Not surprisingly, Grant Robertson delivered a budget focused on enhancing core public services – health, education and housing. Debt repayment has been deprioritised and spending has been increased. So what does this mean for your business, family and community?
Firstly, to give you a sense of how much the coalition government spending will increase, we have converted it to a budget-per-person amount. Adjusting for inflation, in 2017 the government spent $20,100 per person. In this budget the coalition government will be spending $21,000 per person.
Secondly, we need to understand where that extra spending is going. The key priorities for 2018 are based on extending the coalition government’s 100-day plan:
• Rebuilding critical public services
• Promoting economic development and supporting the regions
• Taking action on child poverty, housing and homelessness
• Enhancing and protecting our natural resources
• Enriching New Zealand’s culture and identity
From a business perspective, there is no change to the tax initiatives announced back in December last year. This included a reversal of National’s tax cuts in favour of a more targeted Families Package designed to help NZ’s poorest families. The only new tax change announced in the Budget focuses on the Bloodstock tax rule. This change is designed to encourage investment in the horse breeding industry.
This may mark the beginning of other tax changes with Robertson hinting at a review of the tax system. Whether this results in the introduction of the much-discussed Capital Gains Tax is yet to be seen.
IRD will be receiving additional funding to help them crack down on tax dodgers – particularly outstanding company tax returns. They are also looking at how to improve tax compliance in specific industries.
For rental property owners, ring-fencing of rental tax losses looks inevitable although how this will be achieved is still to be determined.
To support business research and development, there will be a tax incentive, although this is only available to organisations spending more than $100,000 p.a. However the knock on effect to other businesses and consumers should be positive.
For our Far North communities the allocation of $1b for the Provincial Growth Fund is promising. This fund is aimed at creating sustainable jobs and lifting regional productivity. $130.2m is being ear-marked for the forestry, tourism and energy sectors as well as infrastructure projects such as rail transport.
Housing also receives a boost including more public housing and grants for insulation and heating.
Families in our region will benefit from a large boost in health care spending. In particular free doctors’ visits will be extended to those under the age of 14 years. Very low-cost GP visits will be available to more people including Community Services Card holders, Housing NZ tenants, and those who receive an accommodation supplement or income-related rent subsidy.
Those with pre-school and school aged children will notice an increase of $1.6b in the education sector. There will be more teachers, teacher aides and support for early childhood education and those with special education needs or learning difficulties.
In summary, this is a budget for families and communities. Businesses and SME’s in particular will need to continue their focus on:
• Leveraging technology to gain efficiencies and optimise control
• Developing services and products that add value
• Marketing their point of difference