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The Spinoff
25-05-2025
- Business
- The Spinoff
Budget 2025: A fiscal ‘time bomb' and a ‘disrespectful' blue dress
As the post-budget sales pitch ramps up, Investment Boost is put under the microscopic – while one fashion headline sparks an unlikely political sideshow, writes Catherine McGregor in today's extract from The Bulletin. The politics of regional neglect? The deluge of post-Budget commentary has hardly let up, and for two of New Zealand's largest and most politically sensitive regions – Auckland and the South Island – the reaction has been especially pointed. Business leaders in Auckland are cautiously optimistic, the Sunday Star-Times' Stewart Sowman-Lund reports (paywalled). Former National leader turned Business Chamber CEO Simon Bridges called it 'a real shot in the arm' while mayor Wayne Brown said he welcomed the investment in developing innovation, technology, and science and encouraging foreign investment. Greens' co-leader and Auckland Central MP Chlöe Swarbrick was less enthused. She said the budget would make the city 'demonstrably worse', citing the budget's lack of funding for climate resilience and addressing poverty. With little in the budget expressly for the South Island, mainlanders are still waiting for the government's words on regional empowerment to become action, independent economist Benje Patterson told The Press's Blayne Slabbert (paywalled). The government is 'continuing to kick the can down the road' on its fiscal promises to the South Island, he said. Patterson also questioned the long-term value of Investment Boost, an untargeted incentive likely to fund a lot of 'tax-efficient ute upgrades'. A good idea, with a gaping hole The Investment Boost tax break has emerged as one of the most debated measures of Budget 2025. On paper, it's simple: allow businesses to deduct 20% of new asset costs upfront to incentivise growth. But as Newsroom's Jonathan Milne reports, the scheme contains a potentially explosive flaw: there's no cap on either eligibility or cost. Unlike similar programmes overseas, New Zealand's version doesn't have a narrowly defined set of depreciable assets. Instead, Milne's colleague Marc Daalder writes, it offers 'massive, uncapped tax cuts for billion-dollar oil rigs, fast-tracked coal mines and glittering skyscrapers' – meaning just a few large-scale developments could send the cost spiralling well beyond Treasury's $6.6 billion estimate. The finance minister has said the policy will deliver the 'confidence injection' business needs – and Daalder agrees. 'It's hard to imagine a policy that could inject more confidence for the big end of town than an uncapped opportunity for everyone from multinationals to commercial property developers and [Shane] Jones' beloved mining sector.' Labour's fiscal headache While National and its partners defend the budget's restraint, Labour finds itself facing a challenge of a different kind: how to mount a credible alternative. As Thomas Coughlan writes in the Herald (paywalled), Labour's fiscal strategy appears muddled, with no clear consensus on spending, debt or taxation. The issue of pay equity funding illustrates the problem: Labour has criticised the government's decision to scrap the $13 billion contingency, but offered no roadmap to restore it. As Coughlan observes, if Labour plans to reinstate pay equity, it needs to explain how – especially when even its 2023 wealth tax wouldn't fully cover the cost. 'Who'd have thought that after a Budget as stern and severe as this, one that leaves so many victims, so many targets, that it might actually be Labour that comes off in the more vulnerable political position?' Chris Bishop to the Herald: 'be better' Among all the talk of budget winners and losers, one story has spiralled well beyond policy: Nicola Willis' dress. It all started when the Herald interviewed a local designer who said the finance minister's choice to wear a British label on Budget Day showed 'total disrespect' to the local fashion industry. The story attracted swift backlash, including from fellow National ministers. Chris Bishop called it 'sexist' and noted no one asked what he or other male MPs were wearing. Tying the article to Andrea Vance's controversial pay equity column, Bishop said 'we don't need gendered abuse of MPs by journalists like Stuff dished out two weeks ago, and we don't need articles commenting on what female MPs wear on Budget Day.' Willis herself dismissed the criticism, saying she wore a mix of overseas and local fashion brands and the media's focus should be on policy, not clothing.
The Spinoff
27-04-2025
- Business
- The Spinoff
Air NZ faces new wave of anger over soaring fares
Another holiday season, another outcry over the national carrier's soaring ticket prices – and now calls for action are getting louder, writes Catherine McGregor in today's extract from The Bulletin. To receive The Bulletin in full each weekday, sign up here. A Bulletin tradition returns to the runway If it feels like complaints about Air New Zealand fares are a perennial feature of The Bulletin, that's because they are. Former editor Stewart Sowman-Lund wrote on the topic – along with the broader financial pressures on the company – twice last year, inspired initially by Consumer NZ's push for a Commerce Commission inquiry into airline pricing. Fares on some routes have jumped by up to 300% over the past few years, putting domestic air travel out of reach for many in our smaller centres. As Consumer NZ's Abby Damen put it, if you live somewhere like Gisborne or Whangārei, your choices are simple: 'grin and bear it – or not fly at all.' Air New Zealand, for its part, last year insisted that the average fare increase over the past five years was closer to 22%, blaming inflation across almost every area of its business. Holiday prices soar, and tempers with them Fresh outrage took flight over Easter, sparked by stories like that of Tauranga man Scott Koster, who told RNZ's Susan Edmunds that it would be cheaper to send his daughter to Los Angeles than back to Wellington. Air NZ defended its dynamic pricing model, suggesting travellers book early or fly at off-peak times – advice many called unhelpful at best. 'No-one plans in advance for a funeral,' the Sunday Star-Times' Andrea Vance wrote pointedly. In Dunedin, meanwhile, sports groups are warning that crippling travel costs could kill off national tournaments. In response, Air NZ cited bigger forces at play: spiralling labour costs, fluctuating fuel prices, airport levies and a shortage of operational aircraft due to engine maintenance issues. The company is 'very sympathetic' to customers facing higher fares, CFO Richard Thomson told the Otago Daily Times' Matthew Littlewood (paywalled). 'But there's no point in us pricing airfares at less than the cost of delivering the service.' A fraying bond with the public In her (paywalled) column, Vance argued that while the company has some valid defences against accusations of price-gauging, its 'social licence – which allows Air NZ to get away with a lot – is fraying.' For many New Zealanders, the airline isn't just another business, it's a taxpayer-backed symbol of home. That emotional connection is wearing thin, especially on regional routes where there's no competition and high prices can often feel like exploitation. This week government minister James Meager told the ODT (paywalled) that regional flight reliability and connectivity was his top priority 'not only as minister for the South Island, but also as acting minister of transport with responsibility for aviation'. A Horizon Research survey last year found air travel was ranked the least competitive consumer market in the country, trailing even banking and groceries. Whether or not a ComCom market study ever materialises, Vance warned that the airline's next CEO will inherit 'a grumpy customer base' and a trust deficit that slick marketing alone won't fix. Amid the turbulence, Air NZ is celebrating the arrival of its first retrofitted Boeing 787 Dreamliner, fresh from a six-month overhaul in Singapore. The aircraft boasts revamped cabins throughout, including a new tier of business class seats dubbed Business Premier Luxe. It's a major investment – $500 million across 14 aircraft – but one the airline says will set it apart from competitors like Qantas, whose average fleet age is nearly double, reports the Herald's Tom Raynel (paywalled). CCO Jeremy O'Brien called the plane's touchdown 'a huge moment for our people, our customers, and the future of Air New Zealand'. Whether fancier international planes can smooth over domestic anger remains an open question.
