Tova O’Brien: Budget 2024 is the Beige Budget
Thursday, 30 May 2024
ANALYSIS: Budget 2024 is the ‘Beige Budget’, the ‘No Surprises Budget’.
Finance Minister Nicola Willis should be applauded for making an absolute virtue of predictability with her first Budget.
“I’m glad I haven’t delivered any surprises today,” the minister even said with a smile during her Budget lockup press conference.
As expected, tax cuts are the centrepiece of this Budget but - in what could be the only politically remarkable thing in this Budget - they are almost entirely as advertised on the campaign trail.
Willis will not need to make good on her promise to resign if she was forced to borrow for tax cuts.
The cuts are fully funded from savings and revenue.
As revealed by Stuff on Thursday morning, while NZ First took with one hand, it gave with the other.
National missed out on $2.9 billion in revenue when Winston Peters put the kibosh on its foreign buyer tax but instead, two of NZ First’s coalition agreement wins help make up the shortfall.
The Government will bring in $800 million over the forecast period by implementing NZ First’s plan to cancel fees free for first year tertiary and a further $600m by investing in IRD tax audits.
That covers about half the lost dosh from foreign buyers.
Working through National’s example case studies that it promised on the election campaign to illustrate its tax cuts and comparing them to those in its first Budget, Willis has very nearly aced it.
Most people will be able to plug their details into the new official government tax calculator and hit the same result as they had on National’s now defunct tax calculator.
Average income households with two children, a couple with a child in ECE, a sole parent with two children, working couples and single adults all still get what was promised.
The losers here are minimum wage workers and superannuitants.
Minimum wage workers don’t lose out on too much, they were originally due to receive a tax cut of $12.50, that’s been revised down to $10 but when you’re dealing with such small sums, a $2.50 loss is relative.
Retired couples are the biggest losers from the tax tweaks. Before the election they were due to get $13 a week from tax cuts that’s been knocked right back to just $4.30 a week.
$4.30 a week - and that’s for a couple. $2.15 each.
In 2005 then Finance Minister Michael Cullen was derided for his “chewing gum tax cuts” when it was revealed some people would get just 67 cents from his tax relief.
Taking into account inflation, and a packet of Extra costing $2.30 at New World, retirees aren’t even getting “chewing gum tax cuts” in Budget 2024.
Asked by Stuff what superannuitants will be able to buy with their weekly tax cut of $4.30, Willis replied, “superannuitants benefit twice, first they will see greater increases to their superannuation payments each year… the second way superannuitants will benefit is from an economy of lower inflation.”
Beyond that much of Budget 2024 is as promised.
The Government’s operating allowance is $3.2b, what it promised.
Surplus will be reached by 27/28, as promised.
The tax cuts don’t appear to be inflationary, as promised.
Health, education and police get a boost, as promised.
NZ First is a big winner in the budget with $1.2b for regional development and more funding for 500 extra police, as promised.
ACT got some wins too with its military style academies and public service cuts, as promised.
Even the losers knew they were going to be losers.
Free-prescriptions are gone, as promised.
The public service has been slashed, as promised.
People waiting for the 13 cancer drugs National promised to fund will have to wait a little longer but even that main broken promise of the budget was foreshadowed.
If ‘beige’ and ‘no surprises’ seem uncharitable monikers for the coalition government’s first Budget, think again, this was entirely by design.
As Willis said, “I have kept my promise”.