The image shows a person holding a document titled "The Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2025: Economic Development and Infrastructure Sector." The document is marked with the New Zealand government logo and dated 30 May 2024. The background features flames and the phrase "Budget 2024" on price tag stickers.
Image: Tina Tiller

OPINIONBusinessMay 30, 2024

Budget 2024: The great Spinoff hot-take roundtable

The image shows a person holding a document titled "The Estimates of Appropriations for the Government of New Zealand for the Year Ending 30 June 2025: Economic Development and Infrastructure Sector." The document is marked with the New Zealand government logo and dated 30 May 2024. The background features flames and the phrase "Budget 2024" on price tag stickers.
Image: Tina Tiller

Finance minister Nicola Willis describes her budget as moderate and responsible. But what do the experts think?

Jacqueline Paul: $20m rangatahi housing cut a short-sighted decision

The budget for 2024 is deeply disappointing and fails to at least attempt to address Aotearoa New Zealand’s urgent housing crisis, especially for rangatahi.

As someone who cares deeply about ensuring all rangatahi have access to safe, stable and affordable housing, I am frustrated to see $20 million stripped away from the Rangatahi Youth Transitional Housing initiative. This short-sighted decision scales back our collective ambitions at a critical time when we should be proactively expanding youth housing capacity to prevent poor long-term health and wellbeing outcomes.

The overall budget picture is one of misplaced priorities, with over $1.5 billion in operating expenditure cuts to crucial initiatives like the Affordable Housing Fund, Progressive Home Ownership scheme, and public housing maintenance.

These “savings” are not just numbers on a balance sheet. They directly impact thousands of individuals and whānau who are desperate for safe, secure and healthy homes. Budget 2024 was an opportunity to build on previous investments in housing. Instead, we have an uninspired bunch alongside their set of appropriations that fail to rise to the challenge. The coalition government must urgently reconsider these cuts and deliver a real plan to ensure all New Zealanders can access housing.

Jacqueline Paul is a researcher at Pūrangakura Māori Research Centre

Geof Nightingale: Are the tax changes really ‘fully funded’?

The centre piece of the coalition government’s Budget 2024 is the delivery of tax relief to our politicians’ favourite voter, the Hard-Working New Zealander. From July 1 all thresholds at which the personal marginal tax rates apply, except the top rate of 39% on income after $180,000, will be lifted. This is the first change to those thresholds since 2010 and should result in a slightly lower average tax rate for each person.

Further, the Independent Earner and In-Work tax credits will be expanded to cover higher incomes and a new Family Boost tax credit for early childhood education fees of up to $150 a fortnight introduced. And, as promised in the coalition agreements, interest deductions against residential rental income will be restored.

Together these tax changes will reduce the government’s future revenue by $3.7bn a year. The government promises that it has fully funded the tax changes through $2bn of annual cuts in government spending, a $0.6bn transfer from the sale of carbon credits and $1bn from a collection of other measures including the denial of depreciation deductions on commercial buildings.

Despite these tax changes, in 2025 taxes collected from Hard-Working New Zealanders will actually increase by $1.3bn due to wage growth and government’s friend fiscal drag/bracket creep. But the increase will be less than it could have been. And, despite the careful accounting to try and show that the tax changes are fully funded, the government is still budgeting for an overall deficit in 2025 of $7.1bn – which will be funded by borrowing.

Geof Nightingale is an independent tax adviser 

Nicola Gaston: For science and research, the reality is different to the rhetoric

There is no new money for science and research, and that itself is not a surprise. But the expiry of the National Science Challenges this year without any kind of replacement means that we have lost a significant source of funding for the research that our universities and research institutes do. It is worth remembering that when Steven Joyce set up the scheme he reallocated a good chunk of existing funding from other research areas – so this cut is not just a cut compared to the last 10 years of the scheme, but a cut relative to the decade before that.

That is before the ca. 25% cut in research funding attributable to inflation over the last decade.

We have a minister who has a lot to say about the value of science and innovation. At the launch of the Cleantech report in parliament last week she spoke about “the crucial role NZ science can play in transforming our economy through Cleantech and deep tech commercial solutions”, and how she sees science research and education as being “crucial to unlocking New Zealand’s economic growth and sustainability goals”. The rhetoric is good, but the reality is rather different right now.

The good news is that we do have an efficient science and innovation system that is delivering on many counts. The bad news is that it is already losing capability month on month as each of our research institutions announce job cuts. The worst looks to be yet to come.

Nicola Gaston is a professor in the department of physics at the University of Auckland and co-director of the MacDiarmid Institute

Sam Stubbs: A perfectly sensible budget for perfectly tough times

This feels like a perfectly sensible budget for perfectly tough times. I suspect it will credentialise Nicola Willis with financial markets and the National Party base and disappoint beneficiaries and the poor.

It is also clearly a National budget, with additional spending on law and order and regional development to please their voters. No one would confuse this budget with a Labour one.

The lion’s share of the additional spending goes to education and childcare, and few would argue with that.

The tax cuts seem to be focused on the pinched middle, and many voters will agree with that too.

For all the change, I’m pleased that many things have been left alone, most importantly KiwiSaver. National has had a death by a thousand cuts approach to KiwiSaver, but it seems to be relatively untouchable for now – it is simply too popular. Andrew Bayly will be reviewing KiwiSaver next year though, so watch this space.

Expect pushback from the health sector. While large ongoing cost pressures have been funded until 2030 – a $16 billion+ increase – expect the sector to push back on numbers of doctors in training and Pharmac funding of cancer medicines.

What disappointments are there? Little things like the NZSO funding cut. It’s small change in the national accounts, but will be out-of-proportion painful for them.

The two largely unaddressed issues are housing and infrastructure. The $1.2bn regional infrastructure fund will be a vote winner for NZ First, but it’s a drop in the ocean. And the sword of Damocles hangs over Kāinga Ora, with no clear path yet to increased housing supply in New Zealand.

Sam Stubbs is the co-founder and managing director of Simplicity

Kassie Hartendorp: Shifting power from the marginalised to the wealthy

The Backward Budget did exactly as promised: to shift power and resources from marginalised communities into our wealthiest families. Tax cuts are the shiny vehicle for wealth to be siphoned out of public services and infrastructure. This budget clears the way for supermarkets, banks, landlords and energy companies to profit from the things we need to live good lives. The coalition government’s thousand-cut approach to free prescriptions, benefit increases, disability support, public transport subsidies and public services are a surefire way to give dollars and cents with one hand, while taking billions away with the other.

While Nicola Willis was patting herself on the back, our country saw arguably the biggest mobilisation for Te Tiriti o Waitangi since the Foreshore and Seabed Act. Tens of thousands of Māori and tauiwi gathered together in over 40 towns and cities to send a clear message that we will not accept the coalition government breaching Te Tiriti o Waitangi and pushing our race relations back decades. As Willis calculates the numbers, Luxon is leading us straight into a constitutional crisis that will shake the very foundations of the country he claims to lead.

Kassie Hartendorp (Ngāti Raukawa, Ngāti Pareraukawa) is director of ActionStation

Alan Johnson: A budget for middle New Zealand

It is difficult to spot how the 2024 budget from a National-led government is that much different from one a Labour government would have delivered.

Sure Nicola Willis has delivered a clutch of small-change cuts to programmes and services that annoyed government supporters. But the broader policy settings remain the same. Spending still grows at a moderate rate, little has changed over the size and mix of the tax take and deficits and debt levels don’t appear to be that concerning.
Just like the previous government, National and its support parties have paid scant attention to child poverty or to the needs of our most vulnerable families and communities.

This, after all, is a budget for middle New Zealand who seem easy to convince that their immediate interests can be served by token tax cuts, less regulation and a disregard for any long-term planning and investment.

Alan Johnson is co-convenor of Child Action Poverty Group and an independent public policy analyst

Russel Norman: Advancing the war on nature

In a move that comes as no great surprise, the Luxon government’s budget advances its war on nature by slashing funding for agencies like the Department of Conservation, the Ministry for the Environment, Environmental Legal Aid, and the Climate Change Commission. Nicola Willis is systematically silencing environmental advocates to prevent them from standing up for nature.

The Department of Conservation has a statutory responsibility to advocate for nature even if the government doesn’t like it. The Climate Commission provides independent advice on climate policy, advice the government usually doesn’t want to hear. Environmental legal aid helps environmental groups to challenge the government in court. And the Ministry for the Environment has criticised the government’s fast-track bill and rushed process through their official advice.

No one wants to see the forests and oceans of Aotearoa turned into open-cast mines, rivers and lakes turned into sewers or precious wildlife condemned to extinction. People across the country are angry about the fast-track bill and the Luxon government’s attack on nature. On June 8, we’ll be marching in the streets of Auckland to make our opposition heard, and I encourage everyone to join us.”

Russel Norman is executive director of Greenpeace Aotearoa

Brooke Stanley Pao: Only here to protect wealth and those that have it

This year’s crown (clown) budget and their stink tax cuts aren’t going to hide the fact they’re only here to protect wealth and those that have it here in Aotearoa. There’s nothing in it that addresses the drivers of crime, the drivers of ill health, the drivers of disconnection MANY of us are feeling right now and for some have felt for GENERATIONS. We’re clear that if it isn’t a budget that looks to provide Liveable Incomes for All, that isn’t about Universal Services for All, more universal design Public Housing for All, that isn’t addressing poverty in real and meaningful ways than we’ll continue to remain in the same colonial patterns of glossing over and talking big about the issues without any kind of action behind it. We’ll continue this colonial legacy, that we’re passing on to our children to inherit zzz. James Baldwin rightfully said “I don’t believe what you say, because I see what you do” and this needs to be made louder for all of us everywhere. We need love and care and compassion to be the guiding principles of leadership everywhere. All power to the people – Toitū te Tiriti! Matike Mai forever <3

Brooke Stanley Pao is the co-ordinator of Auckland Action Against Poverty

Eric Crampton: Charting a very slow path of spending reductions

At Budget 2019, Grant Robertson promised that New Zealand’s government could deliver widespread wellbeing at a cost of around $28.80 of every $100 in economic activity – with balanced budgets. A Curia survey released by the Taxpayers’ Union showed that for every Kiwi who thought that that budget did not spend enough, more than three thought it spent too much.

When National took office, core crown expenditure had risen to an expected $33.40 for every $100 in economic activity. While the tax take had increased substantially, spending growth outpaced it. National inherited a substantial structural deficit.

National had promised to balance the books and to eventually return core spending to no more than 30% of GDP.

Budget 2024 charts a very slow path of spending reductions that might have the books balanced again by 2028, could return core spending to 30% of GDP by 2033, and may restore spending to pre-Covid proportions of economic activity by 2038: 14 years after the first lockdown.

They even somehow found room to continue subsidising the video game industry.

And they are likely to be damned as austerity merchants while maintaining spending at proportions of economic activity far above those promised in Robertson’s far-from-austere 2019 Wellbeing Budget.

Eric Crampton is chief economist at The New Zealand Initiative

Brian Roper: Laying the foundation for another three-term National government?

So far in New Zealand’s political history, National-led Governments have enjoyed lengthy periods in office. In fact, every National government since the first was elected in 1949 managed to stay in office for three or four terms. One factor that this government has in its favour is the level of campaign funding it received for the 2023 election campaign, something that is likely to be repeated for the 2026 election. Relatively well-off New Zealanders donated to National, Act and NZ First because these parties were committed to tax cuts.

The tax cuts outlined in Budget 2024 benefit those on high incomes, residential property investors and businesses, while providing relatively little to low-income earners, superannuitants and tertiary students. Indeed, students are losing $600 million over the forecast period with the shift from first to third-year fees free while being asked to pay an extra 6% in tuition fees. In short, the tax cuts provide unequally distributed small increases in after-tax income while being funded through a comprehensive programme of fiscal austerity generating mass redundancies in the public sector and cuts to public services. As the Budget Economic and Fiscal Update makes clear, during this government’s first term in office interest rates will remain high compared to those prevailing during the pre-Covid decade, unemployment will also remain high, and economic growth rates will be historically low.

None of this is likely to boost the popularity of this government, especially when combined with far-right policies and pronouncements coming from Act and NZ First, such as those targeting Māori and Te Tiriti o Waitangi while providing $160 million for charter schools. In reality this government is continuing the underfunding of health, housing and education that has been a feature of government policymaking since 2011. The scale of this underfunding becomes clear once the nominal figures in these areas are inflation-adjusted. 

The Key-English National government responded to the global financial crisis and Canterbury earthquakes with huge budget deficits, pumping money into the economy to keep it afloat and to help rebuild Christchurch. Undoubtedly the scale of government spending from 2008 to 2011 contributed to that government’s early popularity. In contrast, ideologically, politically and with respect to its drive for fiscal austerity, this government is much closer in nature to the fourth National government that was in power during the 1990s. The problem being that whereas National was able to narrowly cling to power in 1993 with the aid of the first-past-the-post electoral system, this government is operating in the context of MMP. The current National-led Government has been polling poorly compared with the previous Key-English National government’s popularity early in its first term. Little wonder that political observers and analysts are asking: Could this be the first single-term National government in New Zealand’s political history?

Brian Roper is an associate professor of politics at the University of Otago

Vanessa Cole: A reverse Robin Hood budget

The government has made a political choice not to fund Kāinga Ora to build the homes we desperately need to house the 25,000 households on the waitlist. This ideological opposition to state housing will drive our communities into further housing stress.

While the government has committed funding to charities for 1,500 new social houses, this is really a part of their desire to grow a privatised social housing model with the government washing their hands of the responsibility to build homes. The government has the coordination and the borrowing power to build public housing at scale, and during an economic downturn this will not only provide stable housing for our communities, but will create jobs, construction sector certainty, and a stimulus for the economy.

Aotearoa is falling behind the rest of the world, with only 3.4% of our housing stock being public housing – this is half of the OECD average of 7%. Low-income households are also paying some of the most expensive private rents in the OECD. Building public housing at scale is one of the only ways we can secure downward pressure on rents – rather than providing handouts to landlords.

At the same time as making decisions which will drive up rents, we are seeing political choices made to cut incomes – with benefits being indexed to CPI, lower minimum wage increases, cuts to transport subsidies and a return to $5 prescription fees. This will drive low-income households further into poverty, and will swallow up any supposed benefits of tax cuts.

During a recession, it makes economic sense to increase benefits, build housing and support those struggling the most, not provide tax cuts which consolidate power and wealth into the hands of a few. What we have here is a reverse Robin Hood budget.

Vanessa Cole is Public Housing Futures and Fairer Future campaigner at ActionStation

Lara Greaves: The vibes are off in NZ, and this budget is unlikely to reverse that

Perceptions of the economy matter in an election year, but we are (probably) far from one currently. I fundamentally agree with Professor Richard Shaw’s assessment that this budget provides an opportunity for National to step out from the shadow of its coalition partners. One of the reasons National got elected was the perception that they are better economic managers than Labour. However, the vibe is well and truly “off” in New Zealand, with polls on public sentiment showing that more and more NZers think we are on “the wrong track”.

I will leave others to make assessments of economic and policy features in this budget, but we know there isn’t an election for another two-plus years (notwithstanding the outside chance the coalition falls apart). This means we have to be careful around analysing sentiment at this stage, but this budget is unlikely to reverse public perceptions of the vibe. What may favour National is the timing of the next election and when we may see improvements in the economy by. I guess the major question for me as a political scientist is, would a Labour Party budget right now been better received? And what does Labour need to do for that answer to be a yes?

Associate Professor Lara Greaves is a political scientist at Victoria University of Wellington

Belinda Himiona: No certainty for critical social services

Budget 2024 does not set a clear direction for community-based social service providers around Aotearoa New Zealand. Social service providers will continue to provide for children, rangatahi and families but they will remain uncertain about the future of their own organisations. 

In particular, the reduction in contracting service costs through Oranga Tamariki sets a savings target but we have not seen a reduction in the need for these services. We need to know the extent of reduced frontline social services as a result of funding decreases to understand the impact this will have on providers and communities. This budget provides significant investment in reactive areas including youth justice but limited new investment in core social service delivery and early intervention, which is what makes the real difference for children, families and whānau. 

It is heartening to see a strong investment to improve the lives of disabled people and their families. Children in the care and protection system will benefit from this, as they are more than twice as likely to have a disability than the general population. 

The new Social Investment Fund promises the opportunity to deliver more through trusted communities, but we need to understand how this potential will be realised with this small investment. 

Belinda Himiona is chief Executive at Te Pai Ora SSPA

Susan St John: Our worst-off children have been left out

Overall, it is a ‘try hard’ budget that does want to help squeezed middle income families. But tax cuts just help offset the extra costs already announced.

New Zealand is in the grip of a serious recession with a lot of pain in the next year or more. I am alarmed at how little protection our system now offers and how exposed it makes our worst-off children.

The in-work tax credit (IWTC) helps with the costs of children and has been increased by $25 a week to nearly $100 a week.  The intent is to reward paid work, but it will disappear when work is lost. So when a low income family loses their job – as many will during this recession – they also lose all of the IWTC payments for their children.

The worst-off children are left out. We know that at least 150,000 children are under the lowest poverty line and that at least 64,000 are in severe hardship. Families on benefits, even those with part time work, get no benefit from the IWTC nor from today’s tax cuts. Their accommodation supplement has not been adjusted – they are increasingly in debt, and increasingly fed by under-resourced foodbanks.

Reading the toplines, I was reminded of Budget 1991 – Ruth Richardson’s ‘Mother of all Budgets’. On the surface this budget appears far less harsh, but the vibes are similar. One of the key differences between now and then is that the balance sheets of low income families are seriously depleted. There is no cushion – fewer own their own homes, many have huge debts to IRD and MSD, and large student loan balances are far more common.

For the squeezed middle in paid work, the raising of the $48,000 tax threshold (an extra $12 a week in the hand) is important, but the government has not recognised the severe poverty traps that this group face. They lose entitlement to working for families by 27 cents for every dollar above a fixed $42,700; they may also lose 25 cents of accommodation supplement, and many have students loans repayable at 12%. Once they earn over $53,000 they can face an effective marginal tax rate of 69-94%. Yes an extra IWTC of $25 a week helps, but the government has not made their extra work pay

Susan St John is an honorary associate professor at Auckland Business School’s Economic Policy Centre
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