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Budget Day!

Written By: - Date published: 8:15 am, May 19th, 2022 - 50 comments
Categories: budget 2022, Christopher Luxon, grant robertson, labour, national, nicola willis, uncategorized - Tags:

Today is Budget day.

It has followed a well scripted routine.

There have already been the announcements, primarily in the area of climate change.  I expect that an extension to public transport fare reductions will be announced.

Clearly health and education will get a boost.  You do not solve a decade of underfunding overnight,

There must be a temptation to implement a tax bracket adjustment at least for the lower levels.

Some of the big infrastructure demands particularly three waters will have to be funded somehow.

And from the opposition there will be much talk about the squeezed middle.  Not the extreme pressures on the poor or the increasing abundance for the rich but those in the middle.  It seems that National has a minimum standard in terms of who it will support.

And they will complain about how there has to be tax cuts.  The strange thing is they do not regard working for families as a tax cut but think of it as an expense.  Same with public transport fare reductions. This is money that stays in people’s pockets and contributes to congestion easing and greenhouse gas emission reduction.  But to National it is nothing but an expense.

It will be a test for Luxon and Willis.  In the short time available are they able to understand and talk coherently about what is in the budget.  Or will they continue to spout platitudes and slogans.  And so far they have refused to say what they will cut to pay for tax cuts.  What is for the chop if they get elected?

Stay tuned for 2 pm …

50 comments on “Budget Day! ”

  1. ianmac 1

    "solgans" I bet they must hurt.

    [Bugger now fixed – MS]

  2. Ad 3

    From what is published already it is by a long way already our most important budget since 1987.

    • Patricia Bremner 3.1

      Yes, and he managed to give the "squeezed middle" more than a paltry $2 a week lol.

      Pulled the rug out from under Luxon. Nowhere to go.

  3. Alan 4

    Don't fret MS, Senior roles in Fonterra, Unilever and Air NZ should cover it for Willis and Luxon in terms of understanding a budget – but thank you for your concern.

    • AB 4.1

      The relative simplicity of businesses is bad preparation for the complexity of whole nations. And dangerous too, because people come out of them smug and over-confident in their own abilities.

      It’s boring and silly that people keep stoking the comforting myth that 'business experience' is some magic ingredient.

      • woodart 4.1.1

        if anybody wants to bang a drum about business experience transferring into politics, it should be for the small business owner, who has started in the shed, then into a bigger shed, hired a worker ,then a few workers ,etc,etc. someone who has HAD to learn EVERY aspect of business, not just a corporate climber who hasnt put their life savings on the line. when I see the title, john key, businessman, it makes me want to puke. no more a businessman than luxon is an airline pilot.

        • Patricia Bremner 4.1.1.1

          Exactly, and Luxon lacks necessary qualities of humility and empathy.

          So far not one real advance on the economic ideas from National. Old hat tax cuts.

          His cries of "Save wasteful spending" without any target being named yeah na!!

  4. Scud 5

    I would've liked to have seen the RNZN get it's new Southern Ocean Patrol Vessel, as the current in service OPV's are no longer fit purpose to operate in the Sth Ocean due to CC weather related events in the Southern Ocean these days.

    But that project was cancelled & the Labour has kicked this badly needed ship down the bloody Rd as a Covid19 cost cutting Exercise.

    I wonder what a other Defence cuts are coming under Labour?

    Given the current state of Defence Infrastructure, Defence Capabilities & Manpower issues across-the-board ie the Army's Regular Force has a 18% separation rate & the Navy has to lay up ships as well because of the lack manpower.

  5. James Simpson 6

    It is one of the more difficult budgets to deliver.

    On the face of it revenue is exceptional, unemployment is extremely low and generally the economy is booming.

    Overhanging that is the dark cloud of inflation and the reality that everyone is getting less from each $ than they were 12 months ago. In short not many people are really feeling better off.

    Interesting times indeed

  6. barry 7

    I predict an extension of the disastrous fossil fuel subsidy (slightly ameliorated by an extension of the PT subsidy).

  7. weka 8

    Did anyone catch the detail on intervening in the supermarket duopoly?

  8. Patricia Bremner 9

    Well I take my hat off to Grant Robertson. That is a very balanced mix with targets to help community cardholders who do not get the winter warmth payment, a mix of current and long term spends. We are fortunate to have someone with vision. Nga mihi Grant. Mahi nui.

  9. weka 10

    This is very good.

    • Yes Weka I don't think many people have picked up on this-I heard somebody say on RNZ that it was excellent.

      Also somebody texted in to Checkpoint saying they would take the $350 any day rather than a tax cut of $100 offered by Luxon.

      Somebody needs to add up all the things this government has done for those in poverty or on lower incomes since they got elected.

  10. I thought James Shaw summed up Luxon's budget speech very well"

    Ruth Richardson called: she wants her 1992 speech notes back!

  11. tsmithfield 12

    As much as I understand the sentiment behind handing out $350 to around half the population, unfortunately it is just pouring fuel on the fire so far as inflation goes.

    It is the sort of move that some argued for back when everyone was worried about the economy falling off the cliff, and the need to keep the economy stimulated. However, in a high inflationary environment, any income gains will probably be quickly overwhelmed with price increases that result from the stimulatory effect.

    • pat 12.1

      Have been contemplating that….how to assist without fuelling consumption.?

      I dont think it was necessarily the reason for the grant but the inflationary impact will depend upon how the windfall is spent and i suspect in many cases it will be used to settle overdue accounts and its demand impact will be quite restricted whereas a comparable tax cut is more likely to increase future demand.

      However I also expect that next year being election year there will be some realignment of tax, especially for the lower quintiles.

      And then there is the likelyhood the Gov expect a lessening of inflation pressures with an approaching recession.

      The removal of caps for housing grants however is a different story, especially in a falling market….it shows the true priorities.

      • tsmithfield 12.1.1

        Doing things like further cutting tax on petrol prices would help a lot and at the same time cut fuel prices and thus not affect inflation.

        • pat 12.1.1.1

          A billion in windfall payments is offset by the increased GST take from inflation….the real inflation culprit, credit creation has been handed another lifeline with the removal of housing caps which is disappointing, but the banks and borrowers are unlikely to seize it in the current climate so perhaps no harm done.

          • Poission 12.1.1.1.1

            Some of that will be offset as the producers index today showed an increase in inflation of around 9.5%.

            Lots of energy inflation.

            Higher prices paid by the electricity and gas supply (up 31.1 percent), building construction (up 3.6 percent), and petroleum and coal product manufacturing (up 10.8 percent) industries were the largest contributors to the increase in prices paid by producers.

            https://www.stats.govt.nz/news/producer-prices-increase-in-march-2022-quarter

            In addition household consumers inflation expectations increased,(ahead of existing costs), on the other side of the ledger House price increases have reduced,although 1 in 3 still expect further rises.The RBNZ next week will remove all doubt for the latter.

            https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Statistics/tables/m13/Household-expectations-survey.pdf?revision=66f1cfd0-906a-4a22-868d-4ae6d446bfd4

            • pat 12.1.1.1.1.1

              Energy again…and nothing concrete in either the Budget or ERP to address.

              A good Nero impression.

              • Poission

                Since 2019 (including 2022) we will have spent 2.5$b on the winter allowance which if used for additional generation would have increased output by 5%,with a corresponding decrease in spot pricing.With around 2.2B for the next 4 years we would be looking at most of the ff generation including all imported coal (for electricity) and close to 10% decrease in ave annual costs to all consumers.

                • Nic the NZer

                  Say we had produced that extra energy, where are you planning for it to be stored?

                  Once we start understanding how the actual power grid works we realize the winter allowance is already working that way by providing the income to allow people to keep the heater on in many cases, though if that reduced electricity prices is clearly very debatable.

                  • pat

                    https://www.rnz.co.nz/news/national/447679/new-zealand-likely-to-have-record-high-imports-of-coal-in-2021-officials#:~:text=%22Coal%20imports%20for%20the%20first,first%20three%20months%20of%202021.

                    Officials from Ministry of Business, Innovation and Employment advised Minister of Energy and Resources Megan Woods in June that this was projected to get worse.

                    "It is likely 2021 will have record high imports of coal," MBIE officials wrote.

                    "Coal imported during 2020 was approximately one million tonnes, with approximately 800,000 tonnes used to generate electricity in 2020.

                    "Coal imports for the first quarter of 2021 were 299,300 tonnes, with 427,000 tonnes consumed for electricity generation."

                    So more than half of the coal used in 2020 for electricity – already the most in 14 years – was used in the first three months of 2021."

                  • Poission

                    Over the last 3 years,there was sufficient hydro storage available to reduce generation to enable increased peak load,with the gas peaker on stand by.

                    Coal now reaching 1/2 the price of oil equiv( by weight) $$

                  • Poission

                    , though if that reduced electricity prices is clearly very debatable.

                    Supply and demand,if there is excess supply over demand the price drops eg from 730 pm tonight the Benmore spot price will decrease from 207$mwh to 78.42$ mwh at 11.30 pm due to demand decreases.

                    • Nic the NZer

                      The point however is your only suggesting to increase grid energy, not available generation capacity. You can't just feed power into the grid without it being used, that equals grid damage.

                      During this period NZ typically had some spare capacity so your expectations should be that the power grid and pricing will not really change. You could structure an intervention so the govt pays the first part of some power bills but as I said thats part of how winter energy payments function and otherwise its merely a change in who gets subsidised. Also making some power free seems more likely to cause higher usage than anything else.

                    • Poission

                      The excess supply would have enabled a decrease in hydro generation which increases the available storage (at present 50% of nominal storage)

                      The potential with fast hydro reserve for peak flow windows (and gas peaker) would have decreased the spot price to pre high coal cost.

                      There is no enhanced risk to the grid ,there would also be a decrease in transmission loss (which is around the same as the increased supply 2.3 gwh)

                      The objective is for cheaper power across NZ,and to decrease the operating costs of energy.

                    • Nic the NZer []

                      Depends which kind of generator your using in preference to hydro. Usually hydro is one of the cheapest to use, and the solution provided already picks the cheapest source from those available (with the limitation you only have a demand estimate looking a day ahead).

                      Reducing transmission loss means bringing generation closer to use. Its not clear why the generation your saying should be preferred is closer in any way to that use.

                    • Poission

                      To meet the 100% renewable electricity objective by 2030,we need an increase of 10gwh of generation capacity.This does not include the increase of generation needed for EV and replacement of gas appliances for residential ,or commercial use.

                      We also need to reduce input costs to manufacturers,to remove the inflationary costs,and mitigate the substantive capex going forward and the inevitable high returns.

                      All I am saying is the cost of the winter subsidy,over the period it was used,and budgeted for meets nearly half of Capex for increased generation.

    • Patricia Bremner 12.2

      No the inflation is coming from company profits.

    • Incognito 12.3

      Prices have been rising for some time and wages and benefits have not kept up, which means that the lower/lowest paid people have been going backwards. This is a result of inflation.

  12. Grey Area 13

    According to Stuff: “Those who get the Winter Energy Payment, which is worth slightly more, will not be eligible, nor will those already on benefits such as superannuation or jobseeker.”

    So assistance focused on the added costs of keeping warm in winter means many people won’t get the 3 x $117 assistance for all the other rising costs of living. Hmm…

    • Stuart Munro 13.1

      Well I thought the targeted spending on the squeezed middle was clever – it cuts off Luxon's cost of living line at the knees, and hopefully indicates ongoing consideration of NZ's burgeoning working poor. Put the proverbial chicken in every pot and vanity parties like National will fade away.

    • Corey Humm 13.2

      It's a tax rebate for workers and it's bloody good policy.

      Much of the previous announcements on cost of living policies were flooded with people saying "I'm not on a benefit or on minimum wage so this does nothing for my increased costs" this is to help workers who earn under $70 k

      Min wage went up last month. So did benefits. Benefits going up in 2020 and 2021 and 2022 as well as the winter energy payment get rubbished by the left but no govt has done anything like it in decades.

      The permeant half price transport for CS card holders and dental increases and reforms to child support is a win for beneficiaries and working class.

      It's a pretty good budget.

      Id love to see more money to beneficiaries but the public mood is irate and also it risks adding to inflation. There's definitely a balancing act to helping and not causing more inflation.

      As for minimum wage increases, after last months one they can't increase it again until they change the tax thresholds unless they want to put minimum wage workers into a higher tax bracket which would be electoral suicide so labour needs to do something on that before the next min wage increase next year.

      But the cost of living payment going to middle and working class workers is a damn good policy and it's far better than the nats tax cut.

      Everything labour does between now and the next election must be to make life easier for the working and middle classes.

  13. Listening to the Co-leader of Te Pati Maori speak – revolutionary stuff and I find myself agreeing with much of what she is saying!

  14. MickeyBoyle 15

    The budget getting rightly panned by the pundits.

    Who was the genius in Labour that said no to beneficiaries getting the $350 payment? Ffs these people are feeling the cost of living crisis the hardest!

    What a waste of an outright majority. Ardern is the worst Labour PM in my lifetime. So much promise which has turned into so much incremental bullshit.

    • Patricia Bremner 15.1

      MB,Who are these "pundits?" Bryce recycle Edwards.?

    • The Al1en 15.2

      Nobody had to say anything as beneficiaries, like last year, already get the winter fuel payment.

      The new payment has just been extended to poorer working families.

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