priorities that I think need be provided for include:

  • investment in railways particularly in the South Island, Hawkes Bay and Gisborne.
  • reinvestment in science with some emphasis on explaining theory to students.  waste reduction, reducing crime, and simplification of the research grant application process for researchers
  • encouraging reduction in harmful carbon emissions by recycling aluminium; introducing hempcrete; investigating the feasibility of waste to energy

There could be more, but when the Government walked away from the C.G.T. it walked away from a significant opportunity to check the unsustainable growth of the wealth and income of the 1% who have 50% of all of the known wealth. In doing so it deprived New Zealand of a substantial source of tax revenue that will now probably not happen for another generation – if ever.

Budget leaks or National Party hot air?


The National Party has claimed that the Government has been misleading about the nature of the Fiscal Budget it is due to release on Thursday afternoon. The claims, which come from leader Simon Bridges who says that he has received 22 pages which which show that Defence and Forestry are in line for big expenditure, instead of social welfare, health and education initiatives central to Labour’s promise of “well being”.

To some extent it is a bit of both. Treasurer Grant Robertson has admitted that some of the figures being bandied about are true, but not all of them. Some of the claims are also potentially misleading, such as National claiming that it is not about the well being budget that Labour has promoted. Mr Robertson also pointed out that many of the figures alluded to a four year spending plan that was already known about and therefore the figures were a) not new and b) possible not accurate any longer.

Inevitably there was going to be money set aside this year or next year anyway in the defence budget due to the announcement of the P8 Poseidon patrol aircraft being purchased. On top of that there are other equipment upgrades and replacements being announced in the near future or which are being undertaken right now.

Another alleged leak that was mentioned today regards the budget  is an alleged increase in the budget for forestry initiatives. Minister for Regional Development Shane Jones was not saying much today about the claims other than it not being his job at this point in time to point fingers as to where the leak came from.

As I am not sure how much money is in the coffers, I cannot judge and nor can anyone else just how much of the claims are fakery. Where Mr Robertson should be concerned is about finding out how any figures at all came to be leaked. Was the leak intentional and if so, where did it come from? The annual Fiscal Budget is something that is usually embargoed until 1400 hours on Budget day, which is in this case Thursday 30 May 2019. Normally only Treasury, Cabinet, the printing firm and the Parliamentary services would have access to it prior to the release.

Still, this will not be a great look for the Government on the eve of its second budget, and Prime Minister Jacinda Ardern and Mr Robertson will no doubt be at pains to make sure this does not happen again.

 

 

The cautious budget


Treasurer Grant Robertson delivered the first Fiscal Budget of the Labour-New Zealand First-Green Government yesterday. Whilst disappointing Labour supporters and National supporters alike, the Budget kept a promise to exercise due fiscal restraint, acknowledging the poor international economic climate, the impact of the Christchurch and Kaikoura earthquakes.

Thre was little presented in the 2018 Fiscal Budget that New Zealanders had not already been made aware of. A number of reasons exist for this:

  • The Government, as is often the case, had already outlined what it considered to be the major announcements
  • Prior to being elected, the Government had announced that it would establish a set of fiscal responsibility rules that woul ensure that the three parties acted in a cohesive yet responsible way
  • The first budget is normally the most cautious as the incumbent government wants to establish its credentials, particularly if its image has been damaged by Opposition claims

One the major announcements made was that Conservation would get  $138 million for pest control. Money was also allocated to schools, to help fill in gaps left by the previous government, though teachers signalled their considerable discontent, with one principal going so far as to say that he would not his teaching staff walking if they thought the budget insufficient. Perhaps the biggest cheer went to Health.

Budgeting expectations: New Zealand Fiscal Budget 2018


Today is the day that New Zealand and the world see the first budget of the Labour-New Zealand First-Greens coalition Government. It will be the first delivered by Labour Treasurer Grant Robertson. In anticipation of the budget, here is a recap of what has been announced and what can be expected.

The broad shape of some large expenditures have already been announced. The details that are still to follow on these will come later as those expenditures are put into effect. So, what are they?

  1. Transport – A total of $28 billion has been announced for fixing transport in Auckland, a sum that caught many by surprise, and which will be spread out over a 10 year period
  2. Housing – KiwiBuild was given a N.Z.$2 billion capital advance in December to get underway the construction of 100,000 new homes in New Zealand, and $100 million was allocated in the first pre-Budget announcement of which $37.1 million comes from existing budgetary measures
  3. Christchurch – The Government made significant election promises to Christchurch, which include supporting commuter rail, assistance for those struggling with insurance claims
  4. Foreign Affairs – you can see my earlier article acknowledging the $1 billion allocated to the Pacific and other aspects of New Zealand foreign affairs, but it is worth noting the reopening of the embassy in Sweden which closed under the National government

With so many big announcements already made, one might be wondering if Labour has any more tricks left in the bag. Mr Robertson will no doubt be acutely aware of other areas of funding for which announcements will need to be made at some point. They include the courts, prison and Police so that we may get on with dealing to the methamphetamine epidemic taking hold as well as trying to address why going to prison does not seem to be working as a sentencing tool.

At some point Mr Robertson will also have to address the potential of a nurses strike for better pay and conditions, which if answered will cost several hundred million dollars. In this case though, I wonder if it not so much an inadequate budget as inept District Health Board planning – shortly after Labour was elected in 2000 I heard that scrapping the District Health Boards in favour of a central funding model would save $750 million per annum, and whilst I am not necessarily suggesting such a move, a review of them is tempting.

Other areas that will need an increase in funding are Research, Science and Technology – New Zealand has lagged behind other O.E.C.D. countries for years in terms of investment into science. Some scientists have observed what appears to them to be a war on science by politicians with agenda’s that do not necessarily conform to the known facts, particularly around environmental issues.

I personally doubt Labour will make any radical new announcements today. Most of what happens I suspect will be building on existing announcements. Still, this is a big day for Labour, New Zealand First and the Greens. Voters, despite National’s attempts to show the contrary will probably go easy on them until a sense of direction (or lack of)becomes obvious.

Mr Robertson will deliver the Fiscal Budget at 1400 hours.

 

Government faces challenges on finances


When Prime Minister Jacinda Ardern announced during last years election campaign that Labour would form a Tax Working Group if elected, many thought that this was a cop out mechanism for avoiding the heat on tax. Whilst not being one of these people, I did wonder how comprehensive Labour’s planning on tax had been. As we approach  the Fiscal Budget of 2018 next month, those concerns remain, but some definitively positive signals are also emerging.

The challenges are significant. Not all of them though, involve raising/lowering taxes, introducing new financial tools that affect taxpayers to prop up the books.

Some of them are about making corporate tax evasion more difficult to achieve by working with other nations to ensure corporates like – but not limited to – Apple and Facebook pay what tax they owe. Others are about making sure that tourists who come to New Zealand have some sort of medical insurance to keep the cost to the taxpayer in check.

Not all of these challenges will be or should be addressed in the coming Fiscal Budget. Some will require amendments to tax law and greater oversight.

At the last election Labour said that its plans, which did not signal income or business tax changes, had been costed and found to tally up. Opposition Members of Parliament claim Labour cannot possibly afford their plans for New Zealand without substantial tax increases. Some go so far as to suggest that by cancelling planned tax cuts, the Government has in effect announced a tax increase, something Labour denies.

My own concerns are that Labour, in ruling out business and income tax changes, has left itself open to a budgetary blow out. This would lend credibility to the likes of former Treasurer Steven Joyce’s claim of a budgetary black hole, and Labour being amateurish in budget setting.

However there have been a number of pleasing announcements that suggest to me that a degree of control has been exerted. One of those announcements is that there will be a royalty on the use of water for commercial and irrigation purposes. Another is the introduction of a tourism infrastructure fund. It will take the shape of a N.Z$25 levy placed on non citizens and residents visiting New Zealand. In past articles I have called for a levy to be placed on such visitors, as it is a useful user pays scheme that reduces the pressure on Regional, District and City Councils, whose rates are already subject to considerable pressure.

Of course, all of this said, Labour have yet to actually introduce a Fiscal Budget simply because it is not time. The Fiscal Budget for as far back as I can remember has always happened in May. I accept therefore that it is a work in progress and one not to be judged until the Treasurer Grant Robertson presents his first Budget on 17 May 2018.