Prime Minister Chris Hipkins will put his money where his mouth is today in what is his first Budget as Prime Minister - and could be his last.
With Labour and National effectively neck and neck in the polls, Hipkins and his Finance Minister Grant Robertson have everything to play for in this election-year Budget.
The Budget will be published at 2pm today, with live coverage available at nzherald.co.nz.
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The Government has already ruled out tax increases like a capital gains or wealth tax in the Budget. It’s also warned there are no big tax cuts either. That means cost of living relief, if any, could come in the form of spending to bring down the cost of things in the Government’s control, like healthcare.
Changes to things like Working for Families tax credits are also on the cards, with a review into the scheme recently concluded. Social Development Minister Carmel Sepuloni has been tight-lipped about any changes, saying they were subject to Budget confidentiality.
Hipkins would not divulge any details on Wednesday, saying Kiwis would “have to wait just one more day”.
“New Zealanders can expect that we’ll be quite targeted in our approach to the cost of living. So making sure that we’re dealing with those things that are very pressing, but also being very careful around the extra investments that we make, given the wider economic situation that we’re in,” he said.
Hipkins would, however, confirm that he would inherit former Prime Minister Jacinda Ardern’s tradition of giving Robertson a new tie on Budget day.
The Herald understands Hipkins will give Robertson a tie belonging to former Labour finance minister Michael Cullen, who passed away in 2021.
Robertson and Ardern also had a tradition of eating cheese rolls together on Budget morning (a play on a National Party tradition of a Budget Day pie). The Herald has confirmed this tradition will be adjusted today. Robertson’s office will supply the cheese rolls, while Hipkins will bring his trademark sausage rolls.
In his traditional pre-Budget photo-op, Robertson said this year’s Budget was about “getting a balance between making sure we support people with the cost of living pressures that they are facing right now”.
Robertson has been careful to manage expectations ahead of Budget Day.
“This has been a very difficult budget to put together for two reasons: the economic circumstances that we are in as a country and that people are facing; and secondly, the cyclone,” Roberton said.
He said the cyclone hit late in the Budget process, requiring some last-minute “adjustments”.
Robertson yesterday unveiled the cover of this year’s Budget, a picture he took himself of the Napier shorefront - an obvious reference to the prominence of the Cyclone recovery - and the Budget’s title: “Support for Today, Building for Tomorrow.”
This Budget is unique for an election year in that there is immense pressure on Robertson to keep spending levels down. Government spending is adding to inflation pressures and recent updates from Treasury have shown the slowing economy is starting to eat into the tax revenue it receives.
This Budget will include an operating allowance of $4.5 billion, which will be spent on new day-to-day spending like paying wages, and a multi-year capital allowance of $12b to be invested in long-term assets.
The Government has also “reprioritised” $4b of funding over the next four years that will be funnelled into new initiatives.
But the scourge of inflation is weighing on the Government’s books too, eroding the power of those spending increases by bumping up the cost of everything from healthcare to education. Treasury’s most recent set of forecasts, published in December, warned that $3.7b of that $4.5b in new spending would be used to “maintain the existing level of services”.
The latest polls have Labour and National effectively neck and neck, meaning there’s everything to play for as the two major parties head towards the election on October 14.
A Newshub Reid Research poll published on Sunday showed Labour at 35.9 per cent, and National trailing just behind at 35.3 per cent.
Act was largely unchanged at 10.8 per cent and the Greens were unchanged at 8.1 per cent.
National was on the attack on Wednesday in a rowdy Question Time in which leader Christopher Luxon lambasted Labour for a lack of outcomes for the large increase in nominal spending levels that had occurred under its watch.
“Is he satisfied with the outcomes taxpayers are getting from the increase in Government spending from $76b in 2017 to $129b in the current financial year?” was Luxon’s primary question to Hipkins - to which Hipkins replied with a laundry list of Labour achievements like lunches in schools, new classrooms and more doctors and nurses.
National also came armed with an attack of its own: evidence from Facebook’s political ad archive showing Labour was using its ad budget to promote the decision of Australian Prime Minister Anthony Albanese to make it easier for New Zealanders in Australia to get citizenship.
The deal was a major win for Labour and something that National Prime Ministers had sought to achieve, but National deputy leader and finance spokeswoman Nicola Willis said it was a message to New Zealanders that Labour was using its publicly funded ad budget “to tell the Kiwis who have jumped the ditch to stay right there”.
Act leader David Seymour attempted to carve out a place for himself between the two warring major parties, saying they both offered “shades of beige on spending”.
“Labour’s Budget will spend more money than any Government in the history of New Zealand, but the results will be mediocre. Government spending is up 61 per cent over five years, but no area of public service has improved,” Seymour said.
The Greens said climate needed to be a top priority this year, despite pressure on Labour to pivot to “bread and butter” cost of living issues.
Co-leader Maramar Davidson attempted to manage expectations on Wednesday, saying that while the Greens had advocated for a climate focus in the Budget, their position in a Labour-majority Government meant they could only go so far with pushing climate change in the Budget.
“I … know that only the Greens, with the balance of power, will make climate action the biggest priority,” she said.
"When it doesn’t perform, everybody notices. When it does perform, nobody notices.”