Budget Update
Yesterday Finance Minister Grant Robertson delivered the Government’s final Budget before the election. Following the Budget, Simon Arcus, Chief Executive of Business Central said:
“A Budget is about forecasting, rigorous analysis, a sprinkle of fortune telling and reflects the beliefs of the government of the day about where national spending is best prioritised.
“While there were some significant measures announced to support Kiwis with the cost of living, including extensions to free and subsidised public transport for children and the under 25s, our own policy advisors and BusinessNZ network analysts observe that the measures seem broad and relatively untargeted.
“We are not surprised but naturally disappointed there was little in the way of support for business. This Budget made no acknowledgement of the challenges businesses are facing and took few, if any, steps to remove barriers to business growth.”
Despite this wider outlook, there were however some welcome announcements for our region. Some key examples include:
- A further +$800m of infrastructure investment committed to the Cyclone recovery
- $130m was also committed for business and community support
- $120m was promised for protecting communities (i.e. future flood resilience).
In addition, there welcome boosts to science & technology programmes, with over $450m committed to the creation of three multi-institution research hubs.
However, while such investments will undoubtedly yield future productivity gains, these will not be immediate. It is disappointing that the Budget did not include any measures that could help businesses tomorrow or support a long-term vision for business as the critical contributor to the future of the economy. We need to support those who struggle, but we should also foster and reward achievement and ambition. Ahead of the election, we will continue to call for measures, like accelerated depreciation, that will incentivise business to invest now and deliver growth.
In the detail, there were some positive measures surrounding workforce development. We welcome the news that the Apprenticeship Boost has been extended for another year – this could deliver an additional 30,000 apprentices on top of the 57,000 already funded through the scheme. Feedback from this scheme has been that employers see its merit, feel it is easy to use and has worthwhile outcomes.
Mr Arcus concluded: “It’s worth noting the Government’s optimism around the near-term prospects for New Zealand’s economy: these spending plans are predicated on avoiding recession and inflation being brought back to more typical levels by the middle of the decade. These are very important to keep in mind as they are big assumptions which take an optimistic view of New Zealand’s resilience in the face of global trends.”
We will continue to review and assess the detail of the Budget commitments, and the responses of the major parties, over the days ahead. We are eager for the Government to use all available levers to enhance productivity and enable New Zealand to be more competitive internationally. In the run up to the election, we look forward to working with all political parties to ensure they share this focus.
Please don’t hesitate to get in touch with Ed Gibbs, Policy & Corporate Affairs Manager (ed.gibbs@businesscentral.org.nz / 027 280 3622) if you have any specific concerns you’d like to discuss.
