Budget 2023: Prescription fees ditched, NZ tipped to avoid recession

It’s budget day 2023 – and welcome to The Spinoff’s live updates. I’m Stewart Sowman-Lund, get in touch via

Budget day top lines

May 18 2023

EMA: Just the ‘crusts’ for business in bread and butter budget

Image: Getty Images

The Employers and Manufacturers Association said more should have been in this year’s budget for the business community.

Its chief executive Brett O’Riley said the butter was spread “pretty thinly” across the bread of the economy, leaving just the crusts for business.

“This is a budget for recovery rather than growth or the transformation of the economy, which is most needed for business,” O’Riley said. “We were holding out hope for some well-funded initiatives to stimulate investment that enables innovation, like accelerated depreciation for hardware and software that would drive productivity.”

While the extension of the apprenticeship boost was welcomed, it didn’t do enough to solve the country’s skills shortage problems. “We didn’t expect much and we didn’t get much. There must be an integrated but also more immediate approach to deliver the pipeline of skilled people we need now and into the future,” said O’Riley.

Lack of ‘long term ambition’ in ‘vanilla’ budget, says TOP

Raf Manji, Opportunities Party leader. Photo: Toby Manhire

This is a “vanilla budget”, says the Opportunities Party. Party leader Raf Manji criticised the lack of long term ambition for addressing New Zealand’s systemic problems and said there was a “missed opportunity” to help young people.

“Labour’s sixth budget, whilst helpful, still does not address the structural deficits in our infrastructure and core public services,” said Manji. “There is a lack of ambition in addressing New Zealand’s key issues. We believe in investing in our future and creating a fairer society for all New Zealanders.”

Manji said his party would push forward with its plan for a tax free threshold of $15,000 in order to address the “unbalanced and unfair” tax system. “The Opportunities is a Party for fairness. We believe all New Zealanders deserve a genuine opportunity for a good life but to get there, we need to confront our systemic problems with bold, smart policy,” he added.

The latest Newshub Reid Research poll had TOP, a party founded in 2016 by Gareth Morgan, on 2% – well short of the threshold needed to secure a seat in parliament.

Budget overlooks rainbow communities – Elizabeth Kerekere

Green MP Elizabeth Kerekere (Photo: Lynn Grieveson – Newsroom/Newsroom via Getty Images)

Newly independent MP Elizabeth Kerekere has largely endorsed this year’s budget (in line with her former Green colleagues), but has criticised the lack of additional support for takatāpui and rainbow communities.

“This budget will be disappointing for takatāpui and rainbow communities, because unfortunately, no specified resources appear to have been allocated. This is a loss for our communities, but I will continue to work with the relevant
Ministers to progress this mahi,” said Kerekere in a statement.

“There is much to be pleased about in this budget though, which will impact on takatāpui and rainbow people in other ways.”

ICYMI: The one tax rate going up in this year’s budget

The government funds lots of accelerators, with the hope that it will create more successful businesses Illustration: Toby Morris

One change that is presented as barely worth noting – it’s the final reference in Robertson’s draft speech – is an increase in the tax rate on trusts to 39% from 33%, bringing it into line with the top personal tax rate. It is directly tied to revelations that flowed out of IRD research that showed the most wealthy households pay less than half the tax rate of a typical worker. It is likely to be seized upon by opposition parties as a tax hike, and while Robertson was at pains to talk it down, it is forecast to raise over $1bn through 2027.

Read a full report from Duncan Greive inside the Budget 2023 lockup here

‘A budget for the rich’ – Te Pāti Māori

Debbie Ngarewa-Packer and Rawiri Waititi wear their hats proudly in the house (Photo: Māori Party Facebook)

Te Pāti Māori has criticised the lack of support for Māori in this year’s budget – just 0.47% by the party’s calculation.

In a press release headlined “A budget for the rich”, the party’s co-leaders said they would never be supportive of any government budget “until such time as a Tiriti-centric Aotearoa is in full operation”.

“Three years of a so-called wellbeing budget and the wellbeing of our people here in Aotearoa couldn’t be worse off,” said co-leader Rawiri Waititi.

“This budget is clearly choosing to prioritise the wellbeing of the rich over the wellbeing of the poor by ignoring the big elephant in the room: wealth tax.”

Debbie Ngarewa Packer said the tax system had fuelled extreme wealth inequality – and the government had ignored calls to target the wealthy. “A capital gains tax, if implemented in 2017, would have made $200 billion in tax revenue. That is nearly two times the annual amount of revenue the Crown currently receives,” she said.

“While 2% control 50% of the wealth in Aotearoa, one in 10 children and one in five tamariki Māori are living in poverty. Food prices are the highest they have been in three decades. Over 100,000 people are homeless in Aotearoa, and 60% of them are Māori.”

Stuff gets personal

As an over 25 with no kids, I feel personally targeted.


Eric Crampton: More fuel to the fire

Grant Robertson speaks to media while holding a copy of Budget 2023 (Photo by Hagen Hopkins/Getty Images)

Dr Eric Crampton is chief economist with The New Zealand Initiative.

There are a few budget and macroeconomic rules of thumb.

When the economy is running hot, a Reserve Bank that targets inflation responds by increasing interest rates. Government should not add fiscal fuel to those fires.

The budget projects substantial increases in gross and net debt as compared to the government’s December forecasts. By 2027, net debt is expected to be five percentage points higher, relative to GDP, than had been forecast – despite an improved overall economic outlook.

It makes sense to take on debt to deal with cyclone recovery. But workers and materials to do the work have to come from somewhere; debt doesn’t magic them into existence. And when the government is borrowing $160 million to hand to the video game industry, one wonders whether they are entirely serious.

The government now expects a small return to surplus in 2025/6: a little over half a billion dollars. But the government relies heavily on tobacco excise revenues: $1.7 billion per year, or about 1.1% of total tax revenue. Cigarettes with any substantial amount of nicotine in them are banned after April 1, 2025.

So if the new tobacco rules work as intended, there’s a cigarette burn mark in the accounts.

Read more hot takes on Budget 2023 here.

The mysteriously resilient tobacco tax

The New Zealand Initiative’s Eric Crampton noticed an anomaly, with tobacco excise taxes forecast to only mildly decline over the forecast period. This is despite a change coming on April 1, 2025 which will reduce nicotine content in tobacco to very low levels, with the express aim of introducing a step change in smoking. “Either Treasury is expecting the policy to fail, or they simply haven’t accounted for the policy,” said Crampton.


Te Matatini gets a funding boost of $34m

The overall winners of Te Matatini 2023, Te Kapa Haka o Te Whānau a Apanui (Photo: Supplied)

We’ve written a lot about Te Matatini – the euphemistically named Olympics of Kapa Haka at The Spinoff. And it’s a big winner in this year’s budget.

As noted by Te Kuru o te Marama Dewes and Simon Day in a piece we published last year, “funding for Te Matatini has increased only fractionally relative to its impact and influence… In 1998, government investment in kapa haka was $940,000. It increased to $1.248 million in the early 2000s, and has sat at $1.948 million since 2016.”

Budget 2023 provides a $34 million investment over two years. “Te Matatini 2023 showcased incredible talent and mana from across the country and I’m delighted that this government is further investing in the delivery of the biennial national Kapa Haka festival,” said associate arts and culture minister Willow-Jean Prime.

“This new investment builds on the hard mahi over the past year to solidify the foundations for Te Matatini to expand from a biennial, national festival, to also foster and support kapa haka in our regions.”

Te Kapa Haka o Te Whānau a Apanui
The overall winners of Te Matatini 2023, Te Kapa Haka o Te Whānau a Apanui (Photo: Supplied)

NZ now tipped to avoid recession – Treasury

With a recession looming, Reserve Bank governor Adrian Orr warned of a need to curb consumer spending in the lead-up to Christmas. (Photo: Getty Images)

Grant Robertson opened his lockup speech by emphasising improving Treasury forecasts around the economy, with some flow-on impacts to the government books. New Zealand’s crown debt as a percentage of GDP is now forecast to peak at 22%, well below the 30% upper bound target. By 2027 it is predicted to retreat to just 18.4% – orders of magnitude lower than the likes of the UK and US, both of which sit close to 100%.

Inflation is predicted to continue to ease, now without requiring a recession, with Treasury picking a 4.5% increase in 2023, re-entering the 1%-3% band by the December quarter of 2024. Robertson was at pains to point out that after a period of lagging, wages are set to grow faster than inflation, with Treasury forecasting 5.2% wage growth against 3.3% inflation through 2027. It’s not all good news – tax revenue is forecast to be lower than in the HYEFU just six months ago, pushing out a return to surplus by a year, while unemployment should peak at 5.3% late next year.

The economic forecasts had the air of a reward for the bread-and-butter turn of the Hipkins era – an approving nod from the economic wonks that restraint and a return to economic orthodoxy will produce fiscal dividends down the road. It was telling that Robertson once again referenced the post-GFC budgets of Key and English, proudly pointing at slides showing lower deficits as a percentage of GDP. While those looking for the kind of transformational change that swept Labour to power in 2017 will be disappointed, the new pragmatism at least has benefits the finance minister can use heading into what shapes as a fiercely normie election.

Read a full report from Duncan Greive inside the Budget 2023 lockup here

Government ‘tied its own hands’ with decision to rule out tax changes – Davidson

Green Party co-leaders Marama Davidson and James Shaw (Image: Tina Tiller)

The government “tied its own hands” by deciding to rule out tax changes ahead of this year’s budget, Greens co-leader Marama Davidson said. And the budget “could have gone further” and been more bold.

In a statement, Davidson said the budget fell short of what was needed to fix climate issues and inequality. “Aotearoa is facing a perfect storm of crises super-charged by climate change: an outrageous and immoral level of income and wealth inequality; people struggling to put food on the table, pay the bills, and heat their homes as massive corporations cream it; and farms, towns and cities ravaged by floods and storms,” she said.

“Everything we need to fix these problems and make life better for people in Aotearoa exists. What’s missing is the political will power to use it. So, my message today is clear: if people want a government that will build an Aotearoa that works for everyone and a fairer tax system to pay for it, then we need more Green MPs.”

Overall, however, the Greens have largely been in support of this year’s budget. James Shaw there was “great investments that will make a big difference to people’s lives”, but was frustrated that it didn’t go further.

Bernard Hickey: PM may avoid ‘reckless spender’ title with no-frills budget

Finance minister Grant Robertson with the 2023 budget (Photo: Getty Images; additional design Archi Banal)

This is an extract from Bernard Hickey’s newsletter The Kākā

The Labour government has unveiled a couple of middle-class welfare policies in its last budget before the October 14 election, which is on a knife edge and will be decided by a slither of median voters who will welcome $1.6 billion in spending on extra child-care subsidies and grants for home insulation and heat pumps.

Finance Minister Grant Robertson has tried in Budget 2023, his sixth as finance minister and his fifth ‘Wellbeing’ Budget, to walk a tightrope in the short-term between extra spending to win re-election, and a need to constrain fiscal stimulus to avoid adding inflationary and interest rate pressure to the economy.

In my view, Robertson and his new “boss” PM Chris Hipkins, have probably done enough to avoid being tagged as reckless spending inflation-creators. But they have also done little to change the 30-year long trajectory of our political economy towards being a housing market with bits tacked on, where low wages, low investment, low taxes and low public debt are all designed to reward leveraged investment in residential land, rather than productivity-and-real-wage enhancing investment in infrastructure and real businesses.

National and Act call it the ‘blowout budget’ and the ‘build back broke budget’

QUEENSTOWN, NEW ZEALAND – FEBRUARY 01: National Party leader Christopher Luxon addresses members of the Queenstown Chamber of Commerce and media during the annual New Zealand National Party caucus retreat on February 01, 2022 in Queenstown, New Zealand. The retreat brings all National Party MPs together ahead of the new parliamentary year. (Photo by James Allan/Getty Images)

National’s leader has labelled this year’s budget the “blowout budget”, while Act has titled it the “build back broke budget”.

At the very least, neither are impressed. Christopher Luxon said the prime minister had broken his promise of a bread and butter budget. “What he delivered was a spending spree creating a massive increase in deficits and debt climbing for years to come,” said Luxon.  

“This is the blowout budget, the culmination of Grant Robertson’s massive spending spree as finance minister for six years.”

Luxon reiterated his belief that the government should have adjusted the tax brackets for inflation, something he said would have been “the right thing”.

He added: “New Zealanders hoped today for some relief from the tough conditions that Labour’s economic mismanagement has produced. What they will get is cheaper bus rides for those who qualify, but still nothing for the majority of hard-working New Zealanders.”

Act’s David Seymour was largely in line with these criticisms. “Labour’s build back broke budget will mean a blowout for the government’s books as it tries to buy the election,” he said.

“They’ll blame the cyclone, they’ll blame Covid-19, they’ll blame the Russians. They’ll blame everyone but themselves. The truth is that only $1 billion of their $7 billion blowout is for cyclone recovery. Oil prices are lower than before the war. Covid-19 is officially over. The common denominator in big spending is Grant Robertson.”

Free prescriptions an ‘important step forward’ – Greens

Former AAAP director Ricardo Menéndez March, pictured here at a rally organised by AAAP, left the organisation last year ater being elected to parliament. (Photo: Lynn Grieveson/Getty Images)

The Green Party’s welcomed news that the $5 prescription free will be wiped as part of today’s budget.

“There should be no barriers to anyone accessing the healthcare they need. Often, prescription costs are a significant barrier to care, and a driver for people not accessing medicines that are critical to their wellbeing,” said the party’s health spokesperson Ricardo Menéndez March.

“$5 may not seem like much, but for many households it is another unavoidable added cost on top of food and rent. Without regular treatment for chronic conditions such as diabetes, and heart conditions there can be disastrous outcomes. We’re pleased the Government will be removing this significant barrier for people on low incomes.”

In a statement, the Taxpayers’ Union commented that the removal of the prescription fees was one of just a few aspects of today’s budget that would benefit middle income New Zealanders. “With the exception of rolling out free ECE to two years and dropping prescription co-payments, there is almost nothing that the average taxpayer receives from today, except higher fuel taxes and a promise to increase trustee taxes next year,” campaign manager Callum Purves said.

Budget 2023: The top lines


The first budget of the Chris Hipkins era brought wins for parents of young children, along with an end to the $5 co-payment on prescriptions. There’s also free public transport for under 13s, along with a move to make it half price for under 25s. 

Beyond that the budget lived up to its “no frills” preview from the government, with Robertson approvingly describing it as “sensible and responsible” in a speech to the Budget lockup. That said, Infometrics economist Brad Olsen cautioned that the small pledges added up, with a $9bn spending increase over four years butting heads with a slower recovery, resulting in $11bn less revenue for the government over the same span.

Still, the government can take heart at a number of other indicators which work in its favour. Most prominently Treasury is no longer forecasting a recession, and inflation is set to return to the target band before the end of next year.

Read a full report from Duncan Greive inside the Budget 2023 lockup here

Budget day bargain? Costco drops fuel prices below $1.90

The queues at Costco on a Tuesday morning. Photo: Chris Schulz

Does Costco know something about today’s budget the rest of us don’t? It’s dropped fuel prices well below regular Auckland levels, with the Gaspy app showing 91 at $1.87 per litre.

Nearby West Auckland petrol stations such as in Westgate and Henderson are about 10 cents a litre more expensive, whereas fuel prices closer to the city are still in the usual $2.30+ range.

Photos shared to a Costco fans Facebook page show the 24 pump petrol station is already packed with cars.

Unless there’s an election year sweetener in today’s budget, it’s anticipated the nationwide 25 cent per litre subsidy will end in June.

Costco. Photo: Chris Schulz

Bodies to start being recovered from Loafers Lodge – police

The fire at a Wellington hostel early on Tuesday morning (Image: WCC Facebook)

At least two bodies still within the gutted Loafers Lodge hostel will be removed today by police.

An investigation into the inferno is under way, with police now calling it a suspected arson – and therefore a potential homicide.

The final death toll from the Wellington fire won’t be known until the investigation has been completed and bodies have been located. A number of people remain unaccounted for at this stage.

Acting Wellington district commander inspector Dion Bennett said the damage at the Loafers Lodge was significant, particularly on the third floor which was piled with debris.

“The scene examination is expected to take several days,” said Bennett. “Once the scene examination is complete, an assessment will have to be made as to whether it is safe for property in the building to be retrieved and returned to residents.

“Included in these considerations will be any health and safety risks to residents in returning items which may have been contaminated by fire damage and asbestos.”

Local film Red, White and Brass pulls in $1.4m at local box office

Maka, played by John-Paul (JP) Foliaki leading his church’s Tongan brass band out to the stadium with the dancers. (Photo: Supplied)

Now in its ninth week since its release, feel good New Zealand film Red, White and Brass has reached over $1.4 million at the local box office and continues to play across Aotearoa. Producer and co-writer Halaifonua Finau is overwhelmed by the response to a story that’s close to home for him. “Greatness is in our [Tongan] DNA, so to be amongst the great New Zealand films is mean,” he said in a statement.

The film is inspired by the true story of a Tongan church community that forms a brass band, with no musical experience, as the pre-game entertainment in a desperate attempt to get tickets to the 2011 Rugby World Cup Tonga vs France match. Actor John-Paul Foliaki who plays Maka, the character inspired by Finau, leads the brass band and takes the audience through a roller-coaster journey to the rugby game.

The film has played at the Hawaii International Film Festival, to sold out audiences, the Los Angeles Asia Pacific Film Festival and the Sydney Film Festival. On June 22, Red, White and Brass will be released in Australia and across the Pacific region.

“I have been floored by the response to our community’s story and the māfana energy its created for so many. Greatness is in our DNA so to be amongst the great NZ films is mean!,” adds Finau.

Red, White and Brass film
Maka, played by John-Paul (JP) Foliaki leading his church’s Tongan brass band out to the stadium with the dancers. (Photo: Supplied)

Budget day ties and cheese-sausage rolls


Before we get into the actual detail of the budget (from 2pm), we can take a look at some of the ongoing traditions associated with budget day and how they were observed today.

As the Herald’s Thomas Coughlan detailed this morning, two ongoing traditions will be carried on by prime minister Chris Hipkins. The first is the budget day tie. Jacinda Ardern would typically gift Grant Robertson a special tie ahead of his budget day speech. Coughlan reported that this year, Hipkins would be gifting a tie once owned by ex-Labour finance minister Michael Cullen, who passed away in 2021. “From one great Finance Minister to another,” Hipkins added later on Instagram.

On the food front, the John Key-led government had a tradition of a “budget day pie”. Under Ardern, this became a cheese roll (yes, even during a cost of living crisis). This year, the budget day platter will involve a Frankenstein’s monster combo of cheese rolls and, of course, the sausage roll. Hipkins, appearing on a livestream alongside Robertson, described it as an “innovation”.


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A post shared by Chris Hipkins (@chrishipkinsmp)

The Bulletin: Ockham New Zealand Book Awards winners announced

The Spinoff books editor Claire Mabey has all the details of the book awards winners, announced last night in Auckland. Catherine Chidgey won the fiction prize for The Axeman’s Carnival. The audience was told the star of that book, Tama the magpie, had been due to make an appearance but had been removed by security. It’s the second time Chidgey has won the fiction prize after a win in 2017 for The Wish Child.

Alice Te Punga Somerville won the poetry prize for Always Italicise: How to Write While Colonised. Ned Fletcher won the general non-fiction prize for The English Text of the Treaty of Waitangi and Nick Bollinger, who many will know as the voice of RNZ’s The Sampler for a long time, won the illustrated non-fiction award for Jumping Sundays: The Rise and Fall of the Counterculture in Aotearoa New Zealand.

In other literary awards news, Himali McInnes, a family doctor in Auckland has won the Commonwealth Short Story Prize for the Pacific region for her story, Kilinochchi.

Want to read The Bulletin in full? Click here to subscribe and join over 38,000 New Zealanders who start each weekday with the biggest stories in politics, business, media and culture.  

Happy budget day to all who celebrate

Grant Robertson speaks to media while holding a copy of Budget 2023 (Photo by Hagen Hopkins/Getty Images)

It’s budget day, one of the biggest days in the political calendar. If that’s not your thing, I’d advise you avoid these live updates from 2pm which is when the embargo drops and my inbox will be flooded with dozens of press releases. We’ll have rolling coverage from then along with a substantive write-up from Duncan Greive, who is in Wellington for the big day. (We’ll have some other non-budgety things on site, too, don’t worry)

Ahead of 2pm, The Bulletin has a “no-frills” wrap of what to expect, including key reads to get you up to speed.

Some other reads from this morning include the Herald’s Jenée Tibshraeny on three things to watch out for in the Budget and Stuff’s Bridie Witton takes a look at the balancing act finance minister Grant Robertson has to perfect (in short, how to use less money to successfully counter cost of living concerns). Former MP Peter Dunne also used the phrase “balancing act” during an interview with the AM Show today.

Robertson has remained typically coy on what we can expect in this year’s budget, but significant changes to the tax system have been ruled out. That’s despite growing desire for a wealth tax, with Newshub’s latest Reid Research poll showing over 50% of those surveyed want one introduced. Robertson hinted that while tax will be generally left alone in the budget, it will play a major part of this year’s election campaign.

Newshub political editor Jenna Lynch speculated that in place of tax changes, the government may focus on making core services cheaper – think healthcare, early childhood education and food.

But we won’t know for sure until 2pm. Buckle in.

Grant Robertson speaks to media while holding a copy of Budget 2023
Grant Robertson speaks to media while holding a copy of Budget 2023 (Photo by Hagen Hopkins/Getty Images)