Mini-Budget stole much of the show
ANALYSIS: On July 1 the Government will start to pay a lot of families a lot more money every week.
Any family with children on a moderate or low income will receive a serious bump to their Working For Families – likely well over $1000 a year. Anyone with a baby born after July 1 will receive $60 a week for the first year of its life. Anyone with a superannuation or other main benefit will start to receive their Winter Energy Payment of $20 a week. When these policies are fully rolled out the poorest 384,000 families in New Zealand are expected to receive an average of $3900 extra a year.
No, this isn’t a sneak peak of today’s Budget. It’s all in the $5.53b Family Incomes Package the Government announced in its ‘‘mini-Budget’’ last December, money found by cancelling the previous Government’s $8.36b tax cuts.
A lot of people will be looking for what they can expect in their back pocket from today’s Budget, and may end up disappointed. The Government already made a major change to the incomes of Kiwis, one that (mostly) hasn’t hit yet – but it won’t be in today’s Budget.
Indeed, a lot of the big ticket budget items the Government promised during the election were set in train in December, when we were all a bit bored of politics and ready for Christmas.
KiwiBuild got its $2b in capital to build those
100,000 affordable homes. Tertiary students got their first year of uni free. Tax cuts were cancelled with generous boosts to Working for Families and new benefits to replace them. Paid parental leave got extended from 18 to 22 weeks.
This doesn’t mean the Government has spent all of its money already. Far from it.
That same mini-Budget allocates $2.6b of operating allowance for this year’s budget – that’s continued and repeated spending – and $3.4b for one-off capital spending. The tax take since December has been much better than expected, and Robertson has found $1.4b in reprioritised cash and money from the changes to GST and the Bright Line test. There’s plenty of money.
But it does signal the focus will be less on the back pocket and more on the wider system. Prime Minister Jacinda Ardern has repeatedly called today’s Budget a ‘‘Rebuilding Budget’’ – think serious capital into schools and hospitals.
Labour is also likely to give a boost to the wider health and education operating allowances, money that could go to some specific retail promises that regular voters will notice. Various coalition promises – think ‘‘provincial growth fund’’ – will also take a chunk of that money.
On housing – one of the key issues Labour campaigned on – we may see more details on that
$2b allocated to KiwiBuild. But the big housing issue absent from the mini-Budget was state housing. Labour promised to build at least 1000 more a year, but Housing Minister Phil Twyford has been very clear that he would prefer to build something in the range of 2000.
There’s a solid argument to be made that Labour should have tactically saved those retail policies from the mini-Budget for this Budget. It would have made this Budget a very full and loud Labour Budget – not the ‘‘rebuilding’’ Budget the prime minister has been talking up.
But even if this Budget isn’t quite as exciting as the supposedly ‘‘mini’’ budget from December, that isn’t the end of the world for the Government. There’s still two more of them before the next election.
A lot of people will be looking for what they can expect in their back pocket . . . and may end up disappointed.