Budget benefits southern people
The programme gives tradies, farmers, and other businesses a tax incentive to invest in new tools and equipment to boost productivity and lift wages.
Businesses can now deduct 20% of the cost of new machinery, tools and equipment off their taxable income. This is on top of existing depreciation meaning a much lower tax bill in the year of purchase.
If a farmer wanted to buy a new tractor for $150,000, they would be able to immediately deduct $30,000.
Investments like this pump money directly into our local economy, making everyone better off.
The Budget also includes $164 million over four years to expand urgent and after-hours healthcare, including better access to diagnostics, urgent medicines and 24/7 on-call clinical support.
Over the next two years improved services will be rolled out to rural communities in places like Balclutha, Lumsden and Roxburgh.
I am also pleased to see that the Budget will help up to 66,000 more SuperGold cardholders with their rates payments, with a new income abatement threshold to assist SuperGold cardholders being introduced from July 1.
Another excellent development for the South is the investment for Milford Sound announced last week.
Certainty for cruise ship access and the retention of the Milford Aerodrome is incredibly important for this community.
With many of the sound's visitors moving through our region, this $15.2m investment will bring confidence for Southland and will help ensure a strong future.
Reforms to Fish & Game New Zealand are on the way.
The changes will modernise and strengthen the organisation, as well as improve the management of hunting and fishing resources and advocacy, while maintaining local control.
Legislation will be introduced this year, and the select committee will provide an opportunity to provide feedback on the proposals.
Finally, it was great to see such a packed lineup of events come to Gore for the Bayleys Tussock Country Music Festival.
The festival is a great example of our region leading the way in the country music scene.
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NZ Herald
3 days ago
- NZ Herald
Christopher Luxon won't discuss poor polls with caucus, Labour not saying anything about tax policy
Luxon said: 'We discuss our internal polling from time to time with our caucus, which is very normal practice, but I'm not focused or polls or talking about myself, I'm focused on New Zealanders and making sure we have the right long-term plan in place.' Luxon said. Luxon confirmed caucus was still receiving internal polls. 'New Zealanders understand we've gone through the biggest recession in the last 30 years. We've got a big Covid hangover as we've seen from the Treasury report last week, we've had some difficult challenging circumstances particularly since April with respect to the tariff situation. 'I think you're seeing across New Zealand - get out of Wellington, you go to the South Island, the primary industries, go to Hawke's Bay, you are seeing good recovery in those parts, but I acknowledge in places like Auckland and Wellington and urban environments it is still pretty tough,' Luxon said. He said things like the InvestmentBoost tax credit and the infrastructure pipeline would lead to a recovery. Chris Bishop said talk of a leadership change was silly. Photo / Mark Mitchell Talk of leadership change 'just silly' - Chris Bishop Senior Minister Chris Bishop said despite the grim polling there was 'no talk' of changing the leader. 'That's just silly. What we're doing as a Government - New Zealand's first three-way coalition government - is working hard to get the economy growing again after years of high inflation, high government spending and high debt,' Bishop said. He said he would 'not even entertain' the idea of a polling threshold at which point National would need to roll its leader. Bishop was one of the National MPs at the heart of a bid to replace then-leader Simon Bridges with Todd Muller in 2020. Like Luxon, Bishop said that the economy had struggled to lift off since US President Donald Trump's announcement of tariffs on Liberation Day in April. Treasury had been forecasting a decent economic recovery before April, but since then, it revised its growth forecasts downwards. The economy is still set to grow, but not as fast. Live GDP estimates from the Reserve Bank suggest the next GDP print will show a quarter of contraction. The threat of tariffs had caused businesses to hold back investment. Bishop said the Government would not make 'reactionary one-off decisions' to pump the polls. 'What we need to do is stick to the course of a long-term economic plan that would set New Zealand up for growth,' he said. He suggested that some of the polling slump was because Labour had no real policy, beyond a promise to repeal things like Three Strikes, the reinstatement of oil and gas exploration, and the future Regulatory Standards Bill. 'It's all easy for Chris Hipkins and the Labour Party to sit off to the side and say life should be better, [but] in their own words, they do not have any policy. 'Life's easy in opposition when you have the luxury of not having any policy... they do not have any policy and they are not planning to release any any time soon,' Bishop said, referring to an admission from Labour finance spokeswoman Barbara Edmonds that the party did not have any substantive cost of living policy. Labour leader Chris Hipkins on his way into his weekly caucus meeting. Photo / Mark Mitchell Hipkins keeps mum on tax policy Labour leader Chris Hipkins was happy with the polls, saying Labour's numbers had 'grown significantly since the last election. 'We were at 26% at the last election, we're now polling comfortably across the polls in the mid-30s,' Hipkins said. Asked about Labour's lack of policy, Hipkins said, 'they [National] would definitely like more things to attack us on - that's true'. Hipkins said policy would be announced before the election, but he wanted to make sure he could deliver on it. A column by Vernon Small, a former staffer for Labour Revenue Minister David Parker, in the Sunday Star-Times reported Labour's policy council had resolved to support a Capital Gains Tax as the preferred policy for the next election, beating out the other favoured tax, a wealth tax. It now rests with Labour's governing council and the Parliamentary side of the party to decide what to do with the decision as the party puts its 2026 election policy together. Hipkins has committed to campaigning on progressive tax reform, but said the tax policy was 'not yet resolved'. He said he 'would not discuss the internal machinations of the Labour Party', but said a 'consensus is emerging'. He said a wealth tax and a capital gains tax were 'on the table', but would not commit to Labour's traditional policy of excluding taxing any capital gains accrued on the family home. 'When we have a tax policy to announce we will announce it,' Hipkins said. When asked again he said, 'I'm not getting into that because we haven't announced a tax policy'. Eventually, Hipkins said, 'I've always said taxing the family home shouldn't be taxed, but I'm not announcing a policy that we haven't announced'. Hipkins has been reluctant to shape his party's tax discussions by ruling various things in or out. Labour's 2017 commitment to kick its tax policy to a tax working group was guided by the fact that any capital gains tax would exclude the family home. In an earlier press conference, Hipkins would not rule out the Greens' inheritance tax proposal, although he conceded it would be very unlikely Labour would agree to it. Hipkins got into trouble with his party in 2023 and 2024 for his 'captain's call' to kill the wealth tax proposal, a call some members believed was against party rules - although Hipkins and the party leadership dispute this. Hipkins denied his reluctance to personally shape the tax discussion this time around is because he is being extra scrupulous in light of his previous troubles over captain's calls. 'No,' he said, when asked. 'We'll announce a tax policy when we're ready to announce it, not because you keep asking questions about it,' Hipkins said. Minister of Defence Judith Collins said this is the best Cabinet she has served in. Photo / Sylvie Whinray (file) The most enjoyable Cabinet - Judith Collins Former National leader Judith Collins said she 'didn't even see' the polls. 'I'm just too busy doing my job,' she said. Collins said this was 'a really good coalition Government, I love being part of it'. 'I've been in a few Cabinets, let me tell you, and this is the most enjoyable for me,' she said. 'I find the Prime Minister's leadership excellent, he just lets me get on and do the job,' she said. Collins said Luxon was 'absolutely' the right person to lead the Government.
Scoop
06-08-2025
- Scoop
Unemployment Lower Than Forecast
Minister of Finance The latest labour market data showing lower than forecast unemployment has been noted by Finance Minister Nicola Willis. Stats NZ data released today shows the unemployment rate for the June quarter was 5.2 per cent, below the Treasury forecast of 5.4 per cent. 'Rising unemployment is tough on every New Zealander impacted and is the unfortunate after-effect of a historic period of out-of-control inflation, rapidly rising interest rates and stagnant growth. 'Our Government has worked hard to restore responsible economic management but Treasury, in its pre-election fiscal update, made clear that unemployment would peak in the middle of this year. It's of note, however, that today's data confirms 8000 fewer unemployed people than Treasury forecast would be the case in its pre-election update. 'Our Government remains focused on rebuilding the economy to deliver more and better paying jobs. A recovery is now underway with inflation back under control, interest rates falling and healthy rates of growth in the first three months of the year. 'Despite global volatility and factors outside our control, we remain confident in New Zealand's economic prospects and are working hard to create the conditions for future job creation with $6 billion of government-funded construction work kicking off before Christmas, fast-track projects beginning, exports growing and the Investment Boost tax policy giving businesses a reason to invest and grow. 'We also note that average hourly earnings rose 4.5 per cent in the past year driven by wages in the private sector. This is well ahead of inflation at 2.7 per cent.'
Newsroom
29-07-2025
- Newsroom
NZ's wobbly economy steadying?
1. Tariffs, but with happy markets US tariffs and trade negotiations are back on the front page. That's dashed some hopes the prior 90-day tariff pause might slide into permanency. But a string of recent trade deals has helped produce a vastly different reception amongst financial market participants and forecasters this time around. Indicators of global risk appetite remain healthy and global equity markets have blasted through record highs. That's helpful for confidence, to the extent it lasts. Alongside this and, most importantly for NZ's economic plight, the recent trend stabilisation in global growth expectations has held. Consensus forecasts for global growth were even nudged up a touch this month, for both 2025 and 2026 (to 2.3%= percent year on year and 2.4 percent respectively). Continued resilience in the global economic data pulse, particularly in the US, has helped. We won't add to speculation on whether this is all too optimistic ahead of another trade deal deadline on Friday, and the effective US tariff rate rising above 15 percent. Suffice to say, the dragging uncertainty associated with US trade policy, while lower than previously, looks set to stick around, a negative impost on investment particularly. 2. Investment appetites stirring? Despite this uncertainty, we're encouraged by a sprinkling of indications NZ investment appetites may at least be stirring. Surveyed investment intentions have not only established a foothold at above-average levels but have pushed on further in recent months (ANZ survey, July edition out Wednesday). Admittedly, buoyant rural sector cash flows are having an outsized impact here, per the chart. Boosting the odds these intentions are ultimately acted upon is anecdote suggestive of reasonable interest in the Government's Investment Boost scheme. And perhaps also the lift in investment-related imports we noticed in last week's merchandise trade figures. There's a heap of month-to-month volatility in these data, but in June we saw plant and machinery imports up 13 percent year-on-year imports of transport equipment rising 19 percent, and those for intermediate goods up 21 percent. It's all partial stuff but, taken together, helps assuage some of our prior concerns sluggish business investment might be a dragging anchor for the broader recovery. 3. Steadying of the wobble Other June economic data to hand paint a picture of a partial steadying from May's surprise and unwelcome wobble. Most 'high-frequency' indicators have pulled back a bit from the brink. The underlying sense of the recovery so far failing to launch remains though. Indicative of such, two of the better monthly indicators we watch – the Performance of Manufacturing and Performance of Services indices – continue to openly question the extent of growth uplift we've got on the board. And that's even after our second quarter GDP forecast was pruned to -0.2 percent quarter on quarter. The Reserve Bank's new Kiwi-GDP 'nowcast' sits at -0.3 percent. We still think the mid-year activity air pocket will pass. The underlying drivers of the recovery remain in place and should reassert themselves in coming quarters. But the recent weakness does push back the likely timing of the eventual labour market recovery. We doubt the current undershoot of firms' labour requirements relative to worker availability will change appreciably this side of Christmas. Our forecast peak in unemployment has been shunted out to 5.4 percent in the final quarter of the year. Wage growth should thus continue to slow through to the middle of next year. 4. Inflation (slightly) less threatening We think the supply overhang in the labour market is symptomatic of what's going on in the broader economy. And it's central to our expectation the current burst of inflation will peter out early next year. Our updated forecasts have CPI inflation peaking at 2.9 percent year on year in the current (third) quarter (forecast table at back of document). That's a touch lower than previously and follows the nudge up to 2.7 percent in Q2 revealed by Stats NZ last week. Hikes in food and energy prices are expected to feature prominently again in Q3, as well as this year's annual rates increase. Thereafter, a brisk return to the mid-point of the Reserve Bank's 1-3 percent target range is anticipated through the first half of 2026. An eye-catching but perhaps not surprising feature amongst the detail of the June inflation numbers was the downward pressure on many of the components linked to the sluggish housing and construction markets. Construction costs fell outright in Q2 for the first time since 2011. We've got additional declines pegged for the next two quarters, in part reflecting past weakness in house prices. Annual inflation in property maintenance prices fell to 1.4 percent, with that for household supplies and services at 1.5 percent. Meanwhile, household appliances and domestic accommodation experienced annual deflation in Q2 of 0.9 percent and 6.3 percent and respectively. Notably, these CPI subgroups comprise five of the top 10 most sensitive to interest rates, according to recent research by the Reserve Bank. 5. Rent declines confirm excess supply Annual rent inflation was marked at a still robust 3.2 percent year on year in June. Rents in the CPI are measured on the stock of all rental properties. But note that rents for new tenancies – a flow measure collected by MBIE more closely aligned to market conditions – are now deflating at a (smoothed) annual rate of around 2 percent. That's around the weakest in the history of a series going back to the mid-90s. It puts the median new tenancy rent back at late 2023 levels around $560/week. It fits with the general state of rental market oversupply highlighted in our recent research, a development noted as most obvious in Auckland and Wellington. Heightened supply, alongside the fact net migration remains, not only weak, but also subject to continued downward revisions, points to the strong likelihood CPI rental (stock) inflation falls back towards 2 percent over the coming 12 months. Still, one development worth highlighting is that available rental listings, according to the data we collect from Trademe, appear to have stopped rising. On our estimates, rental vacancy rates have tracked roughly sideways at 3.3 percent for the past two months. If sustained, this would cap a multi-year uptrend and mean rental supply capacity, while still large, is no longer expanding. 6. Runway to a sub-3 percent OCR looking clearer It's been relatively quiet on the interest rate front recently. There's been a pause in the trend declines in most retail interest rates (chart below). However, the net of recent growth and inflation goings on described above is sufficient in our view to reintroduce some gentle downward pressure, should the RBNZ resume Official Cash Rate cuts in August as we expect. A 25bps cut in August is as close to fully priced as it gets and we think the combination of sputtering demand and contained inflation supports the case for a follow up in October. That is, there's no change to our long-held forecast for a 2.75 percent low in the OCR cycle. At a high level we still think the risks are falling evenly either side of this view but more recently there's probably been more of a skew to the downside. Disclaimer: This publication has been produced by Bank of New Zealand. This publication accurately reflects the personal views of the author about the subject matters discussed, and is based upon sources reasonably believed to be reliable and accurate. The views of the author do not necessarily reflect the views of BNZ. No part of the compensation of the author was, is, or will be, directly or indirectly, related to any specific recommendations or views expressed. The information in this publication is solely for information purposes and is not intended to be financial advice. If you need help, please contact BNZ or your financial adviser. Any statements as to past performance do not represent future performance, and no statements as to future matters are guaranteed to be accurate or reliable. To the maximum extent permissible by law, neither BNZ nor any person involved in this publication accepts any liability for any loss or damage whatsoever which may directly or indirectly result from any, opinion, information, representation or omission, whether negligent or otherwise, contained in this publication.
