Post-Budget analysis: Which wishes did you Grant, Robertson?

Tax

Murray Brewer says:

The Government has obviously been thinking about how much stress families are under, and it was good to see them address some of those. Removing the $5 prescription fee is positive, for example, as is the extended early childcare subsidy, and I applaud the fact they’re continuing with school lunches in these times. These will provide meaningful benefits and I don’t think this isolated spend will significantly fuel inflation, because even if you’re happy to be paying a lower rate of childcare, you’re not likely going to go out and buy a bottle of champagne to celebrate. 

But overall, what’s concerning is that we’re in this economic situation in the first place. The overall spending bus is unstoppable and today’s full spend announcements will not slow it down. Without substantial economic growth and having fewer people on welfare, the massive total level Government spend as a percentage of GDP will become a locked-in feature of our economy. 

The biggest tax change was aligning the trustee tax rate with the top personal income tax rate, which are now both at 39%. This wasn’t a surprise. The rationale for the increase from 33% has been sheeted home to the 31 March 2021 tax year results.  Given  IR has fired up its new $1.5b computer system, it makes me wonder what the 31 March 2022 trustee tax results look like; was the 2021 result just a one off but a  good excuse to collect another 6%?I would be aghast if they raised the top personal income tax rate again as an election campaign policy and created another divide – it would be good to see some certainty that the top tax rate will remain steady. An increase unfairly hits workers, not wealth, and it means that working hard and growing your skills has diminishing returns.

High earners already pay a disproportionate amount of tax. 

I am pleased to see the 20% rebate for the gaming industry and the Industry Transformation Plans for horticulture, digital and tourism industries. This will hopefully improve productivity, although it’s not yet clear how these will be implemented. 

Including KiwiSaver ‘matching’ contributions for those on parental leave is also a boost, although I’d like to see more incentives for paying into KiwiSaver. 

The Budget is essentially as I expected: a mere sprinkling of sweeteners, just hundreds and thousands. With another $5 billion up their sleeves for more sweeteners, and a significant proportion of households reliant on getting a hand-back of their own tax money, I expect we’ll see a tight race in the election. 

Primary health care

Pam Newlove says:

Health was a huge benefactor in the 2022 Budget, but this year’s Budget merely tinkered around the edges. It was certainly no-frills – the minimum response to an acute situation. 

The removal of the $5 prescription fee was not unexpected. It’s an administrative hassle, and divisive for pharmacies. Large-format retailers were enticing customers in with free prescriptions and luring them away from other pharmacies, so this change will create an even-playing field.

At the heart of this decision is improving patient access to prescriptions, which is excellent. But it doesn’t increase the supply of GPs, so you may not be able to access a GP to get that prescription in the first place. I was very disappointed to see no increase in training spots for doctors generally, and then specifically support more to specialise as GPs. 

Although it is encouraging that pay increases are on the cards for primary care nurses, it was a very tentative statement: ‘we’re committed to improving over time’ says the Minister of Health. The cries from the sector are that pay increases need to be immediate.

They can see low pay eating away at their workforce, causing huge difficulties in retaining and replacing people in the sector. 

There was no recognition at all of the upcoming workforce issues that were highlighted in the RNZCGP’s recent survey. There seems to be no intention to overhaul the capitation model, either. Allocating $118 million to improving patient flow from hospitals to community settings could be useful, but if the sector isn’t adequately supported to provide that care it could just compound existing issues. Some of last year’s allocated spending has only just started to come through – equity-based funding, for instance, is just now starting to trickle into primary care although only a small percentage of practices are seeing any benefit from this.

But perhaps these oversights are to be expected when the Government has to be frugal. It was an interesting Budget strategically; certainly not what you’d expect in an election year. 

Sustainability & impact

Michael Worth and Imogen Graham say:

The rhetoric in this Budget was very encouraging from a sustainability perspective. The Government acknowledged the extreme weather we’ve seen this year is climate related and that we can’t just kick the can down the road anymore. We must build our resilience to climate change and its impacts. We’re on a highway to a lower emissions economy. Wellbeing is vital. All excellent sentiments.  

The extended Warmer Kiwi Homes programme is another positive; it will support better health, lower emissions, and reduce household’s power bills. Infrastructure spending is welcome. Wellbeing spending is also enormously helpful. 

But this is failure demand: essential spending needs created by earlier failures to provide the types of services and infrastructure we need to build a genuinely sustainable economy. Instead of building back better, we need to build back different. Investing in EV infrastructure and roading is fine, but why aren’t we instead diverting funding into rail? We need transitions that move the dial, rather than just getting a few more drivers into EVs. 

This is a critical time in the fight against global warming and climate change. Every year that passes where we do too little, is another lost opportunity. 

Property & construction

Dan Lowe and Tom Verdonk say:

We asked for more funding toward insulating homes, so we were pleased to see the Warmer Kiwi Homes programme extended. This creates jobs in the sector, reduces energy use and cuts emissions, which are all excellent outcomes. 

There was a considerable sum tipped into accelerating our low-emissions economy, so it was disappointing not to see any of that allocated to the building sector when it has the largest contribution of any industry. ‘Support for Today, Building for Tomorrow’ didn’t quite hit the mark in terms of future thinking and creating a sustainable construction industry with more environmentally friendly practices. Instead, the Budget delivered more of the buildings of today, which isn’t the kind of transformation we’d like to see.  

On the plus side, spending $3.5 billion on public housing will boost the building industry, even if the Government’s track record suggests the timeline might be a little ambitious. Residential builders who can get a place at that table will be happy to see some work in their pipelines, which have dried up in recent months. The Government is an outstanding client, but the question remains: how can the smaller companies and tradies benefit from some of that money rippling through the supply chain? Hopefully Rau Paenga (formerly Ōtākaro) can have some of the same successes it had in supporting the Christchurch rebuild now it has become a national operation.  

Extending the Apprentice Boost scheme is also a welcome announcement, because there is a perpetual skills shortage in the construction sector. It’s great to see an effort being made to future-proof the industry, and we’ve seen and heard that the scheme has already had positive impacts, so we know it’s working reasonably well. 

Overall, a number of positives for property and construction – hopefully next year we can see more commitment to support sustainable building practices.

Aged care

Ryan Campbell and Liam Rawlings say:

This was certainly a no-frills Budget as promised – it’s hard to have an exciting Budget when there’s so little spending to go around. Unfortunately, though, every budget is no-frills for the aged care sector, and yet again it finds itself at the bottom of the pile. 

Moves to support vulnerable groups in light of the cost-of-living crisis are obviously commendable, but we continue to ignore one of the fastest growing vulnerable groups in our society – the elderly. Seniors continue to get pushed to the side as the sector as a whole is overlooked.

The announced funding for 500 additional nurses was desperately needed. However, with an estimated shortfall of 4,000 nurses last year, any extras will be quickly soaked up by Te Whatu Ora, which will continue to try to recruit nurses from aged care. This may mean there is little net benefit for the aged care industry, which keeps struggling with a staffing shortage. 

Continue to overlook the sector and it will eventually turn into a big, unavoidable problem – one that becomes very expensive to fix when it becomes too big to continue hiding under the rug. 

Not for Profits

Barry Baker and Jadene Windley say:

Some sectors saw big wins in this Budget, and the Not for Profit (NFP) organisations operating in those areas will be really pleased with the additional support. There are plenty of NFPs working in or around early childhood education (ECE), housing, and health and disability; they’ll reap some of the benefits of Budget 2023.

It’s excellent to see some of the funding being directed to higher wages; this is an area where NFPs have sometimes struggled. Higher wages should allow them to attract and retain good team members. We may also see an indirect boost to worker numbers from the ECE subsidy extension. Improved access to childcare encourages people into the workforce who might otherwise have been looking after kids. Hopefully this will help those already in the sector stay, and make it easier to recruit others. 

Finally, the expansion and extension of the Warmer Kiwi Homes programme will provide a significant boost to NFPs involved in this industry. We know many have been struggling to survive over the past few years, and this will give them some certainty and confidence for the future. 

Other NFPs won’t be impacted much by the Budget. We were happy to see targeted extra funding in areas where it’s needed, it just didn’t go far enough.