A new survey of New Zealand consumers highlights the risk that the Government missed the mark in some areas of Budget spending, says EY's David Snell.
Released today, the EY Sweeney Consumer Outlook survey polled more than 1000 New Zealanders on the issues causing them most concern in the economy.
The survey, conducted in March, found the increasing cost of living dominated concerns. Rising power costs were the most specific issue.
The increasing cost of living was rated as the most concerning issue; 57 per cent of respondents rated it as extremely concerning.
Increasing energy prices and the cost of essential services were rated extremely concerning by 49 per cent and 48 per cent of respondents respectively.
That contrasted with the lowest-ranking concern - falling house prices - rated as extremely concerning by just 16 per cent.
"There is a potential risk for the Government heading into next year's election, that what it considers to be contributing factors to wellbeing don't align with the problems as experienced by ordinary New Zealanders ," Snell said.
There appeared to be two key contributing factors to this, he said.
"A perception of low wage growth - and the cost of energy and essential services being an issue of extreme concern for around one in two [49 per cent and 48 per cent respectively]. At an individual level, many are feeling the pinch."
The big packages in child poverty and supporting mental health, were undoubtedly critical issues, he said.
The funding and quality of the health system did rank as extremely concerning issues for 48 and 46 per cent of respondents respectively.
Snell said it was less an issue of what the Government had included in the Budget - which had addressed some critical, long-term problems.
That it was a case of what wasn't there.
There is a potential risk for the Government heading into next year's election, that what it considers to be contributing factors to wellbeing don't align with the problems as experienced by ordinary New Zealanders.
Given the that inflation remained at historically low levels, it seemed likely the concerns about the cost of living were underpinned by low wage growth in the past few years.
Snell noted 61 per did not expect their income to increase this year.
There appeared to have been little in the Budget to address that, he said.
New Zealand, relative to other developed nations tended to have relatively low levels of income, whereas costs tended to be relatively similar.
Finance Minister Grant Robertson reading his Wellbeing Budget 2019 in Parliament on May 30. Photo / Mark Mitchell
While this was never going to a be a big Budget for business-friendly investment infrastructure, the Government could have looked to change rules to speed up the process around investment in infrastructure, he said.
Now the Capital Gains Tax was off the table, the Government was going to have to look at its tax policy in order to meet its Budget Responsibility commitment to "a fair and progressive" revenue system, Snell said.
That had not be addressed at all in the Budget.
Overall, the survey found that 40 per cent of New Zealand consumers were feeling more content than 12 months ago.
This was the first time the EY Sweeney has been conducted in New Zealand. A similar poll has been running in Australia for several years.
