Why we could be in for more surprise cuts and costs this Budget

Tuesday, 28 May 2024

Tova O’Brien is Stuff’s Chief Political Correspondent and host of the weekly political podcast, Tova. Listen to the latest episode, ‘Bills, bills, bills and the Budget’

ANALYSIS: Are we in for more surprise cuts or household costs in the Budget?

The finance minister isn’t ruling it out.

And there’s potentially scope for quite a few. Nicola Willis says her Budget has identified more than 240 individual savings initiatives.

“We have uncovered a layer cake of government initiatives - many of which we had never heard of before - which were absorbing tens of millions if not hundreds of millions of dollars.”

Finance Minister Nicola Willis speaks alongside Prime Minister Christopher Luxon at a post-Cabinet press conference.

The layer cake will also include many of the things we know about and that National campaigned on like the public service cuts, cutting half-priced public transport, welfare changes, getting rid of free prescriptions.

But it could also mean a bunch of things National - the leading party in the coalition - didn’t campaign on and even things not covered in the coalition agreements.

Last week, the death of the First Home Buyer Grants signalled an enormous shift into unstable new political territory where everything is potentially up for grabs, nothing is certain no matter the cast iron guarantees, bottom lines or rule outs.

Prime Minister Christopher Luxon, and Finance Minister Nicola Willis at the post cabinet press conference on Budget 2024 week.

Not only had the Government not campaigned on getting rid of the grants and therefore securing the public mandate to do so, the prime minister had even categorically ruled out doing so on the campaign.

And it’s not the first time the Government’s snuck in surprise costs that it hadn’t foreshadowed on the campaign.

First Home Buyers Grant was nixed after the PM commited to keeping it.

First came the hikes to car registrations. Nowhere and at no point was it campaigned on or mentioned that all car owners would be paying an extra $50 a year for their regos.

Then the increases to fuel excise. On this the Government kept its promise - no hikes this term - but what it had neglected to mention was that it would accelerate the hikes big time beyond 2026.

Finance Minister Nicola Willis at the post cabinet press conference on Budget 2024 week.

Asked if there will be further cuts and costs in the Budget that National did not campaign on, Willis replied, “what you will see on Thursday is consistent with the campaigns of our three parties.”

Which suggests that once again the minor parties in this coalition appear to have secured even more wins from National.

Willis says she doesn’t think there will be anything in the Budget that National categorically said it wouldn’t do - like it did with First Home Grants.

Coalition campaign promises could surprise in this year’s Budget.

She doesn’t “think” so.

But technically, by breaking the promise around the grants, any number of the things National has ruled out are now possible.

For example, Christopher Luxon has previously told Stuff the Government would not be nixing the winter energy payment.

However, ACT campaigned on getting rid of what it called the “winter energy money go round”.

Labour says National “too weak” to say no to Winston Peters.

Now the finance minister is saying campaign promises by any of the coalition parties are in the Budget mix.

And according to Labour, the minor parties are calling the shots.

The Ministry of Foreign Affairs has been tasked with finding just 1% of cuts when all other government departments have been told to find between 6.5 and 7.5%

Asked to speculate as to why, Labour’s Chris Hipkins said, “I don't have speculation, I have a fact. It's because of who the minister is.”

“That's the only explanation that there could be: Winston Peters said, ‘No, I'm not cutting it’, and Nicola Willis and Christopher Luxon are too weak to be able to do anything about it.”

The First Home Grant U-turn and Mfat exemption aren’t the only shifting sands beneath this year’s Budget.

Willis’ bold claim that the government would be creating more jobs than were lost as a result of the public service cuts is also now wavering.

“That advice has changed due to the complexity of the numbers over time,” said Willis.

“We are dealing with a dynamic set of economic circumstances here in New Zealand,” Luxon explained, “and just trust us, we’re going to get New Zealand out of the hole that it’s in.”

On the other hand, Hipkins told Stuff, “the reality is I don't think New Zealanders can trust anything they say.”

Both sides pitching the Budget as a matter of trust.