Heather du Plessis-Allan: I’ve struck the Budget jackpot - but hardly anyone else did

Finance Minister Grant Robertson shaking hands with Prime Minister Chris Hipkins while receiving a standing ovation from his Government colleagues after reading his Budget. Photo / Mark Mitchell

OPINION

If there was a Budget jackpot then we struck it this week.

We have a 1-year-old. He turns 2 next year, two days before the centrepiece promise of this Government’s Budget kicks in.

That’ll make us among the very first families to qualify for the 20 hours’ free early childhood care being rolled out to 2-year-olds.

And relative to the other handouts in this Budget, this is the one you want to strike. It’s generous. It’ll save families up to $133 a week which – in a cost-of-living crisis – will go a long way to balancing the weekly family Budget.

In total 44,000 families with soon-to-be 2-year-olds struck the Budget jackpot. But hardly anyone else struck gold. Mostly everyone else has to make do with a $5 discount on their antibiotics, cheaper trains for university-aged youths and free bus rides for the kids.

That’s frankly not a lot in a cost-of-living crisis. For a Budget with “Support for today” written on the cover, there was a lack of support. A few families got a lot of help, and everyone else got hardly anything.

Bear in mind, it’s only going to get harder for Kiwis. Petrol and diesel prices go back up again in June when the fuel discount ends.

In total 44,000 families with soon-to-be 2-year-olds struck the Budget jackpot. Photo / 123rf

The Budget will also make the cost-of-living crisis worse. The economists of most major banks reckon this Budget will force the Reserve Bank to hike interest rates further than expected. The OCR will have to go up higher – they say – to fight the inflation Finance Minister Grant Robertson just stoked by opening the spending hose more than expected.

Granted, it’s marginal stuff inflation-wise but marginal stuff is still enough to add another 0.25 per cent to the official cash rate, either this Wednesday or in two months’ time.

When family budgets are as squeezed as they are right now, every 0.25 per cent adds more pressure to the weekly budget than a $5 discount on pills can alleviate.

Then there’s lost income for punters hit by the trustee tax rate which the Budget is lifting from 33 per cent to 39 per cent. The Government wants you to think that will catch the rich pricks trying to dodge taxes by funnelling income through trusts. It’ll catch more than them. It’ll also catch mum and dad investors who have their rental properties in trusts. The easiest way for them to make up for that lost income will be to lift rents. Higher rents won’t help the cost-of-living crisis much.

The new trustee tax will also catch the tradies who’ve put their businesses in trusts. They’ll either have to pay the higher tax rate or shut the trust and cop the legal and administrative fees that entails. Again, hardly helping the cost-of-living crisis.

It is remarkable how few Kiwis this Budget has actually supported, given the size of the spending.

Grant Robertson blew $4.8 billion in operating allowance. That’s the second-biggest operating allowance in our history. The biggest was last year at $6b. At the time, Robertson assured us it was a one-off. He would restrict his spending to $4b this year. He didn’t. He blew it by 20 per cent.

Ultimately, the spending decisions in this Budget probably were as much about politics as economics. Perhaps the calculation is that the people who get grumpy from higher inflation and interest rates and taxes were grumpy anyway.

But the people who struck the Budget jackpot will be keen enough for that money next March to be convinced to vote for Labour to get it.

There are plenty of spending promises to come between now and election day, and if there are just enough jackpots struck, there might be just enough winning voters to tip the balance in Labour’s favour.

• Heather du Plessis-Allan Drive, Newstalk ZB, 4pm-7pm, weekdays.