Dear John,
It's certainly been an interesting two weeks in politics! Yesterday Nicola Willis delivered the 2025 Budget, Parliament has been consumed with what to do about the Maori Party behaviour, we've legislated to make pay equity more workable and affordable, and that's just a few things. Today's newsletter goes into some more detail, including what I've been up to around the Hutt.
First on Budget 2025. I'm really proud of the Budget, which I helped Nicola put together as Associate Minister of Finance. It's a responsible Budget that secures our economic future. It's worth recalling that when we came to government, we were in recession, inflation was sky high (as were interest rates) and debt was exploding. We're making really good progress. Here are the financial highlights:
- Real GDP growth is expected to accelerate to 2.9 per cent in 2025/26 and 3 per cent in the year after
- Wages are expected to grow faster than inflation and over the next four years there are expected to be 240,000 more people in jobs.
- The books will be back in the black in 2028/9.
- Net core Crown debt is expected to peak at 46 per cent of GDP before beginning to decline.
Three particular highlights for me. First, Investment Boost. This is a new tax incentive that will increase capital investment in New Zealand. Investment Boost allows a business to immediately deduct 20 per cent of the cost of a new asset from its taxable income, on top of depreciation. This means a much lower tax bill in the year of purchase. Over 20 years, Investment Boost is expected to lift New Zealand’s capital stock by 1.6 per cent, GDP by 1 per cent and wages by 1.5 per cent. Investment Boost started yesterday and it's going to be brilliant for our Hutt Valley manufacturers!
Second, our KiwiSaver changes. Budget 2025 makes changes to encourage Kiwis to save more, while also making the scheme more fiscally sustainable. From 1 April 2026, the default rate of employee and employer contributions, which is currently 3 per cent, will go to 3.5 per cent. From 1 April 2028, it will go to 4 per cent. These changes were recommended last year by the Retirement Commissioner.
To ensure that KiwiSaver’s costs to the taxpayer remain sustainable, this annual government contribution will be halved to 25 cents for each dollar a member contributes each year, up to a maximum government contribution of just over $260. Members with an income of more than $180,000 will no longer receive any government contribution.
Third, learning support. Improving the results we get from our education system is the single most important thing we can do to improve the future productivity of New Zealand. But there are lots of children who need extra support to learn because of physical, behavioural, communication or other learning challenges. The extra Budget funding will provide more teacher aide hours, more specialist support, learning support coordinators, an expansion of early intervention services, and new learning support classrooms. It is the biggest investment in learning support in a generation!
There's lots of other things to mention - changes to Working for Families (an estimated 142,000 families with children will receive $14 more per fortnight on average), support for rates rebates for low income Super GoldCard holders, allowing prescriptions to be issued for up to 12 months if it is clinically appropriate and safe to do so.
What's in it for the Hutt? The Investment Boost incentive will be huge for us, but we're also getting a daytime urgent care service! There is after-hours urgent care available in the Hutt on weekends and after 5.30, but not during the day. That's set to change as a result of increased funding in the Budget. I'm also particularly pleased with the $600 million investment into rail, including for the Wellington and Hutt metro networks. We have a big maintenance and renewal backlog to sort out.
Pay Equity: There's been a big kerfuffle in the last couple of weeks about the government's changes to pay equity (including a senior journalist using the C word against Nicola). Frankly the Labour Party has been spreading misinformation about it and has basically been lying about it. We have not abolished equal pay or pay equity, but we have made it more workable. Back in 2020 Labour created a very complex scheme that resulted in admin workers being compared with civil engineers; social workers being compared with detectives; and librarians being compared with fisheries officers. The costs blew out from around $3.5 billion into the multiple billions.
So we've reset the law. Twelve existing pay equity settlements including for nurses, social workers, midwives, teacher aides, school librarians, care and support workers and a range of other female-dominated workforces remain. Those settlements resulted in higher pay for tens of thousands of women, and they continue to be funded by the Government, at a cost of around $1.8 billion a year. Future pay equity claims are expected and we've set aside money for them. But we've made the scheme more workable and more affordable - those savings are being invested in more schools, hospitals, and frontline services Kiwis need. Read Nicola's opinion piece here - it's well worth a read - and don't believe the Labour spin. It was pretty frustrating to see Chris Hipkins refuse to condemn the gendered abuse dished out by a senior journalist at Nicola, Erica and some of my other colleagues. i got stuck into the issue in the House here.
Maori Party shenanigans: I've had a lot of emails about the Maori Party antics. Here's the basic background - last year the Maori Party interrupted a vote in Parliament (a big no-no), did a haka, advanced on the ACT benches (also a no-no), and Debbie Ngarewa-Packed simulated shooting David Seymour (definitely a no-no). They were referred to Parliament's court, the Privileges Committee. Last week the committee reported back on the proposed punishment, which is 21 days in relation to the two co-leaders. The punishments are so severe partly because the Maori Party have never apologised, never turned up to the committee, and refused to even engage in the process. They show utter contempt for Parliament and taxpayers deserve better.
On Tuesday this week there was due to be a big debate over the punishments - but I moved to adjourn the debate to take the temperature down a notch, allow the focus to be on the Budget, and to make sure they could participate in the Budget debate. You'll be amused to learn that after all that, they didn't show up at all for the Budget! The government parties will vote in favour of the 21 day suspension when Parliament comes back in a couple of weeks.
Around the Hutt: Despite all of the busy work preparing for the Budget, it's been great to get out and about in the Hutt. The Hutt Valley Sports Awards last week were amazing, and it was a privilege to give the keynote speech for the first time. I also really enjoyed the Hutt Chamber of Commerce Manufacturing Expo last Wednesday, which I attended with my colleague Chris Penk (Small Business Minister). There's so many great things happening in the Hutt!
One final thing: Thank you to everyone who is delivering my 2025 community newsletter around the Hutt. We still have a few thousand to get into letterboxes - so if you could spend an hour or two delivering them, please click here to sign up. It's really easy - just involves popping letters into letterboxes.
Have a great weekend.
Chris
P.S I'm hosting Nicola Willis on Monday 26 May for a Pink Ribbon Breakfast event for the Breast Cancer Foundation. Click here to buy a ticket. 7am at Boulcott's Farm Golf Club - tickets just $50 and all profits will go to breast cancer.
P.P.S This video of me crushing a car to demonstrate our new anti-boyracer laws has now been seen by nearly 1.5 million people!
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