Budget gambles on growth
Every Budget is a juggle. Money is spent here and there. Taxes are tweaked, and spending cuts are made.
Budget 2025 is especially so. Somehow, the government and Finance Minister Nicola Willis had to juggle finances and politics. Somehow, she had to conjure up many billions of dollars to salve wounds in health, reinforce the ramparts of defence, rev up roads and enhance education.
At a time when money was not growing anywhere, let alone on trees, she and Prime Minister Christopher Luxon desperately need both the illusion and reality of "growth".
Growth will increase the tax take and lower unemployment and benefit payments. Decent growth can reverse deficits into surpluses and raise voter morale.
Ms Willis' "no BS Budget", or as she said yesterday, "a responsible Budget to secure New Zealand's future", desperately endeavoured to find extra money.
New Zealand's debt is predicted to rise to 46% of GDP before sliding back. The Budget, despite the juggling, will continue to run deficits for a few years yet, at least. The spectre of long-term structural deficits continues to loom.
Covid and post-Covid spending splurges have accentuated New Zealand's tricky finances. Further, the advent of United States President Donald Trump detrimentally affects international economic health and therefore New Zealand.
Politically, Ms Willis and co are betting that the public will recognise their "responsibility", that the government will be rewarded for staying the course.
Such is the desperation that the government swooped on the massive blowouts in the expected costs of "pay equity" settlements.
This gamble produced more than half of the savings, $12.8 billion, needed over the next four years to make the Budget credible. This is the fraught juggle that could see the government come crashing down.
Few will be concerned that the KiwiSaver subsidy will disappear for those earning more than $180,000. Halving the amount for the rest, and altogether $3.7b will be saved.
Means testing for first-year Best Start payments, increasing the threshold for student-loan repayments and means testing parents for Jobseeker allowances for 18- and 19-year-olds are ways to generate more money.
Various areas of government will have to make do without increases, and RNZ's budget will be cut. Impacts will continue to emerge over the next few days as details are scrutinised and affected parties react. There are 116 savings measures.
On the other side of the ledger are 228 new spending initiatives, the likes of higher rate rebate levels for SuperGold cardholders and the 12-month prescription provision.
There were also the pre-Budget announcements for the Social Investment Fund, the screen production rebate, urgent healthcare funding, more money to tackle truancy and for maths education, and to combat drug smuggling. The biggest by far was the $12b over the coming years for defence.
The Budget day's new spending is the attempt to stimulate business productivity and growth through "Incentive Boost", $6.8b foregone in tax revenue over four years through immediate accelerated depreciation for capital spending.
While there are no magic wands to increase productivity, the government is banking on its collection of changes to prompt more efficiency.
Increases to learning support in education should not be scorned.
Ms Willis did her best to lower expectations. Indeed, there is little or nothing for the "squeezed middle", which received small "tax cuts" last year when tax thresholds were adjusted.
However, despite claims of an "austerity" Budget, taxes (and the overall size of the government) will increase again, partly through bracket creep or fiscal drag. Increases in wages and salaries cause more income to be taxed at higher levels.
There will remain those on the Right who think that Ms Willis, despite the rhetoric, is tinkering and not tackling fundamental financial unsustainability. Others will see her as Scrooge, mean-spirited and foolishly stalling an economy that requires government stimulus.
Faced with tough choices, Ms Willis has juggled the finances in a way that carries high political risk. Much will depend on whether the promised growth occurs next year.
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RNZ News
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- RNZ News
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Photo: RNZ / Cole Eastham-Farrelly But Williams said there were risks in treating similar submissions created using 'tools' as one submission. "Treating those ones as if they are all identical is not just wrong, it's actually undemocratic," he said. "It's been really concerning that, under the current parliament, they are trying to carte blanche, reject people's submissions, because a lot of them are similar." AI should be used to analyse submissions and identify the unique points. "Because if people are going to take the time and make a submission to Parliament, at the very least, the officials should be reading them or having them summarised," Williams said. Labour MP Duncan Webb is a member of the Justice Committee and sat in on oral submissions for the Treaty Principles Bill. He said he attempted to read as many submissions as possible. 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Otago Daily Times
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Bishop had called a vote ahead of Budget Day to suspend the privileges report debate to ensure the Te Pāti Māori MPs could take part in the Budget, but not all of them turned up. The debate was robust and rowdy with both the deputy speaker Barbara Kuriger and temporary speaker Tangi Utikare repeatedly having to ask MPs to quieten down. Tākuta Ferris spoke first for Te Pāti Māori saying the haka was a "signal of humanity" and a "raw human connection". He said Māori had faced acts of violence for too long and would not be silenced by "ignorance or bigotry". "Is this really us in 2025, Aotearoa New Zealand?" he asked the House. "Everyone can see the racism." He said the Privileges Committee's recommendations were not without precedent, noting the fact Labour MP Peeni Henare, who also participated in the haka, didn't face suspension. Henare attended the committee and apologised, which contributed to his lesser sanction. MP Parmjeet Parmar - a member of the Committee - was first to speak on behalf of ACT, and referenced the hand gesture - or "finger gun" - that Te Pāti Māori co-leader Debbie Ngarewa-Packer made in the direction of ACT MPs during the haka. Parmar told the House debate could be used to disagree on ideas and issues, and there wasn't a place for intimidating physical gestures. Greens co-leader Marama Davidson said New Zealand's Parliament could lead the world in terms of involving the indigenous people. She said the Green Party strongly rejected the committee's recommendations and proposed their amendment of removing suspensions, and asked the Te Pāti Māori MPs be censured instead. Davidson said The House had evolved in the past - such as the inclusion of sign language and breast-feeding in The House. She said the Greens were challenging the rules, and did not need an apology from Te Pāti Māori. NZ First leader Winston Peters said Te Pāti Māori and the Green Party speeches so far showed "no sincerity, saying countless haka had taken place in Parliament but only after first consulting the Speaker. "They told the media they were going to do it, but they didn't tell the Speaker did they? "The Māori party are a bunch of extremists," Peters said, "New Zealand has had enough of them". Peters was made to apologise after taking aim at Waititi, calling him "the one in the cowboy hat" with "scribbles on his face". He continued afterward, describing Waititi as possessing "anti western values". Labour's Willie Jackson congratulated Te Pāti Māori for the "greatest exhibition of our culture in The House in my lifetime". Jackson said the Treaty bill was a great threat, and was met by a great haka performance. He was glad the ACT Party was intimidated, saying that was the whole point of doing the haka. He also called for a bit of compromise from Te Pāti Māori - encouraging them to say sorry - but reiterated Labour's view the sanctions were out of proportion with past indiscretions in the House. Greens co-leader Chlöe Swarbrick said the debate "would be a joke if it wasn't so serious". "Get an absolute grip", she said to the House, arguing the prime minister "is personally responsible" if The House proceeds with the committee's proposed sanctions. She accused National's James Meager of "pointing a finger gun" at her - the same gesture coalition MPs had criticised Ngarewa-Packer for during her haka - the Speaker accepted he had not intended to, Swarbrick said it was an example where the interpretation can be in the eye of the beholder. She said if the government could "pick a punishment out of thin air" that was "not a democracy", putting New Zealand in very dangerous territory. An emotional Maipi-Clarke said she had been silent on the issue for a long time, the party's voices in haka having sent shockwaves around the world. She questioned whether that was why the MPs were being punished. "Since when did being proud of your culture make you racist?" "We will never be silenced, and we will never be lost," she said, calling the Treaty Principles bill was a "dishonourable vote". She had apologised to the Speaker and accepted the consequence laid down on the day, but refused to apologise. She listed other incidents in Parliament that resulted in no punishment. Maipi-Clarke called for the Treaty of Waitangi to be recognised in the Constitution Act, and for MPs to be required to honour it by law. "The pathway forward has never been so clear," she said. ACT's Nicole McKee said there were excuses being made for "bad behaviour", that The House was for making laws and having discussions, and "this is not about the haka, this is about process". She told The House she had heard no good ideas from the Te Pāti Māori, who she said resorted to intimidation when they did not get their way, but the MPs needed to "grow up" and learn to debate issues. She hoped 21 days would give them plenty of time to think about their behaviour. Labour MP and former Speaker Adrian Rurawhe started by saying there are "no winners in this debate", and it was clear to him it was the government, not the Parliament, handing out the punishments. He said the proposed sanctions set a precedent for future penalties, and governments may use it as a way to punish opposition, imploring National to think twice. He also said an apology from Te Pāti Māori would "go a long way", saying they had a "huge opportunity" to have a legacy in The House, but it was their choice - and while many would agree with the party there were rules and "you can't have it both ways". Te Pāti Māori co-leader Rawiri Waititi said there had been many instances of misinterpretations of the haka in The House and said it was unclear why they were being punished, "is it about the haka... is about the gun gestures?" "Not one committee member has explained to us where 21 days came from," he said. Waititi took aim at Peters over his comments targeting his hat and "scribbles" on his face. He said the haka was an elevation of indigenous voice and the proposed punishment was a "warning shot from the colonial state that cannot stomach" defiance. Waititi said that throughout history when Māori did not play ball, the "coloniser government" reached for extreme sanctions, ending with a plea to voters: "make this a one-term government, enrol, vote". He brought out a noose to represent Māori wrongfully put to death in the past, saying "interpretation is a feeling, it is not a fact ... you've traded a noose for legislation".
