2018 Budget – very predictable

The budget to “help rebuild New Zealand’s reputation”

Touted as predictable, it did not disappoint – nor is the Government making any apologies for this.  Most of the big ticket items were, of course, announced prior to Christmas in the 100 day Budget – including the whopping $5.5 billion families package, free tertiary study, and the $60 a week first-start payment for newborns.

Yesterday’s Budget is branded as a rebuild budget, with the Prime Minister being quite clear that it is to “help rebuild New Zealand’s reputation”. The only surprise was the size of the surplus, a $3.1 billion surplus expected to rise to $7 billion in 2022.

This surplus falls, in part, to a windfall gain from extra tax revenue since last year’s pre-election fiscal update. But despite this surplus, the Budget does fall on the conservative side of spending – in some areas looking rather miserable, with Finance Minister Grant Robertson repeatedly using the term “fiscal responsibility”.

The big winner on the day was Health.

2018 New Zealand Budget in a snapshot

Health Health

  • $4 billion going into health – $2 billion of this is going to the District Health Boards. There is a $100 million boost to midwifery services and bowel screening will be extended.
  • Free doctors’ visits have been extended to all under 14 year olds, and cheaper visits for Community Card holders.
Education Education

  • The education sector receives almost $2 billion – to be spent on 1500 new teachers, 200 new classrooms and a large boost to learning support.
  • Learning support will receive an extra $133.5 million over a period of four years.  An extra $30.4 million allocated to the deaf and hearing impaired.
Primary-Industries Primary Industries

  • Ministry of Primary Industries funding to increase by $9.3million over the next four years – but compare that to the cost of Mycopasma Bovis at $38 million over the next two years.
Justice1 Justice

  • An allocation of $1.2 billion to fund 920 police officers and 240 support staff in 2018.
Small-Business Housing

  • Provision for the building of an additional 1600 state houses per year, an increase on the government target of 1000 houses a year. This will cost $234 million over four years.
  • Insulation grants will be available for low income owner-occupied homes at a cost of $142.5 million over four years.
Social-Services Social Services

  • $26.8 million over four years to increase places in a six-week programme for unemployed youth.
  • Refugee funding has increased by $7.7 million for capital investment over four years as well as $1.5 million each year going to the Mangere Refugee Resettlement Centre to help the Government increase the quota to 1500 per year – it has not been specified when the quota will increase.
Taxation Taxation

  • Nothing to see here – the tax cuts proposed to take effect May 2018, by the previous government have been scrapped.
  • Funding boosts provided to the IRD for initiatives to improve tax compliance – expected to raise an extra $183 million in tax over the next four years.
  • Funds for the IRD to develop a programme for the future R&D tax incentive.
-Natural-Resources Natural Resources

  • DOC has received a spend increase of $181.6 million over four years – its first boost in 16 years.
  • $100 million of new capital funding for the Green Investment Fund designed to encourage private sector investment in clean tech and new jobs with an additional $14 million in new funding to help the Government deliver on commitments to address climate change.
Foreign-Affairs- Foreign Affairs

  • An allocation of $1 billion for a “Pacific Reset”.
  • $100 million allocation for America’s Cup.
Cuts The Cuts

  • Cuts on policy advice on Energy and Resources saving $650,000 and ACC saving $500,000 per annum respectively.
  • The planned $500,000 spending increase on the Prime Minister’s scholarships to Asia won’t be going ahead.
  • Funding arrangements for private schools are facing cuts to the tune of $3.5 billion.
  • There is no funding for Waikeria Prison – instead there is a funding boost for 600 more prison beds through rapid-build modular units added to existing prisons.


Prepared by Moore Stephens Markhams director and tax specialist, Belinda Canton.

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