Lit­tle re­lief for mid­dle in­come Kiwi earn­ers

In­creases spread thinly with ex­pected boost for health but much less for ed­u­ca­tion

The New Zealand Herald - - News - Claire Trevett deputy po­lit­i­cal ed­i­tor

Labour has knocked off its first Bud­get but it lived up to Prime Min­is­ter Jacinda Ardern’s “no sur­prises” prom­ise leav­ing some un­der­whelmed and of­fer­ing lit­tle for mid­dle-in­come work­ers.

Fi­nance Min­is­ter Grant Robert­son and Prime Min­is­ter Jacinda Ardern kicked off the day with a cheese roll and the Bud­get proved just as sim­ple fare.

It in­cluded the ex­pected boost in spend­ing for health ($3.6 bil­lion) to help pay for hos­pi­tals and DHB costs, as well as plans for 6000 more state houses, but there was a lower in­crease for ed­u­ca­tion of $1.3b.

That will de­liver just a 1.6 per cent in­crease in schools’ fund­ing and a sim­i­lar in­crease in fund­ing for early child­hood cen­tres, which had hoped for a 4 per cent in­crease.

Labour’s op­er­at­ing al­lowance of $2.8b was more than $1b higher than Na­tional’s but the in­creases in spend­ing were con­ser­va­tive and rel­a­tively thinly spread, tar­get­ing those on low in­comes with lit­tle for mid­dle New Zealand.

The first steps of its prom­ise for univer­sal cheaper GP vis­its were highly tar­geted at school chil­dren (it lifted free GP vis­its to in­clude 13-yearolds) and low-in­come earn­ers such as state house ten­ants and those get­ting ac­com­mo­da­tion sup­port.

The re­straint meant Labour could an­swer the crit­ics of its eco­nomic han­dling by re­turn­ing a sur­plus of $3.7b ris­ing to $7b over the next four years and steady growth fore­casts of around 3 per cent.

While debt will in­crease by about $10b over the next few years, it is on track to drop be­low the tar­get of 20 per cent of GDP by 2022.

How­ever, the Bud­get left many groups un­der­whelmed. The pri­mary school teacher union NZEI de­scribed it as “a dis­ap­point­ment” and the Sal­va­tion Army wel­comed moves such as cheaper GP vis­its for those on low in­comes but said “it is not the trans­for­ma­tional change we had hoped for”.

Ardern de­nied the Bud­get had failed to live up to the hype of Labour’s prom­ises for change on the elec­tion cam­paign, say­ing it had de­liv­ered a lot prior to the Bud­get such as its Fam­i­lies In­come Pack­age which would be­gin in July.

“It might not be ex­cit­ing to put money into hos­pi­tals or DHBs or into schools, but ac­tu­ally that’s what we needed to do. And that’s what we’ve done.”

Ardern, who had promised the Bud­get would ad­dress the “squeezed mid­dle”, said that would be done through the widen­ing el­i­gi­bil­ity of Work­ing for Fam­i­lies for those on mid­dle in­comes. Na­tional leader Si­mon Bridges said the ones miss­ing out in Labour’s Bud­get were mid­dlein­come work­ers.

“In fact mid­dle-in­come fam­i­lies are get­ting steadily worse off, with the can­cel­la­tion of Na­tional’s tax changes and the com­ing big in­creases in fuel taxes that will take petrol and diesel prices to record lev­els.

“Bor­row­ing more and tax­ing more in strong eco­nomic con­di­tions makes no sense and risks un­do­ing all the hard work New Zealan­ders have done over the last few years.”

The Bud­get fore­cast the aver­age wage to hit the $70,000 mark in the next three or four years, which is when the top tax thresh­old kicks in. That could leave Labour de­fend­ing fail­ing to move on tax bracket changes while it has healthy sur­pluses and higher than ex­pected tax rev­enue.

Robert­son said the Tax Work­ing Group would look at whether that thresh­old should now shift but did not show much en­thu­si­asm for it.

Robert­son said the aim of the Bud­get was to get bal­ance. “We never said we could fix ev­ery prob­lem in one Bud­get. We’ve got three in this term and hope­fully more to come. It’s re­ally im­por­tant for us to show that we can af­ford what we promised.”

Newspapers in English

Newspapers from New Zealand

© PressReader. All rights reserved.