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Happy King's Birthday weekend, Friend! For the team at the Taxpayers' Union, Budget week is always the busiest of the year. This week's Taxpayer Update wraps up our coverage, and (more importantly) asks you, what did you think of Budget 2024? I've had thousands of responses to our initial reaction to Budget 2024 – I can't recall receiving so many emails in just a few days! So we thought we'd do a poll of our supporters: did Nicola Willis nail it, or did she fall short? >> Click here to give your score out of ten on Budget 2024 <<Why this year's Budget was more important than most ⏰
Friend, personally, I consider the last government the worst in my lifetime. I sweated blood to get rid of them last year; through the election campaign we chased Chris Hipkins and Grant Robertson around with the Debt Clock, Debt Monster, held them to account on Three Waters, the outrageous "Central Planning Committee" proposal to replace the RMA – heck, we even launched a tongue-in-cheek removal company "Robbo's Removals" to highlight to voters just how bad things had become because of Grant Robertson. But we didn't work so hard to expose the last Government to elect a new one that, in its first Budget, is increasing overall government spending, and borrowing at an even faster rate. From a personal perspective, that is what made Thursday working through the materials in the Beehive lock-up so disappointing: this budget effectively locks in Grant Robertson's post-COVID so-called 'ballooned' spending. SNAP Budget Poll: Kiwis want Nicola Willis to go further, faster, harder ⏩ ⏩ ⏩
On tax cuts, Kiwis want Nicola Willis to go further. A majority of respondents (51%) think that the $25 a week less tax for the average earner doesn’t go far enough and want to see further tax reductions. That's compared to just 34% who are opposed. And on public spending too, the public thinks the Government needs to do more to cut the waste. By a ratio of nearly 2 to 1, Kiwis think Nicola Willis should get public spending as a share of the whole economy back below the 30%. This was a target set by Labour and the Greens no less, but next year the Government will only get spending down to 33%. When it comes to tackling the deficit left by Grant Robertson, there is no appetite for increasing taxes (-30% net support) or increasing borrowing (-39%). Kiwis want the Government to focus on driving higher economic growth (+78%) and by getting tougher on decreasing spending (+49%).
The Weekend Herald coverage of the snap poll is in this news item and Claire Trevett's column. Three cheers for tax relief! 🥲🥂Nicola Willis says her tax relief package is "modest but meaningful". If you've not already checked what you're in line for, head over to The Treasury's tax calculator here. But the emphasis really is on the word "modest". For the average earner, the tax reduction only unwinds the effects of three years' worth of inflation and is just half of the $49 Nicola Willis needed to deliver to catch Kiwis up for the last 14 years of stealth tax hikes due to inflation tipping people into higher tax brackets. But didn't Labour leave the books in a mess? 😡Absolutely. No one would deny that Nicola Willis and the new coalition had a challenge on their hands after the reckless budgets of the last Government: 84 percent more spending since 2017, more than 18,000 extra bureaucrats, and borrowing $75 million every day. But while the Government has made some progress, the savings they have delivered are pretty small fry. In cash terms, Nicola Willis will be spending more than Labour did in each and every year of this budget. And it's not likely that spending as a share of our economy will get down to the level set out in Grant Robertson's big-spending 2019 Wellbeing Budget until at least 2038. That's 14 years away. Well this is awkward 😬A friend of the Taxpayers' Union pointed us to a speech from last year where Christopher Luxon accuses then Finance Minister Grant Robertson of having an 'addiction to spending' not once, but ten times. Awkward for Nicola Willis that she's spending even more, despite the election mandate to, well, spend less. We couldn't help ourselves... 🤭
So how is the Government funding the tax reductions? 🧮 🧐As well as some limited savings and the scrapping of Labour white elephants like Three Waters and Auckland Light Rail, there are also a laundry list of new taxes, levies and rebates to balance the books. Some make more sense than others: ✅ User pays immigration levies: New immigrants to New Zealand will have to cover the full costs of their visas. This is a sensible move. Why should the Kiwi taxpayer subsidise the costs of people who want to move here? ✅ Climate Dividend: Some of the money raised through auctions of carbon credits in our Emissions Trading Scheme will be used to fund tax reductions rather than being used to fund corporate welfare for climate initiatives that don’t actually reduce emissions (any emissions reduced are just made available elsewhere under our fixed-cap scheme). 🟠 More money for tax inspectors: More money will be given to IRD to chase after those who are not paying their tax bills in the hope that this brings in a lot more revenue than it costs. The proof of this pudding will be in the eating. 🟠 Fees ‘free’ tuition in the final year: Rather than getting the first year of university tuition courtesy of the taxpayer, students will get the final year paid instead. This is an improvement as it ensures we aren’t covering the costs of dropouts but the middle-class welfare that is fees ‘free’ should be scrapped entirely. 🟠 Taxing online casino operators: Collecting revenue through a gaming duty on online casino operators isn’t particularly bad, so long as it taxes them in the same way as in-person gambling companies. ❌ Removing commercial building depreciation: Businesses will no longer be able to offset the costs of deteriorating buildings. That means less investment in improvements to things like apartment blocks or improving the earthquake ratings of older offices. ❌ Digital Services Tax: This will force big international companies to pay more tax in New Zealand but raises concerns that this may breach the spirit of free trade agreements and could lead to costly retaliatory tariffs that cost the country more than the tax revenue. In the media: making the case for taxpayers 📺
I joined RNZ's Morning Report yesterday explaining why we were disappointed with the Budget and outlining why the Government needed to go further. Have a listen online here. Over on The Platform, Connor was chatting to Sean Plunket and scored the Budget against our three key tests relating to tax, spending and debt, along with giving a few examples of additional areas he would like to see spending cuts.
Heather du Plessis-Allan doesn't hold back 😳Over on NewstalkZB, Heather du Plessis-Allan covered our 'Mother of all Disappointments' reaction on Thursday's Drive show before putting some of our main criticisms of the Budget to the Minister of Finance herself.
Heather doesn't hold back and the interview with Nicola Willis is worth the time. Have a listen here. We were also covered in the NBR and interest.co.nz. Our policy guru, James, gives his verdict ⚖️
Writing for The Post on the evening of the Budget, our Head of Policy, James Ross, gave his verdict on the Budget and what he thinks the Finance Minister ought to have done: Everything needed to deliver tax relief for the squeezed middle was ripe for the taking. But this Budget showed a Government which has buckled under pressure from the Wellington elite. Kiwis needed a blockbuster Budget, but all they’ve got is a hackneyed reboot of Grant Robertson’s box-office flop. Read the full piece over at Stuff's The Post website. And from the experts: what did two of NZ's leading economists think?🎙️
I sat down with two of New Zealand's top economists just back from the Budget Lock Up. Suffice it to say that neither was very impressed with he Budget and (just like the Taxpayers' Union, apparently! 😳 ) have probably been taken off Nicola Willis' Christmas card list. 😥 Dr Eric Crampton is a semi-regular guest on the podcast and is the Chief Economist at The New Zealand Initiative think tank. Cameron Bagrie heads his own firm, Bagrie Economics, specialising in economic research, analysis and consultancy. The podcast with Eric is here. The podcast with Cameron is here. Taxpayer Talk is also available on Apple Podcasts, Spotify, Google Podcasts, iHeart Radio, and every good podcast platform. That's all from us for this Budget week. Enjoy your long weekend!
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A lot of
National Party supporters are making the point that the last
government got New Zealand into the financial doo-doo and that we
should lay off our criticism of this year's Budget.
