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Finance minister Nicola Willis and prime minister Christopher Luxon
Finance minister Nicola Willis and prime minister Christopher Luxon

The BulletinMay 16, 2024

With two weeks to go, what do we know about Budget 2024?

Finance minister Nicola Willis and prime minister Christopher Luxon
Finance minister Nicola Willis and prime minister Christopher Luxon

The prime minister has made it clear this is a no frills budget in all but name, writes Stewart Sowman-Lund in this extract from The Bulletin. To receive The Bulletin in full each weekday, sign up here.

A budget of managed expectations

We’re now just two weeks away from Budget 2024, which means the pre-announcements and the teases are ramping up day by day. Yesterday, prime minister Christopher Luxon addressed the Auckland Business Chamber where he laid out some further breadcrumbs about the budget. BusinessDesk’s Jem Traylen has a good rundown of the speech here, while Newshub published it in full. Most of it we’d heard already – this was mainly an exercise in managing expectations. One thing Luxon did make clear is we shouldn’t get too excited. He could easily have called it a “no frills budget”, but that was last year’s moniker under a different government. Instead, the PM said that it will be “basic”, with “no bells” and “no whistles”. This year’s budget, he said, shouldn’t be “a surprise”. So have we heard it all?

We’ve already been promised a lot

While yesterday’s Auckland Business Chamber audience, who each forked out over $100 for lunch and to hear from the PM, were promised a “significant” announcement, that didn’t eventuate. But there have been a few big ones in recent weeks. Judith Collins unveiled a $571m defence spend. Mark Mitchell announced new corrections funding for Waikeria. David Seymour confirmed a pared-back school lunches programme. And Erica Stanford announced funding for structured literacy to be taught at all schools. All of this comes out of Budget 2024, with Luxon reiterating yesterday that the government had achieved its aim of $1.5bn in savings courtesy of the public sector cuts. What the government is keeping close to its chest is details of its long-promised tax cuts. Luxon and Willis have both maintained that this will not require new borrowing, and the prime minister reiterated this yesterday, but the precise details won’t be known for another fortnight. Earlier in the year, former Reserve Bank economist Michael Reddell told RNZ that tax relief in the face of the current financial circumstances didn’t make sense and the coalition should focus on balancing the books first. I looked at that claim and more on the coalition’s fiscal challenges back in March for The Spinoff.

What the budget won’t be

Much like her boss, finance minister Nicola Willis has also been clear that this month’s budget won’t contain “big spending”. During a speech in the Hutt Valley last week, she said this would be a “moderate, responsible budget”. And it won’t be austerity either, as Luxon told yesterday’s audience. Dan Brunskill at Interest noted that while both Luxon and Willis are focusing on restraint, across the ditch, Australians have just been thrown several major treats in Anthony Albanese’s latest budget. “Luxon’s speech contrasted against the newly-released Australian budget which lifted net spending by AU$24 billion and will shift the federal government from a surplus to deficit,” wrote Brunskill. Luxon did offer a glimmer of optimism about the state of the economy in this speech, noting “promising signs of progress”, as The Post’s Thomas Manch reported. We’ll find out next week whether our official cash rate changes, but the latest predictions are that it won’t – all the more reason for the government’s cautious approach. Sticking with the economy, the Herald’s Thomas Coughlan looks at the warnings over a “structural deficit”, which he calls a “a very serious, very bad thing”.

Why should we care?

Budget Day is a landmark event in the annual political calendar, but that doesn’t make it any less confusing – or explain why it’s something that garners so much attention. The Herald’s Liam Dann wrote a handy explainer a few weeks back looking at what a budget actually is and why it matters. It’s paywalled, but the most basic detail, Dann wrote, is that the budget outlines the government’s spending plan. Given the ongoing cost of living crisis, that makes it important for everyone – where the government chooses to invest our money has a ripple effect. And we’ll find out more about all of this in just 14 days.

Keep going!