Online exclusive
Finance Minister Nicola Willis delivers her first Budget next week backgrounded by a tanking economy, thousands of people looking for work, and confirmation that interest rates won’t start to ease until well into next year.
So, no pressure then.
“It’s the economy, stupid”, is a phrase often heard -- when something goes bang, the flip side goes pop. With economic growth easing, government revenue is a fast follower - all part of the downside story with businesses reporting lower profits and therefore paying less in tax, while costs remain high due to stubborn inflation.
Chuck in the Reserve Bank’s narrow mandate to keep inflation down by ripping every last dollar from our wallets and little wonder a net 52,000 Kiwis left the country in the 12 months just gone. It’s the biggest net migration loss New Zealand has recorded.
It might be a tad late to change this Budget now - the hard work has been done and the tax cuts are coming - but here’s what I would do. And before you say, “What does Duncan Garner know about economics?” here’s the answer: perhaps about as much as Willis, who has a first-class honours degree in English and graduated with a journalism diploma from Canterbury University. I had a first-class experience at AUT, graduated top of the class with a Bachelor of Communications, majoring in journalism and spent the $200 prize money at a bar near Aotea Square. So, here’s my plan - and remember most of the money goes on health, education and welfare, leaving not much for anything else:
Cancel the tax cuts
These are going ahead because the National Party promised them. I get that, but they’re a political pledge or payback and not any form of economic silver bullet. But stuff the tax cuts. We’ve waited so long for them to arrive and by now, billions of dollars are spread across the nation so thinly that most of us will wonder if they happened at all.
And they’re inflationary. And police officers and nurses are leaving for Australia where they’re paid properly. Aren’t we trying to put the fire out, not create more flames to fan the inflation?
Job support fund
I’d set up a fund for companies to access if they can show they are keeping workers in jobs rather than laying them off. If they choose to put them on reduced days or hours instead of totally losing their jobs then they qualify for support. The aim is to save jobs, so rather than fire – sorry, restructure – a worker, this fund allows businesses to keep staff on. It could be similar to payments to businesses after the Canterbury earthquakes but would not in any way be as loose as the Covid wage subsidy.
Auditor-General’s scrutiny fund
Former Prime Minister Sir Bill English has filed a blistering report into social housing agency Kainga Ora showing it has enormous debts, expected to increase to $23 billion by 2028 and not sustainable. Additional money needed for current and future projects has forced a late Budget change – the dumping of grants for first-home buyers, with the money to go into social housing. I want the Office of the Auditor-General to set up a special audit scrutiny unit to go over spending line-by-line if concerns emerge or if directed. The Auditor-General has the right to refuse any inquiry, but I want the office to be ready. Far too much has been spent during the past six years for little gain and it’s now taking us backwards, contributing to a long and deep recession biting NZ households hard.
Given the lack of transparency and accountability to date, a scrutiny fund would allow our best auditors to delve into the likes of Kainga Ora and ask, ‘Where’s the money gone and what do we have to show for it?’ Following the money could indeed be revealing.
Restore first homebuyers grants
Don’t ditch them! National ignored first homebuyers last time it was in office and so far has focused on those who already own property, with tax breaks for landlords. The Aussies proudly rave about their First Home Owner Grant scheme; you’d think our government might want to do something comparable.
Capital Gains Tax
A what? You read right. Just get on with it. We don’t need any more reports to tell us our tax system is no longer fit for purpose. Those on the PAYE system have no choice but to pay their way, but those making money from the likes of property have escaped paying tax for too long. This is about pushing investment into other parts of the economy.
Increase Pharmac’s spending on medicines by $1 billion
Cancer is our biggest killer, and it’s predicted to double by 2040, but we are well behind the world when it comes to accessing drugs to prolong or save lives. It’s time we gave Pharmac the tools and money to get this job done. When it comes to funding cancer treatments, we have fewer potentially life-extending drugs compared to Australia, and that’s not good enough. Stop the piecemeal, incremental approach, and go big.
This is why the tax cuts have to be canned. Tax cuts or staying alive? Sorry, but I’m of the view we deserve a better deal from those in power - it’s our money.
Also, explore teaming up with Australia’s drug buying agency to see if we can benefit by becoming part of Australia for this specific purpose.
Fully fund our emergency services
This could start in the Budget, with the aim to fully fund them in four years. Our emergency services are so stretched, and trying to raise money in a world fatigued with giving to charity – if you’ve got any money left to give – is an additional strain. When you’ve got people waiting up to 12 hours for an ambulance, you have to take action. We’re not a third world country, so let’s fund these heroes properly. It’s long overdue.
Time limit welfare
At the end of March, some 187,986 people were receiving Jobseeker Support – otherwise known as the dole. That’s up 19,488 – 11.6% – from March 2023, and there are no prizes for guessing why. Hopefully, most of these folk will find alternative income and be off it as soon as they can, but there are always those who have no intention of getting off the dole and into work. I’ve met those who never look for work, and never get held to account, but why would they try? Earn the minimum wage for a 40-hour week - $23.15 an hour – and after tax, you come close to what someone with a partner and two kids gets on the dole.
Put a time limit on – six months to a year – and then the tap is turned off. Why are we pussyfooting around on this? Kids need role models and seeing their parents in work is crucial if we want to break the cycle of dependency.
Put the public service on notice
No more blank cheques, no more hiring of staff willy nilly. We live within our means.
So, there’s my plan. What are the chances any of this will be in the Budget? I’m not holding my breath.
