It could be said that the Wellbeing Budget 2022: A Secure Future announced on May 20, was a B budget – balanced, backwards, big spending, being some of the words used to describe it.
‘Balanced’ by Finance Minister Grant Robertson who, in delivering his fourth Wellbeing Budget, stressed that it balanced the shorter-term support being offered with long-term investment to ensure a stronger economic future for all New Zealanders; all with the need to not exacerbate inflation.
National Party opposition believes the Budget is taking New Zealand and its people backwards in prosperity yet there is no denying that $6 billion is a significant spend. Whether you believe this Budget will deliver a secure future or not will be very dependent on where on the political spectrum you sit.
We share our snapshot of key points we believe may affect business along with insights from our people below. If you have any questions about how your business may be impacted, please get in touch.
OUR VIEW
Ashleigh Gilmour, Associate Tax and Business Advisory, Hawke's Bay
In what is going to no doubt be a difficult year ahead for businesses facing rising inflation (and therefore business costs) and a call for wage increases in a tight labour market, there was nothing in the Budget to reduce compliance costs or support most SME businesses in New Zealand. While the $350 one-off
Cost of Living Payment might alleviate some pain for middle New Zealanders, the old adage of ‘someone will have to pay’ still holds true. Whether the Government can deliver a secure future will come down to its execution of policy initiatives.
David Hackston, Director, Christchurch
I like the continued investments (through the ongoing development of Industry Transformation Plans – ITPs) to change industries towards low emissions and higher wages. It’s a good thing to bring industry players together to develop ways to increase productivity and build resilience in businesses and industry sectors.
Andrew Steel, Audit Director, Wellington
Although details at the moment are light, it would be worth keeping an eye on the new Business Growth Fund to improve SMEs access to finance. It’s intended to fill the gap in the capital markets for SMEs that require growth capital not available through current market providers. The fund would take equity positions in the companies rather than loaning money.
Vaishali Talpade, Manager, Auckland
This Budget is designed to drive investments to improve New Zealanders' living standards by tackling long-term challenges as well as addressing the pressures immediately in front of us. Wellbeing means giving people the capabilities to live lives of purpose, balance, and meaning to them. However, for SME businesses, who are struggling with COVID issues, staff shortages and supply issues amongst other challenges, there is not a lot on offer to take us forward.
2022 BUDGET SNAPSHOT
Business and industry
- A new $100m Business Growth Fund to support small and medium sized enterprises (SMEs) to grow with private sector banks providing equity rather than loans.
- $200m to continue the Regional Strategic Partnership Fund to support regional economic development opportunities.
- $60m to progress an Income Insurance Scheme for people unable to continue working due to health or disability.
- Industry Transformation Plans to work with industries, workers, and iwi to transition to a high-wage, low-emissions economy – construction, advanced manufacturing, agritech, digital, primary industry.
Cost of living relief: $1b package
- $350 per person cost-of-living payment for individuals earning under $70k over three months from 1 August.
- Half-price public transport fares for a further two months, plus ongoing concession for Community Services cardholders.
- Fuel excise and road user charge reductions for a further two months.
- 26,500 more insulation and heating retrofits for low-income homeowners.
Health: $11.1 billion
- New funding to establish the new health system – Health NZ - $1.8b in year one, $1.3b in year two.
- $299m for Māori health services.
- Remediation of DHB deficits (planned at $550m in '21/'22).
- Additional $191m to Pharmac over the next two years.
Covid-19
- $1.2b for immediate Covid-related public health needs.
Housing
- $221m for Affordable Housing Fund.
- $1b to support public and transitional housing.
- $355m for redesigning emergency housing system.
- $75m for Homelessness Action Plan.
Māori and Pacific
- $580m package across health, social and justice sectors.
You can read the full Budget speech here. Or an at-a-glance report here.