Catch-ups but three big misses

different from the others in recent years: The purse strings have loosened.

In the first term, government spending was boosting the economy through tax cuts and Canterbury earthquake-related spending.

Since then, the Government has been cutting back on spending relative to population growth and inflation to get the books in balance, and that was a drag on the economy.

This Budget is an expansionary one. Tax cuts and catch-up spending mean economic growth will get a boost over the next few years.

The centrepieces are broad income tax cuts. By lifting thresholds at which tax rates bite, the average worker will receive about $26 more per week. Increases in Working for Families and the accommodation supplement were long overdue.

Other spending largely reflected catch-up after some years of restraint at a time of growing population and costs. The catch-up is welcome, but there should not have been restraint in the first place.

For me, there were three big misses.

Housing: There were no new commitments to fix the crisis.

A modest increase in Housing New Zealand funding by not taking a dividend (which is bizarre in the first place when there is a significant shortage of social housing) is not large enough or fast enough to reduce housing pressures.

Housing also requires a much greater focus on solving local government’s infrastructure funding. Sadly, there is no progress on this front.

Social investment: The Government isn’t really investing in this much-hyped policy ($321 million, compared to $304m for film subsidies and $763m to build more prisons).

barely rates – an additional $4m seems pretty small, given the huge task ahead to meet our obligations under the Paris Agreement.

For most punters, the Budget will seem like a sweet deal. For those looking for action on housing, infrastructure and the poverty trap, it came up short.

Climate change

Shamubeel Eaqub is an independent economist and consultant. Follow him on Twitter: @Seaqub.